Quintessentially London

Published: August 9, 2012 - 17:13

It needed fiction writer and a purveyor of phantasmagoria to reiterate to a world audience why Great Britain ran such a vast empire. So it was in the fitness of things that the organisers of the London Olympics deployed the creative skills of Oscar winning director, Danny Boyle, to cheerfully and unapologetically locate Imperial Great Britain as an Isle that changed the world. His interpretation of the industrial revolution had shades of both Charles Dickens and Adam Smith, which meant toiling working classes juxtaposed with adventurous mercantilists. 

Boyle’s directorial enterprise captured the levity and joy of success rather than the pain of exploitation, injustice and deep suffering visible in writings emanating from that phase in history. And then there was the fantastic sequence about the queen being chaperoned by Britain’s most popular export to the world, Ian Fleming’s mythical secret agent, 007, who has in her majesty’s service fought on the side of the good and right even if it meant sleeping with the enemy. 

It was fun, colourful and reflective of what London meant to itself and to the world. It felt like an epitaph of an empire on HD. The surreal quality of what was at display is heightened when read together with Britain’s plummeting fortunes, its double dip recession, and falling reputation as the upholder of global financial standards and probity in public life. 

Niall Ferguson, the feisty historian, TV personality and defender of the Empire believed that Great Britain ruled the world due to its financial capital. It was always the flag that followed the traders and businessmen. At a particular stage in its history, it had far more investments abroad than any other country in the world. 

Distant countries of Latin America, like Brazil, for instance, that were not even their colonies and did not speak the English language, were beneficiaries of their investments. That is, though they were under Portuguese control, it was the British investor who called the shots. In short, the Empire was built through mergers, acquisitions, takeovers -- many times at gun point. 

It also benefited in this enterprise through its tax havens, where money was washed. It worked rather well. While Great Britain, the mother of parliamentary democracy, was the epitome of uprightness, probity and good governance, the tax havens, also under the rule of London, had no such moral compunctions. Dubious funds were washed in these havens, which sneaked into the global banking system. 

These facts were long known, but due to a host of reasons, they never got currency. 

Since 2001, when terrorists rammed commercial jets into the World Trade Center in New York City, the world has been a bit concerned about dubious funds and how they could aid terror activities. Paranoia towards dirty funds and tax havens intensified after the 2008 meltdown. 

Pressure was brought in by the international community to shut down these tax havens and force them to adhere to ethical practises. Many protectorates submitted, but there are countries which still accept funds from unexplained sources. This is money from drugs, kickbacks, tax evasion and criminal proceeds. All along, these nefarious activities were seen as outside the banking system. This narrative is changing now. 

While the British people were in thrall of a riveting scandal involving close ties between Conservative party leaders and media baron Rupert Murdoch’s newspaper News of the World (NOTW -- now shut), reports arrived of how the 300-year-old Barclays Bank rigged the LIBOR rates during the 2008 meltdown at the behest of the Bank of England. LIBOR rates, a rate at which banks loan funds to each other, are determined by a clutch of bankers. 

These rates affect financial instruments with values more than 36 times of the GDP of the US. Every interest rate in the world is fixed around the LIBOR. Lot of entities lost money in this fixing.

 Even before the full implications of the LIBOR fixing were available came reports of the Hong Kong and Shanghai Banking Corporation funnelling hundreds of millions of dollars to the Al-Rajhi Bank of Saudi Arabia through its London branch. The Saudi bank has been linked with terror funding. 

Reports suggest that it has funded entities in Bangladesh that have close ties with terror or religious radical groups. It has been criticised for promoting Wahabi Islam and extremist fundamentalism in many of the countries that it deals with.

The question that arises is sharp and clear: Were British regulators and intelligence agencies aware of what was going on? Or, is it yet another James Bond style covert operation in a world of no morals?

Editor of Delhi's Hardnews magazine and author of Bad Money Bad Politics- the untold story of Hawala scandal.

Read more stories by Sanjay Kapoor

This story is from print issue of HardNews