Thursday, February 5, 2009

"Chinatown" (Featuring background to HSBC Tax Evasion Scam -how the HSBC stole $1.5 billion dollaars in order to take over The Midland Bank!)

In Chinatown nothing is what it seems to be”Noah Cross (John Huston) to Jake Gittins (Jack Nicholson)
(from Roman Polanski’s Chinatown)

Parts VI & VII concern the consequences of two “Iran-Contra” fundraisers, attempts to raise “black” funds to ransom hostages. Both had very significant if unintended consequences, unrelated to the actual fraud.

The first, an attempt to solicit funds from Wimpey PLC, supposedly to bribe Malaysian politicians, was utilised by the Sunday Times in an example of “sponsored” journalism to pursue a campaign of mischief against the British and Malaysian Governments.

This arose from a Hong Kong corruption scandal in which the Hong Kong Government fraudulently presented an edited and sanitised account of the extent of this corrupt activity, centred around the head of the Legal Department's Commercial Crime Unit Charles Warwick Reid,  portraying it at harmless. The true story involved several murders including those of three witnesses whose statements were corruptly disclosed by the Hong Kong Government’s Independent Commission Against Corruption (ICAC).

The story also involves prosecutions arising from the 1983 collapse of the “Carrian” group of companies, in which two of the defendants were charged not in the interests of justice but at the behest of No.10 Downing Street in order to facilitate a Civil action against the groups’ accountants (and perhaps their legal advisers) to recover the losses of a corrupt Malaysian Bank in order to appease the Malaysian Prime Minister.

When the case collapsed the UK taxpayer picked up the bill for the Bank’s losses through funding the Pergau Dam project. As a delicious irony the case lay behind the creation of the “Cash for Questions” affair, central to the allegations of Conservative Party “sleaze”, which was central to the disintegration of John Major’s Conservative Government.

The story also involves a colossal fraud, the $1billion (Aus) Bell Resources scam by which the Hongkong and Shanghai Bank reduced its massive unsecured exposure to Alan Bond as a necessary prerequisite of the takeover the Midland Bank.

A Dam Waste of Money;
On the 20th February 1994 the Sunday Times published the notorious story “Wimpey offered contract bribe to malaysian PM” under the by-line John Davison (1) A text insert referred to a previous story concerning the Pergau Dam.

This told the story of how in 1985 the British construction giant Wimpey had been approached by a “Hong Kong based British businessman David J. Hutcheson” soliciting funds supposedly on behalf of influential Malaysian politicians as bribes in order to award Wimpey the contract to build a (supposedly) proposed $600US million aluminium smelter project. The paper’s editor Andrew Neil argued on BBC2’s Newsnight that the story didn’t say money was offered to the Malaysian PM. (2)
(A baffling claim in view of the article's title!)

The story provoked the Malaysia Government to impose a further trade embargo on the United Kingdom as it was intended to do. A decade earlier, the prickly Malaysian Prime Minister Mohammed Mahathir had imposed a trade embargo in protest at Mrs Thatcher’s policy of ending subsidies for overseas students. (Malaysians of Chinese origin preferred to study in English in the UK rather than in their third language Malay. Mahathir took the view that it was the responsibility of the UK taxpayer to educate his country’s racial minority as the British had brought his country’s racial minorities to colonial Malaya.)

In January 1983 Mrs Thatcher met with PM Mahathir at Downing Street. A package of measures was agreed to improve bilateral relations. These included measures to recover the colossal losses of the Malaysian Bank Bumiputra Malaysia to the Hong Kong Carrian Group.

While obviously an “advance-fee” fraud of a type endemic in Hong Kong and the Far East at the time this fraud was of unusual significance. The fraud was launched from a “bucket-shop” in the Empire Centre, East Tsimshatsui, a sub-prime business area at the tip of the Kowloon peninsular, on or about the 11th June 1985 13 days after David Jacobsen, Director of the American University Hospital in Beirut had been kidnapped. The man behind the scam was a notorious fraudster and later a personal friend of Jacobsen’s.(3) Indeed the alias “David J. Hutcheson” may have been some clue to this. He was also part of Oliver North’s “inner circle”.(4 )

The fraud was abandoned around September 1985 after Wimpey had foolishly paid some $100,000 to “Hutcheson”. Wimpey then made a complaint to the Royal Hong Kong Police’s Commercial Crime Bureau who launched an investigation under the supervision of Superintendent Phil Layton. The Police were unable to identify or trace “David J. Hutcheson”. The other occupants of Hutcheson’s office were unable to assist. They had merely rented out a desk space to some unidentifiable person.

At the time the Sunday Times’ Wimpey bribe story was published several UK broadsheets, Newsweek Magazine, Channel 4 news and the Sunday Times itself were showing a great deal of interest in the Pergau Dam project when in 1989 £214 million or 90% of the Foreign Aid budget was devoted to this single scheme. Even the Minister for Overseas Development Chris Patten (later Governor of Hong Kong) was baffled.

By third world standards Malaysia had a high and rising standard of living. Nearly all the Foreign Aid budget was going to a single country, one with which Britain had long had fractious relations. The Prime Minister had ignored the advice of the National Audit Office who described the project as “unnecessary, unenvironmental and a waste of taxpayer’s money”.(5)

A widely held, if untrue suspicion, was that “Pergau” was about “arms for aid”, a subsidy so Malaysia would buy British military equipment. (A consequence of the new trade embargo was that the Malaysian Air Force ended up being equipped with MiGs!). In fact it was a lot sleazier than that. (6 )

Why did the Sunday Times publish as fact an obvious fraud eight years after the event? As would become clear the story had not been approved by the Sunday Times libel lawyer.

Three weeks later, on the 13.3.94 the Sunday Times published another strange story under the same by-line of “John Davison”. Risibly titled “Victim Spends Years in Jail Without Trial” this full-page story told the story of Lorraine Osman, former Chairman of the Bank Bumiputra Malaysia who had fled Malaysia in 1983 and sought asylum in the UK. He had been arrested in 1985 and had spent seven years on remand fighting extradition to Hong Kong to face corruption charges in relation to the Carrian case.(7)

(The edition of the 13th March 1994 also carried a four page special on the “Malaysian Affair” which made numerous allegations of criminality and corruption against PM Mahathir and his associates. The piece was illustrated by a number of racist caricatures). (8)

Eventually extradited to Hong Kong in 1992 Osman pleaded guilty and served a further nine months imprisonment. On his release his extradition specialist Michael J.Kingston boasted to a Hong Kong newspaper of having sold Osman’s story to a London newspaper for £5,000. (9) (If true, this would be contrary to the newspaper’s code of conduct that forbids payment for a convicted felon’s story.) According to the Independent a “freelance journalist” had touted the story to the Observer and Independent for £5,000. But who was paying whom?

Again the story was not checked for libel and repeated defamatory comments about a Malaysian politician Tengku Rezaleigh Hamza made in the earlier Wimpey story alleging Hamza was involved in the murder of the Malaysian accountant Ibrahim Jafaar (see below).

The story referred to “Alex Carlisle MP” (now Lord Carlisle a Government advisor) “making the latest of many appeals on Osman’s behalf in the House.”(10)     MPs of all parties had been  approached by Osman’s representative Kingston some of whom (such as Labour’s Barry Shearman) showed him the door. Osman’s lobbying extended to the press such as an anonymous “letter from Hong Kong” placed in Private Eye (11) and a petition published in the letter column of the The Times “Call to End 6 Year Remand” (12) signed by Mr Kingston and a number of luminaries.

The Sunday Times continued to print further stories criticizing Malaysia to the bemusement of readers and the embarrassment of the newspaper’s proprietor who was trying to establish Star TV in Asia and who sought cordial relations with the regions authoritarian governments. The “Malaysia Campaign” was sometimes seen as an attempt by News International to exert pressure on the Malaysian Government. In truth it probably demonstrated Rupert Murdoch left editorial control to his editors (reserving of course the right to sack the editor!)

In February 1996 the Sunday Times published a bizarre retraction and apology. According to the “apology” News International had been sued for defamation by Hamza in relation to two stories published in relation to the “Malaysian affair”. These stories were not referred to my title or content but by their dates of publication 20.2.94 & 13.3.94. (the Wimpey bribe story and the Osman story.) (13)

News International made an unreserved apology for these unspecified allegations and announced its agreement to pay substantial, if unspecified, damages. News International repudiated their unspecified source and stated that these stories should never have been published. The ordinary reader would have no knowledge of which stories it was referring to or that News International had retracted the story that provoked the 1994 Malaysian Trade Embargo.

Within weeks Andrew Neil, who had earlier described the Wimpey story as “copperbottomed” and vigorously defended his “Malaysian campaign”, stood down as editor. In his memoirs Neil continued to refer to the fictitious “David J. Hutcheson” as a real person. (14)

The Carrian Case:

There is no such thing as politically motivated crime – crime is crime is crime.” - Margaret Thatcher ( 15 )

The Carrian group of Companies were established in Hong Kong in the late 1970s by a\Singaporean George TAN Soon-gin who was living illegally in Hong Kong. (The name “Carrian” derives from the names “TAN” and his mistress Carrie Wu.)   For a time the group prospered with interests in property, transport, taxis and pest control.

The group’s main bankers were the Hongkong and Shanghai Bank, the Bank’s Chairman Michael Sandberg being a personal friend. (Sandberg was also a backer of Alan Bond and later Asil Nadir.) Another major backer was the Bank Bumiputra Malaysia.

This connection was a matter of controversy in Malaysia. The Bank Bumiputra Malaysia had been established with a racist mandate to support indigenous Malays (Bumiputras) rather than the more commercially sophisticated Chinese. Instead Bank Bumiputra lent nearly all it’s capital to a group of Hong Kong Chinese businessman on what transpired to be grossly inadequate security.

TAN used the services of the elite of Hong Kong’s business community. Price Waterhouse were the public companies’ accountants and John Marshall a PW partner was appointed Chairman. The groups’ Legal advisors were the Colony’s most prestigious law firm Deacons.

In 1981 Carrian pulled off the most astonishing property coup buying the Bank of America Tower, a landmark of Central District, then, almost immediately, announced its sale for 100% profit to two Hong Kong businessman the Lam brothers. Carrian’s profits soared with this coup and the share price surged. The Hong Kong property boom exploded and the Carrian group borrowed huge sums on the security of Carrian shares and mortgaged their assets to the hilt (and beyond).

An insider’s dream, the Bank of America Tower deal was a sham.  As a scheme to boost the Carrian share price those with knowledge of the scam could make a fortune . As the Lam brothers later admitted they hadn’t paid a cent. The supposed “sale” was a fraud.

Following Mrs Thatcher’s ill-fated visit to Beijing in 1983, where her hopes to negotiate an extension to the lease on Hong Kong’s New Territories were dashed, the Hong Kong Stock Market slumped and the Carrian stock price fell sharply. Bankers dumped Carrian stock, depressing the price further and leading to panic selling. As the Carrian group was on the verge of collapse the Police’s Commercial Crime Bureau raided Carrian HQ. The liabilities of the Carrian group exceeded three billion Hong Kong dollars.

Also involved in the Carrian case was the Territory’s Independent Commission Against Corruption (ICAC) whose sweeping powers, including the power of press censorship, made them a formidable body to cross. Often seen as rivals to the Police with whom they later undertook some supposedly “joint” investigations they actually controlled the Police investigation of Carrian and other Police cases through their control of the Attorney General’s Commercial Crime Unit (CCU) headed since 1981 by a New Zealand Solicitor and Barrister Warwick Reid. Police files left with the Legal Department were routinely copied by the ICAC.

While the plan to raid Carrian had long been in gestation the raids were precipitated by one of two homicides in the case arising from the relationship between Bank Bumiputra Malaysia and the Carrian group.

As Carrian’s financial position worsened Bank Bumiputra’s Hong Kong subsidiary made a number of loans to the group. A Malaysian auditor Ibrahim Jafaar was sent to Hong Kong by the Bank’s HQ to investigate. He was murdered in his hotel room in Kowloon and his body found in a banana plantation in the rural New Territories.

The second suspicious death was that of John Wimbush, senior partner of Deacon’s and Chairman of the Hong Kong Law Society who had handled the conveyancing on the Bank of America Tower deal. At about 9 a.m.on Monday the 28th March 1984 Wimbush was found in the swimming pool of his Peak District apartment with a manhole cover tied to his neck with nylon rope. (Despite the apparent Masonic symbolism Wimbush was not a Mason.)

His family were out of the Territory but two teenage friends of his son were staying at the flat. At about 7 a.m. they had heard Wimbush having a heated telephone conversation with a person never officially identified. He left a brief suicide note.

The case was treated as suicide, and the party with whom Wimbush was speaking on the phone never came forward. Wimbush was to be arrested later that day.   CCB's Deputy Commander Russ "What's in a name?" Mason had made an appointment with Wimbush in advance to do so!   Also to be arrested, by appointment, were two other Deacons Solicitors partner Maurice Wong and his assistant Simon Poon who according to an anonymous CCB spokesman speaking on the Monday were “still out of town”.

At 11 am on the morning of Saturday 25th March, 48hrs before Wimbush’s death the two senior CCB officers on the Carrian case Superintendent Philip Layton and his sidekick Chief Inspector Rod Starling met Wong and Poon at Deacons offices in Swire House and briefed them on the case against them. They also told the two lawyers that they were free to leave Hong Kong.

The two lawyers along with many others had made fortunes insider trading on Carrrian shares through their knowledge of the Bank of America deal. They fled Hong Kong for Australia and the USA never to return. In evidence to the Carrian trial Layton falsely claimed the two had never been interviewed.

They had been tipped-off on the instructions of Warwick Reid at a meeting held earlier that morning at the Legal Department also attended by John Sulan, senior Legal Department official handing Carrian and by CCB’s Russ Mason. Layton had been told not to make any record of the interview and to remove the two from the Immigration Department stoplist. Layton was baffled by Reid’s instructions but did as he was told.

At the inquest into Wimbush’s death, despite heavy pressure from the Coroner to return a verdict of suicide the Jury returned an open verdict.

The Reid Affair;

In September 1989, Warwick Reid, now Director Designate of the New Zealand Serious Fraud Office, (with a “character reference” from Hong Kong Attorney General Michael Thomas) (17) was arrested by the Independent Commission against Corruption ICAC and two years later pleaded guilty to unspecified corruption, (being in control of assets greater than the total of his cumulative earnings.)

While in ICAC custody Reid’s “confession” statement was concocted and Reid was presented as a “supergrass”, supposedly giving a true account of his corrupt activity in order to receive a reduced sentence and keep the bulk of his fortune intact. He served a further three years of an eight year sentence all in ICAC custody.

        Any reduction in his sentence was dependent on his coming up with a version of events that suited the Hong Kong Government and the ICAC, primarily that his “confession” would not incur any financial liability for the Hong Kong Government. While happy to dump liability for the Carrian collapse on Price Waterhouse they had no plans to face the bill for Reid’s systematic corruption. Reid claimed in Court he only took bribes to do what he would have done anyway and that no miscarriage of justice ever occurred from his taking money not to drop prosecutions.   This is of course risible.

Reid’s arrest may have been prompted by his planned move to New Zealand. The ICAC were doubtless aware of his corrupt activities and degenerate lifestyle for years prior to his arrest through one of Reid’s associates.

Toby Lok was a key figure in Reid’s admitted corruption. A corrupt former Detective Inspector and Sun Yee On Triad Society member Lok disappeared shortly before Reid’s arrest. (He is rumoured to form part of the foundations of the Hongkong Bank’s spectacular HQ at No.1 Queens Road, Central, Hong Kong.) Reid’s association with Lok long predated his admitted corruption and as early as 1981 Reid had scuppered prosecutions in major cases in which Lok was involved.

While other corrupt Policemen fled Hong Kong in the 1977 crackdown on Police corruption, (in which Lok’s own “bagman” his former Station Sergeant was arrested and charged) Lok remained in Hong Kong and was never arrested or charged. As an English speaker he had become a valuable informant for the ICAC who in its early days were staffed largely by masonic refugees from “Operation Countryman”.

      Reid’s “confession” statement produced an edited, sanitised and quite incredible account of the extent and duration of Reid’s corrupt activity pretending he had only become corrupt in April 1986 under the pressure of his elder brother’s debts (Mike Reid was a Senior Crown Counsel, Warwick Reid’s subordinate in the CCU) and that he had made corrupt deals on just six cases.

Reid gave evidence against just three persons, only one of which, a Banker, was alleged to have actually paid him money. It was apparently a mystery who was the source of the millions of dollars paid in the other five cases. The two other defendants, Oscar LAI a Solicitor, and Eddie SO a Barrister, had, as a team, represented parties in all six cases. "Carrian", the Ka Wah Bank and a number of other cases involving the collapse of Banks such as the Overseas Trust Bank, Dominican Finance Deposit Taking Company and other less high-profile cases were expunged from the official version of events.   Of particular interest Oscar LAI had been the senior Chinese partner at Deacons before he left in the aftermath of Wimbush's death to start his own firm.    While Reid's corrupt activities supposedly only commenced in May 1986 (evidence to the contrary being suppressed) he had been involved in corrupt activity in April 1984 allowing two Deacons Solicitors to flee Hong Kong and Lai and So had represented the Lam brothers when Reid dropped charges against them.  Of course Lai and So weren't going to point out they had been bribing him for years longer than was alleged!

In relation to the collapse of the Ka Wah Bank (one of several Bank collapses that feature in the “Reid affair”) the principals of the Bank the Low brothers had fled to Taiwan.(16) According to Warwick Reid’s statement the Low brothers wanted to get their hands on witness statements made in the case and Mike Reid had spent his working hours photocopying the files with a view to selling this material (as he doubtless did in other aspects of Reid’s “covered-up” corruption.) Warwick Reid’s statement noted that “the ICAC were concerned for the safety of their witnesses.”(17) Mike Reid was never arrested or charged but was allowed to return to his native New Zealand where he later committed suicide. (18)  (Trying to make the world a better place?)

On the 10th September 1989 Dr David Chye was shot dead in the garage of his Sidney home. In January 1990 his sister Mrs Brenda Caleo was hacked to death at her Sydney home. Mrs Caleo was the former mistress of one of the Low brothers. Both murders remain unsolved.

In May 1990 the world famous surgeon heart surgeon (and friend of Princess Diana) Dr Victor Chang was shot dead in a street in Sydney. This time the Police had a lucky break. The professional hitman who gunned him down had dropped his wallet at the scene! (As you do!) (19)

Like Chief Superintendent John Orr of the Strathclyde Police Sydney’s finest grasped the essential principal of successful criminal investigation - “you don’t look a gift horse in the mouth”, and arrested the assassin, who had been working as a restaurant plongeur (dish-washer) as he boarded a flight to his native Malaysia.(20) He got life.

Marketing confidential files to suspects and to the ICAC was an important revenue stream for the Reid brothers. But had Mike Reid actually sold the Ka Wah Bank papers or was this passage in Reid’s statement created to exonerate the ICAC and the new Attorney General Jeremy Mathews from their own responsibility for the murder of these three witnesses?

The Hong Kong Government had brought a crackpot Civil action against the principals of the Ka Wah Bank which recovered $200HK (£20 sterling) of the $3HK billion (£300 million) liabilities of the Bank. To provided the evidence for this civil action the Hong Kong Government engaged the services of a firm of private detectives with a personal link to a senior ICAC officer. Did these private detectives actually conduct an “investigation” or did they simply use copies of statements given in confidence, passed to them illegally (under the secrecy clauses in the ICAC Ordinance)?

Evidence that contradicted Reid’s self-serving claims of the extent and duration of his corrupt activities was suppressed and the authorities relied on the fact they would not be trampled in the rush of Reid’s other paymasters to confess. Reid had channelled his corrupt payments (or at least the few deals that were admitted to) through a Singaporean bank account he had opened in his mother’s maiden name. The date this account was opened and the activity on the account went undisclosed in evidence.

Also not disclosed was that when 26 year old Reid joined the Hong Kong Government in 1975 he had recently divorced his wife and was supporting two children. (22) As a junior Crown Counsel, living a riotous bachelor lifestyle (23), Reid was under financial pressure as soon as he landed in Hong Kong eleven years before he supposedly became corrupt.

For the purposes of managing the “Reid Affair” the Hong Kong Legal Department (or the ICAC) imported a new DPP John Wood, former head of the UK Serious Fraud Office, who announced within days of his arrival that the ICAC had “got to the bottom of the Reid Affair.” How would he know? As a senior official of the Crown Prosecution Service Wood had become close friends with fellow Mason Graham Stockwell now the ICAC Director of Operations. (23)

As a Metropolitan Police Superintendent Stockwell had achieved a measure of fame in the Maxwell Confait case a Police abuse that nearly led to the resignation of the DPP. Maxwell Confait was a transsexual prostitute who died in a fire at his flat in 1972. Two days later two youths were seen running from a burning shed. After several hours in custody they had not only confessed to setting light to the shed but also to the murder of Maxwell Confait!  Charges were later dropped and a major enquiry followed. The case led directly to the introduction of the Police and Criminal Evidence Act. (PACE).

Amongst the several “covered-up” aspects of Reid’s corrupt activities was the “Carrian” case. When conspiracy charges against the two Lam brothers (the supposed purchasers of the Bank of America Tower) were dropped and they became instead “witnesses” it apparently went quite unnoticed that in court they were represented by Oscar Lai and Eddie So.

The flight of Wong and Pun was a corrupt deal three years before the “official” start of Reid’s corrupt activities. Reid knew the two Solicitors had been placed on the Immigration Department stoplist and only the Police could remove them. At the time Oscar Lai was the senior Chinese lawyer at Deacons leaving soon after to start his own firm.

P:arallel to the “Reid affair” the ICAC had arrested Police superintendent Phil Layton together with a former ICAC officer John Picken on charges that were almost unintelligible. Layton was accused of “soliciting an advantage” by looking at the possibility of working in the private sector. He was acquitted after a lengthy and very expensive trial in which his sidekick Rod Starling was a reluctant witness against him, hampered by the fact that the charges against Layton was so ethereal.

Layton, who formerly led the Police Carrian investigation was represented by Martin Thomas QC (no known relationship to Michael Thomas QC) a former Lib-Dem parliamentary candidate. Martin Thomas was also representing Lorraine Osman who was facing corruption charges in the Carrian case which may give some clue as to the Sunday Times’ ultimate source of the Wimpey bribe story.

The Carrian Trial;

The prosecution in the “Police” Carrian case took nearly two years from September 1985 until June 1987 to present its case. At the close of the prosecution case the Trial Judge Dennis Barker, sitting alone, ruled that all defendants had no case to answer a ruling against which there was no appeal. The charges arose out of the 1981 accounts of Carrian and the four defendants in the case were George TAN, his assistant Bentley HO and two relatively junior Price Waterhouse accountants David Begg and Anthony Lo. Many of their more senior colleagues, partners in Price Waterhouse, had been interviewed and given statements after having been given immunity from prosecution by Reid and John Sulan.

The prosecution of Begg and LO was for reasons other than the interests of Justice. While the accounts of the public company had been falsified to overstate Carrian’s profitability through the Bank of America Tower scam Begg and LO were being prosecuted for failing to realise it was a fraudulent deal. Were these two juniors to blow the whistle when a senior partner in the firm was Chairman of Carrian?

The Carrian case was masterminded by a Foreign Office body called the Commonwealth Fraud Secretariat headed by Dr Barry Ryder, who had been one of the board that had appointed Reid to head the CCU. (Apart from the Carrian case a “Commonwealth” Secretariat had no real function). At the annual conference of Ryder’s private business C.I.D.O.E.C. held at Jesus College Cambridge in August 1994 the theme for the conference was “Making the Accountants Pay”. When this had actually been tried in the Carrian case it the UK taxpayer who ended up paying by funding "Pergau". (24)

(Had any of the Deacons Solicitors been convicted Deacons could have been facing a substantial Civil suit but John Wimbush was now dead and Wong and Poon had permanently absconded. Charges against a fourth Deacons solicitor were also dropped.)

Ryder’s sidekick was Dr David Chaikin an Australian Barrister. In 1981 Reid had supposedly recruited a South Australian Lawyer John Sulan to head the Carrian enquiry two years before the group’s collapse. In fact Sulan may have been recruited at the behest of his friend (and co-religionist) Chaikin.   Sulan did not personally prosecute any Carrian case and left the Hong Kong Government in 1985 to become the Australian Special Prosecutor into Alan Bond.

Another central personality in the affair was the Attorney General Michael Thomas who was appointed in 1983. Thomas had developed a "friendship" with the most prominent personality in Hong Kong Baroness Lydia Dunn who had many interests in the business and political sphere (in Hong Kong there was little distinction between the two.) Baroness Dunn was a Director and later Deputy Chairman of the Hongkong and Shanghai Bank as well as thousands of other companies. Amongst her numerous positions she was Chairman of the ICAC Complaints Committee as well as being a principal advisor to the Foreign Office before leaving Hong Kong in the run-up to the 1997 handover.

In 1988 Thomas resigned as Attorney General, divorced his wife and married Ms Dunn. Despite being Reid’s supervisor for five years Thomas was unaware of Reid’s corrupt activities regarding him as being very able. (If ignorance is bliss Thomas must have been a very happy man.)

In a speech given prior to Reid’s arrest to the dinner of the Hong Kong Society of Accountants Thomas boasted of the skills and experience of the Legal Department’s (inept and corrupt) CCU but complained they were often left to pick up the pieces “after the bird has flown” and called on accountants to “blow the whistle at the earliest opportunity”. “Eternal vigilance” he pontificated “is the price of freedom”. ( 25 ) Despite sounding like he was touting for business and despite being a bit short on eternal vigilance himself the sole consequence of his ineptitude was that the ICAC dropped their annual claim to “work on the principal of supervisory accountability” from the Hong Kong Government yearbook.

Alan Bond and the "Bell Resources" Fraud ;

During the trial of Oscar LAI and Eddie SO some dirty laundry was aired. One of the interesting details to emerge concerned Michael Sandberg’s protégé Australian “entrepreneur” Alan Bond. In 1983 Bond had floated Bondcorp on the Hongkong Exchange. Bond then caused apoplexy by publicly announcing that the value of assets in Bondcorp far exceeded the offer price.

It transpired that the Police (Phil Layton) had obtained an arrest warrant for Bond in relation to this public statement. It further transpired that the Attorney General Michael Thomas had cancelled this warrant after being asked to do so by John Oates, Deputy Chairman of the HKSBC. (26) Thomas had done so “in consultation with his senior staff on the case” which included Reid and the future Australian Special Investigator of Alan Bond John Sulan.

When Sulan was appointed Special Investigator the major crime for which Bond was convicted had yet to be committed. In 1987 Bond bought a minority stake in the late Robert Holmes A’Court’s vehicle Bell Resources. Bond and cronies hijacked the board excluding other minority shareholders notably the AMP insurance group. Bell Resources was “cash-rich” earning interest from long-term cash deposits.

The new Bell board decided that these stuffy safe investments were not good enough. Instead they resolved to lend Bell Resources reserves to the financial black hole known as Bondcorp. Within two years Bell Resources had been looted of a $1,000 million Aus (this was when a billion dollars was a lot of money.) What became of the money was not explained. Little was recovered from the liquidation of Bondcorp.

The Bell Resources case was central to Sulan’s role as Special Investigator. Bond was eventually prosecuted but a “sweetheart” deal was struck. Bond pleaded guilty, was sentenced to five years in prison (he was out in three) and nobody else was prosecuted. No money was recovered.

There was more to “Bell Resources” concerning a frequently mooted merger of the British Midland Bank and the Hongkong & Shanghai Bank. A planned merger in 1988 had to be abandoned because of mounting losses in the Midland’s US operations and growing losses by the Hongkong Bank’s Australian subsidiary the Hongkong Bank of Australia which had massive unsecured exposure to Bond and a number of similar Australian "entrepreneurs."

How Bond had financed his stake in Bell Resources was a mystery. He must have borrowed the money from somebody and the party who lent him the money might be regarded as a party to the fraud. It was no secret that the Bell Resources fraud coincided with a substantial reduction in the Hongkong Bank of Australia’s exposure to Bondcorp. ( 27 )

In 1991 BCCI collapsed. BCCI had been inadequately supervised by a “college of regulators.” (i.e. no regulation at all!) Following the 1992 General Election the Hongkong and Shanghai Bank launched a takeover bid for the Midland Bank. The HKSB engaged the former Hong Kong Minister Francis Maude, who had lost his seat in the April 1992 General Election as “consultant” for the deal who was paid a fee of £1 million.

It is suspected that personalities associated with the HKSB and the Swire group had made substantial contributions to Conservative Party funds prior to the election and Prime Minister John Major had visited the territory the previous year and whist there solicited donations to party funds.

In 1995 David Leppard of the Sunday Times ran an expose of “Tory Party funding” a story of how several prominent Hong Kong personalities, some unsavoury, had funded the Conservative Party. However the guts of the story “Bell Resources”, the takeover of the Midland Bank and the contributions to the Conservative party of the Deputy Chairman of the Hongkong Bank, “named” insider dealer, LI Ka-shing was expunged as LI was a friend of the Sunday Times Business Editor Geoff Randall.

In order to supposedly prevent the BCCI fiasco ever occurring again (look around!) PM John Major had set up a Special Investigations Unit within the Bank of England. In response to the PM’s standard request for persons with relevant information to “come forward” the author drew the SIU’s attention to matters concerning the Bell Resources fraud and personalities associated with the Hongkong and Shanghai Bank. (27)

The SIU declined to pursue the matter unless the author agreed to his information being disclosed to the Hong Kong Independent Commission Against Corruption a body who covered-up systematic and related corruption in the Hong Kong Legal Department and who had disclosed confidential information resulting in the murder of three of their own witnesses! The regulation of a UK Bank was in the hands of a Hong Kong criminal enterprise who had kept personalities associated with the Hongkong Bank "out of the frame".

The “Cash for Questions” Affair;

On the 10th July 1994 (a few months after the publication of the Wimpey and Osman stories) The Sunday Times Insight Team published the first of several stories on the “cash for questions affair” an attempt to test the probity of MPs by offering them money to ask questions in the House of Commons. Two Tory MPs, both Parliamentary Private Secretaries initially accepted money to ask questions about a fictitious drug. One of the two (Graham Riddick) had second thoughts and returned the money.

The Sunday Times story became entwined in revelations published in The Guardian of a more systematic attempt to subvert Parliament involving the lobbying company Ian Greer Associates who maintained a “stable” of MPs for the purpose. The Guardian story featured the affairs of Mohammed Al-Fayed and the take-over of Harrods an arcane parliamentary affair of little or no interest to people in the real world.

Al-Fayed had apparently paid more than one Conservative MP for “advice” and the story led to the libel case brought against Al-Fayed by the former Trade Minister Neil Hamilton and the imprisonment of the former Minister for Defence Procurement Jonathan Aitken.

The Sunday Times’ attempt to entrap MPs was based on the experiences of the Sunday Times’ informant a “prominent businessman” who had experience of paying MPs to ask questions in the House. The informant was widely assumed to be Mr Al-Fayed. Mr Al-Fayed, no shrinking violet, was never shy in coming forward with allegations of wrongdoing. In fact the Sunday Times’ (self-styled) “prominent businessman” was Lorraine Osman for whom paying MPs to ask questions and paying for press coverage were aspects of his futile seven year long campaign to avoid extradition to Hong Kong. (Osman's later involvement with Irish Taoiseach Albert Reynolds led to his disgrace and resignation.)

Unaware and uninterested in the true motivation behind the story the Committee on Standards and Privileges nonetheless condemned the Sunday Times for the attempt to entrap MPs. The scandal led to the establishment of the Nolan Committee on Standards in Public Life in October 1994. By coincidence a member of the Nolan Committee, Peter Shore MP headed the Foreign Affairs Select Committee investigation of Pergau but being unaware and uninterested in the true story was unable to conduct a worthwhile investigation.

The “cash for questions” affair was a major contributory factor to “sleaze” the perception that MPs and particularly Conservative MPs were corrupt, and significantly contributed, to the defeat of the Conservative Government in the 1997 General Election.

Postscript: The Hong Kong Terrorist Association

In the summer of 1987 Hong Kong was rocked by a number of terrorist bombings carried out by an entity calling itself, rather lamely, the "Hong Kong Terrorist Association".    The Acting Governor David Ford had publicly promised the people of Hong Kong that the culprits would be brought to justice.

The "Masonic Verses" is essentially a blog about the Lockerbie case arising from how the Dumfries and Galloway Constabulary and in particular the CIO Chief Superintendent John Orr made a colossal blunder in "eliminating" Heathrow as the point at which the primary suitcase was introduced.   How could the Police make such an elementary blunder?   Well I had been there before.   My colleagues in the Royal Hong Kong Police were unable to solve the Hong Kong Terrorist Association case, even though I told them who did it!

In October 1987 (possibly as an aspect of the "Reid Affair") I was interdicted and never returned to duty.   One day I went to my parent unit and ran into an old friend Ricky who was in charge of the "Hong Kong Terrorist Association" investigation which was apparently going nowhere.    Ricky and I had worked together several years earlier with another officer nicknamed by the rank and file (without irony) as "mental".     One day "mental" just wasn't there any more.  He had been sacked.   I later heard he had been burgling his new place of employment just to show he was cleverer than the Police.

I suggested to Ricky that the culprit was somebody like "mental"   Ricky thought about this for a microsecond and said "no it couldn't be.   The person they were looking for was Chinese but spoke good English, had a grudge against the Police and was an expert chemist."   I responded that "mental" was Chinese and spoke good English, had a horrendous grudge against the Police in having been so badly humiliated and I told Ricky something he didn't know.   "Mental" was a graduate chemist.  Ricky considered this for a further mic5rosecond.  "No" he said, "couldn't be."   Curious that the OC case actually knew the bomber.   Contrary to the Acting Governor's pledge the case was never solved.  It was no surprise to me John Orr got it so badly wrong.

(1) Wimpey offered contract bribes to Malaysian prime minister John Davison Sunday Times 20.2.94 which refers to New evidence links aid for Malaysian dam to arms deal Sunday Times 23.1.94

(2)Panel discussion BBC2 Newsnight 4.3.94 featuring Andrew Neil

(3)David Jacobsen with Gerald Astor Hostage My Nightmare in Beirut Donald I.Fine 1991 (1993 Edition ) meeting with “John Smith” p.308

(4) Gavin Hewitt Terry Waite, Why Was He Kidnapped (published in US as Terry Waite and Oliver North ) Bloomsbury 1991 Chapter 4 The Inner Circle

(5) Chris Blackhurst Patten ‘fury’at Malaysia dam deal – Minister thought Pergau not proper use of aid
Independent –

(6) The Malaysian air-force bought 18 Mig 29s.

(7) John Davison Victim spends years in jail without trial Sunday Times 13.3.94

(8) Sunday Times 13.3.94

(9) Interview with Mike Kingston SCMP (South China Morning Post) 28.8.93

(10) John Davison Victim spends years in jail without trial Sunday Times 13.3.94

(11) Letter from Hong Kong (sic) (Macclesfield actually!) from Our Own Correspondent Private Eye 6.12.91

(12) Call for end to 6 year remand from Mr M.J.Kingston and others
Letters Times 9.9.91

(13) Sunday Times Feb.1996

(14) Andrew Neil Full Disclosure

(15) Statement to camera by Lady Thatcher featured on BBC TV as a
trailer. Date and time of statement unknown.

(16) “confession” statement of Charles Warwick Reid – not in public domain.

(17) Lindy Course Thomas in court denial of Reid claim SCMP 7.4.92

(18) Lindy Course Reid’s brother a ‘paid informant’ SCMP 11.2.92

(19) Sidney Police left in the dark over Hongkong link in murders Hongkong Standard 10.2.91

(20) Dropped wallet provided clue in surgeon’s killing SCMP 20.7.91

(21) Marriage cert.1853 All Saints Anglican Church Nelson, New Zealand 24.2.68

(22) Lindy Course Reid tells of lawyers’ sex and booze binges SCMP 11.2.92

(23) John Elliott Hong Kong given a morale boost Financial Times 19.10.90

(24) August 1994 Prospectus for conference of C.I.D.O.E.C.
Jesus College, Cambridge.

(25) Attorney General urges accountants to report business fraud SCMP 3.10.87

( 26) Terry Porter Thomas ‘killed Bond charge’ SCMP February 1992

(27) Paul Barry The Fall and Rise of Alan Bond page 198

(28) Author’s correspondence with Bank of England’s Special Investigations Unit.

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