[Militant No. 385, 9th December 1977, p. 3]
At least £212 million of public money has been poured down the drain. This is the extent of the losses run up by the Crown Agents, most of which will have to be met by the taxpayer.
Yet in contrast to the losses made by nationalised industries, which are always given maximum publicity to discredit “socialism”, the scandalous activities of the Crown Agents have been given relatively little attention by the news media.
In stark contrast to the so-called “overspending” of Clay Cross Council, for example, which brought the Official Auditor down on the Labour councillors like a ton of bricks, no action has yet been taken against the men in high places responsible for the Crown Agents’ losses. Little has been done even to inform parliament or the public of the facts.
Squandered
Just to make it clear what is at stake, let us consider what £212m would pay for: 17,000 council houses or 17 medium sized hospitals. More topically, it would just about pay the total cost of running the Fire Service for a year!
How was the money squandered? The Fay Report, recently presented to the Minister of Overseas Development, adequately confirms earlier report in ‘The Sunday Times’ and the ‘Guardian’. The losses were made through the utter financial recklessness of the Crown Agents themselves – and there is undoubtedly a string stink of corruption about some of their deals.
The Crown Agents are a hangover from the days of the British Empire. Their main role is as buying agents for about 80 foreign governments – mostly former colonies – and about 200 public bodies overseas. For years, they have also invested in funds on behalf of their clients.
But in 1967 they began to invest on their “own account” to “build up their own reserves”.
Taking advantage of their own impeccable reputation, the Crown Agents began to borrow heavily on the London money market and then to re-lend, at higher rates, to fringe banks and property developers. They mostly chose the very worst, least credit-worthy of the speculators.
It gradually leaked out, moreover, that Crown Agents’ senior personnel were buying shares in the companies which they were investing in or helping to promote.
Concealed
Within two years, alarm bells were ringing in the inner sanctums of the Treasury and the City. But nothing was done. By the end of 1970, it was discovered that because of losses on currency speculation the CA foreign governments investment fund was technically insolvent.
Just as scandalous as the Crown Agents’ dealings themselves is the systematic governmental cover-up that has taken place. We know the Treasury can be ruthlessly efficient in imposing “cash limits” when it comes to spending on social services. Yet they did nothing to curb the Crown Agents’ speculative activities.
Successive Governors of the Bank of England have continually demanded sacrifices from the workers in the “national interest”. But the “national interest” was left to look after itself when it came to Crown Agents throwing cash away, which was known to the Bank.
Although appointed by the Ministers of Overseas Development, the Crown Agents, especially under Sir Claude Heys and Allan Challis, asserted their independence as an “emanation of the Crown” – and were allowed to get away with it.
In July, 1972, Richard Wood, Minister of Overseas Development in the Tory government, received the internal Stevenson Report which gave a good indication of what was going on. But Wood merely soothed parliament and concealed the full facts. Later, a Tory-controlled Parliamentary Committee votes in 1974 to suspend any investigation into the Crown Agents.
“Lifeboat”
In December 1974, the government had to hand the CA £85 million to bail them out. Early in 1975, with the return of the Labour government, Judith Hart set up the Fay committee to investigate.
Fay has reported. But still no real action has been taken to name those, in the Crown Agents, the Treasury, the Bank of England, and elsewhere, responsible for the scandal.
Now, yet another committee has been set up to investigate. The immediate result is that many officials are refusing the comment on the Crown Agents affair on the grounds that it is under investigation!
Unfortunately, there is no indication that the Labour government has any real determination to reveal the facts or bring those responsible to account.
Dennis Skinner, Labour MP for Bolsover, for instance, recently demanded in Parliament details of Bank of England support, through the so-called “lifeboat”, to secondary banks which came to grief during the Barber property boom of 1972-73. The Bank, supposedly a public institution, contributed at least £210 million to the £1,200 lifeboat. But the Treasury ministers refused to give any details.
Pressure
It is only pressure from left-wing Labour MPs and the fact that the government lost the vote in the Commons that there will now be any form of public enquiry.
It is now vital for the labour movement to ensure that a thorough public enquiry takes place. But while exerting pressure for a full investigation into the Crown Agents, the movement should itself set up a representative tribunal to investigate and expose the wheeling and dealing that has gone on, and will still be going on, between bodies like the Crown Agents, the nationalised corporations and the City, particularly the secondary banks.
Open Up!
It should also look into the personal involvement of top civil servants and politicians. Many of these spend a lot of their time preaching about “sacrifices”, “public morality”, “ the need for restraint”, and so on. But they have a marked reluctance to open the workings of public institutions to genuine public inspection.
If they really have nothing to hide, let them open their records to inspection and let them answer in public for their actions.
Lynn Walsh
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