THE RETURN OF THE BANK OF WALES

February 23, 2016

rebecca_logo_04

TOMORROW THE American economist Ellen Brown will give a talk in Cardiff about setting up a Public Bank of Wales.

Brown is at the forefront of a US movement promoting publicly-owned banks as a solution to the problem of low growth and stagnant living standards.

The lecture is organised by Cardiff University Business School and the pressure group Arian Cymru.

Few attending the event will remember that nearly half a century ago the Liberal Party proposed a public Bank of Wales.

That initiative was sabotaged by the Welsh establishment which supported a rival — the Commercial Bank of Wales —  promoted by the moneylender Julian Hodge.

Backed by James Callaghan and George Thomas, both Cardiff MPs, Hodge’s bank was a fraud.

It was designed to enrich the elite while doing virtually nothing for the people of Wales.

It was taken over by the Bank of Scotland in 1986 and ceased trading in 2002.

The only exposé of this sordid episode was an investigation by the magazine Rebecca in 1977.

Called Cheque Mates: The Selling Of The Commercial Bank Of Wales, it’s reprinted here as a cautionary tale about the way the establishment worked in Wales back in the 1970s.

One of those who backed Hodge’s Bank, the former Controller of BBC Wales Geraint Talfan Davies, has been calling for its return.

In 2009, in the aftermath of the banking crisis, the Western Mail published an article by Talfan Davies.

“In this new situation,” he wrote, “the title Bank of Wales might have a real value for society and government in Wales.”

“After all, it is a name that has too much of a public resonance to languish as a discarded private pawn.”

“It should be regarded as a Welsh national asset.”

Talfan Davies did not say that the name had been tarnished by its association with the unscrupulous Hodge.

He did not say that he’d supported the Hodge bank — and revealed nothing of its sorry history …

images

THE MORNING of 9 February 1971 was an important occasion for Geraint Talfan Davies, then Welsh Affairs Correspondent of the Western Mail. First he attended the birth of his second son Rhodri (father and son would later lead BBC Wales). The father then rushed to join the celebrations of another birth — the Commercial Bank of Wales. On the top floor of Sir Julian Hodge’s Cardiff skyscraper, he was just in time to join the “Usurer of the Valleys” and former Welsh Secretary George Thomas. Thomas was smoking a giant cigar — Hodge puffing on his pipe. Talfan Davies had written some ‘supportive columns’ about the new bank — and there were high hopes for this new powerhouse of the Welsh economy. In his autobiography, At Arm’s Length (Seren, 2008), Talfan Davies admitted: “In the 1970s it appeared a more important victory than it turned out to be.” Talfan Davies went on to become the head of one of the most important cliques in modern Welsh history — and has been featured in a series of Rebecca Television articles (see The Son Of The Man From Uncle, In The Name of The Father? and The Great Welsh Water Robbery).   Photo: Seren    

♦♦♦

CHEQUE MATES: THE SELLING OF THE COMMERCIAL BANK OF WALES
Rebecca, Spring 1977

♦♦♦

FOR GEORGE THOMAS  ‘the biggest event for Wales in my lifetime’ was the launching of the Commercial Bank of Wales in February 1971.

At the time Thomas was Shadow Secretary of State for Wales in the Labour opposition and had been an MP for 20 years with five of them spent in Harold Wilson’s cabinet as Welsh secretary.

In his lifetime he had seen many changes in Wales — the nationalisation of the coal and steel industries, the introduction of the National Health Service, comprehensive education and even the Labour victory in the 1964 general election.

All were passed over.

And if the establishment of the bank was the ‘biggest event’ there was no doubt in his mind about the greatest Welshman — Julian Hodge, the Welsh merchant banker knighted the year before by Wilson’s government, and the man behind the bank.

“I believe,” said Thomas, “Sir Julian has done more for Wales than David Lloyd George and all of us politicians together.”

“I see this as an act of faith in the future of Wales. No one can measure what this bank could mean for us in the years ahead.”

No other comment by a Labour politician more accurately captures the political bankruptcy of the Labour party in its support for big business at the expense of ordinary people.

Julian Hodge was equally ecstatic but with good reason:

“I believe this is the first time for many years that a company with the word ‘bank’ in its title has been incorporated in the United Kingdom”.

It was no easy task — he had to overcome the resistance of Civil Service and Bank of England mandarins and beat off an attempt by the Liberals to set up a genuine Bank of Wales.

When the board of directors for the Commercial Bank of Wales — including George Thomas and James Callaghan — was announced in May 1972, Hodge admitted it was ‘like a dream come true’.

This article tells part of the incredible story of how two Labour Cabinet ministers helped the Welsh merchant banker to overcome all obstacles and make that dream come true.

♦♦♦

IN JUNE 1968 the Secretary of State for Wales bumped into the London financier John Ellis at a garden party held in the grounds of Buckingham Palace.

Ellis, chairman of a sizeable finance house in the City of London, was the prospective Liberal candidate for James Callaghan’s Cardiff South East constituency.

In the conversation that followed Ellis told George Thomas that there was a need for a Bank of Wales.

JULES ET JIM 2 1

GEORGE THOMAS fawned on Julian Hodge. The photograph shows Thomas presenting the merchant banker with a gold watch to celebrate his knighthood in 1970. Thomas turned a blind eye to the misery caused by the accountant-turned-moneylender in the 1960s and 1970s. Hodge made millions out of a ruthless second mortgage operation, some of it involving a fraudulent pyramid-selling scheme. The number of victims who lost their homes as a result of the scandal is not known — a Rebecca investigation in 1977 estimated it could have been as high as 5,000 …

Wales had no independent banks — unlike Scotland which boasted five — with the result that all financial decisions affecting Wales were taken in London.

More important, a Bank of Wales could organise a system where the ‘special deposits’ demanded by the Bank of England as a means of controlling the economy could be reduced.

At the time the five main clearing banks in England and Wales had to deposit 2 per cent of all the money they held with the Bank of England.

In Scotland the rate was only 1 per cent — if the figure had been the same for Wales then the clearing banks in Wales would have had an extra £25–30 million to spend.

Thomas was impressed by Ellis’ ideas and agreed to meet him in Cardiff to discuss his proposals in greater detail.

The meeting took place over lunch at the Queens Hotel in Cardiff’s St Mary Street on Saturday, 7 September 1968.

During the meal Ellis stressed that the bank could be opened at the same time as the planned investiture of the Prince of Wales in 1969 — with the heir to the throne becoming the first account holder.

Although it was never stated, there would be considerable prestige for George Thomas as the Secretary of State who acted as political midwife to the new bank.

So enthusiastic was Thomas — he went so far as to ask the banker to prepare a detailed memorandum on his scheme — that Ellis thought the idea well and truly sold.

It was not until the meal was over and the two men standing on the pavement outside the hotel that the conversation took an unexpected turn.

Ellis remembers the moment vividly because, looking back, it was in those seconds that the Liberal idea for a Bank of Wales died.

Thomas said — “what about Julian Hodge?”

He swept his arm along the frontage of the massive James Howell department store and added, “he owns all of this you know”.

A surprised Ellis replied that Hodge was welcome as a shareholder and director but the Bank of Wales would have nothing to do with either second mortgages or hire purchase agreements on second hand cars.

Before taking his leave, Thomas asked Ellis to send a copy of his memorandum to Julian Hodge.

He then promised to return and make a statement to waiting reporters.

An hour or an hour or so later, he rang Ellis at the hotel to say that he could not make a statement on the Bank of Wales at that time.

And that was the last Ellis was ever to hear from George Thomas — the Secretary of State never acknowledged the memorandum Ellis sent him (ironically enough, Hodge did) let alone reply to it.

♦♦♦

ELLIS PLOUGHED on nevertheless.

On 26 November 1968 he met the Chief Cashier of the Bank of England, Jasper Hollom, to discuss his proposals.

Hollom — now Sir Jasper and a deputy governor — was sympathetic and agreed that it was unfair that Wales should suffer the same rate of ‘special deposits’ as England.

Despite this, it soon became obvious to those involved in the Ellis scheme that they had come up against an official brick wall.

The campaign came to an end on 20 December 1968 when the Board of Trade refused permission for the bank on the grounds that it was not owned by an existing bank or a company with a strong financial position.

In fact Ellis had plenty of banking support — what was then the National Provincial Bank (now part of National Westminster) was interested as were the powerful merchant bankers N. M. Rothchild and Sons.

But the Board of Trade decision was a clear sign that a Bank of Wales along the lines suggested by Ellis and the Liberals would not be tolerated.

And, as they would settle for nothing less, they excepted that they had been beaten.

♦♦♦

WHILE THE Liberal campaign for a Bank of Wales was grinding to a halt, Julian Hodge was quietly preparing the ground for what was to become the Commercial Bank of Wales.

Part of the groundwork was to shut out the possibility of a Liberal-inspired Bank of Wales.

In these preparations George Thomas, then Secretary of State for Wales, played an important part.

RHUDDLAN PENNY

HODGE CHOSE a 12th century Welsh penny as the symbol of the Bank of Wales. In February 1972 he proclaimed it would “be an independent bank with no company or group of companies holding more than 10 per cent of the shares.” By October the same year, the Hodge Group held 16 per cent and the First National Bank of Chicago 20 per cent …

It was he who set up the Welsh Council in 1968 and appointed Julian Hodge as one of its 14 members.

The first task of the Council, decided at its second meeting in June 1968, was to set up a Finance Panel “to enquire into the availability of public and private capital in Wales for development purposes and to look at means of improving the flow if difficulties were found to exist.”

When George Thomas met Ellis at Buckingham Palace, and again in Cardiff, he made no mention of the Finance Panel deliberations that were to lead to the Commercial Bank of Wales.

The Ellis campaign certainly worried Hodge — it was a public campaign by a political party (a Bank of Wales was proposed in the 1970 Liberal manifesto) while Hodge’s strategy was to persuade a small group of key people that his bank was a sound idea.

When the details of Ellis’ memorandum were released in October 1968 Hodge was forced into the open.

The proposals in the Ellis document, he commented, were not realistic.

“The setting up of a national Bank for Wales is an extremely complicated business, requiring a great deal of research.”

He added — “this work is now being carried out by the Finance Panel of the Welsh Council”.

When Ellis was seeking Board of Trade approval for the Liberal Bank of Wales, the Western Mail noted (22 October 1968) — “a projected investment bank is also being considered by the finance committee of the Welsh Council, who will be reporting soon to the Secretary of State for Wales”.

By the time the Finance Panel report presented its report to the full Welsh Council meeting at Llandudno on 21 April 1969, its purpose was revealed to be little more than a thinly disguised attempt to justify a Hodge-controlled Bank of Wales.

The report was not finally published until 7 October 1969.

Under the title The Availability of Capital for Small Firms in Wales, it stated “that a financial institution with a commitment to Wales … is urgently required”.

It recommended “that, if private sources should put up viable proposals for the registration of a bank or a similar institution, the authorities concerned should pay full regard to the analysis and recommendations contained in this paper “.

At Llandudno the Welsh Council, with just one dissenting vote, accepted the report — handing George Thomas a blank cheque to give the political go-ahead for a Bank of Wales.

On the very same day Hodge admitted that “some months ago, preliminary steps were taken through our solicitors towards registering a company with a proposed initial capital of £5 million to be called the Bank of Wales”.

What could be more blatant?

And Rebecca can now reveal that the published report was completely different to the one presented to the Welsh Council at Llandudno in April 1969.

The earlier version was far more pointed — its title was The Case for an Indigenous Investment Bank in Wales — and it was never published.

This first version ends:

“Finally, the Council are of the opinion that if some private source should put up really sound proposals for the registration of a bank or similar institution then the authorities concerned should, when considering the application, have full and sympathetic regard to the views of the Council as to the benefits which would accrue to Wales from a firmly-based and financially viable institution of this sort.”

The published report says sources, the earlier unpublished version mentions a single source and there can be no doubt to what it was referring — Julian Hodge’s plans for a Commercial Bank of Wales.

♦♦♦

THE FINANCE Panel report was one of the meanest and most poorly argued documents ever to come out of a Welsh Office sponsored body.

After ten months of work on what Hodge himself described as ‘an extremely complicated business, requiring a great deal of research’, the Panel produced a report exactly eight pages long.

There were just 31 paragraphs — four dealt with other countries and a further nine were taken up by a minority report that came up against the whole idea of a Bank of Wales.

Most of the evidence was oral and there were only five witnesses.

RHUDDLAN PENNY

WHEN REBECCA asked the Welsh Office for a copy of the Welsh Council’s Finance Panel report, it sent — by accident — an earlier draft which talked of a single source for a possible bank. When the report was finally published, the word had changed to “sources”…

With so few ‘experts’ giving evidence, it must have been deeply embarrassing to the panel that two of them felt there was no need for a bank.

The local director of one of the clearing banks ‘stated that he knew of no case in Wales when money had been refused for industrial development’.

The general manager of the government-backed Industrial and Commercial Finance Corporation ‘suggested that the problem was not so much a shortage of finance in Wales as a relative lack of demand’.

Although the Confederation of British Industry in Wales and the Development Corporation for Wales were more enthusiastic, they could provide little in the way of hard evidence.

In the words of the report — “their views were that, whether or not a general flow of finance appeared adequate, there were known to be a certain number of cases where firms have been unable to raise finance without a great deal of difficulty, despite the fact that their subsequent history has shown them to be successful”.

No names, no evidence — and the companies mentioned did get their money.

Indeed, and ironically, the only ‘concrete’ evidence was to come from ‘a well-known merchant banker’ — none other than Julian Hodge, a member of the Panel.

Hodge “supplied confidential evidence of a number of cases where firms, unable to raise credit from normal sources, had approached his firm and had thereby been enabled to show a successful subsequent growth record, even though his firm, as a merchant bank, concerned largely largely with short-term bridging finance, was not so ideally suited to deal with, and further develop, this kind of business as would be an investment bank designed purposely to meet such a demand “.

Thus it was Hodge’s confidential — and therefore secret — evidence that formed the basis of the Finance Panel recommendation that a (Hodge-controlled) Bank of Wales should be established.

Only one member of the panel did not swallow this rubbish.

In his minority report, the district secretary of the APEX trade union, Graham Saunders, wrote:

“in my opinion, insufficient evidence was presented to the Finance Panel of the Welsh Council, demonstrating that there is a real shortage of Risk Capital in Wales and, therefore, the conclusions of the Welsh Council in my view are irrelevant “.

He suggested that, instead of relying on evidence presented by one of its own members, the Finance Panel investigate the lack of demand for capital and look for ways to increase it.

But the Finance Panel was clearly not interested in considering such complex questions questions — its report didn’t examine the impact of the regional aid policy or the ‘special deposits’ that were one of the central features features of the Ellis memorandum — and concentrated on giving Julian Hodge exactly what he wanted.

♦♦♦

BUT THIS is only part of the selling of the Commercial bank of Wales.

The most important gaps being the parts played at Board of Trade, Bank of England and Cabinets levels by George Thomas and James Callaghan.

JULES ET JIM 2

JAMES CALLAGHAN’S friendship with Julian Hodge — the “Usurer of the Valleys” as Private Eye called him — was long-standing. Hodge supported Callaghan’s election campaigns and often gave work to his constituency agent Jack, later Lord, Brooks. After he resigned as Chancellor in 1967, Callaghan attended the annual conference of the International monetary Fund as the guest of Julian Hodge …

There are clues however.

On 3 March 1971, for example, the Western Mail gossip column carried this intriguing item on the chairmanship of the bank:

“I am reliably informed that the shortlist has been narrowed down to two eminent candidates — former Chancellor of the Exchequer, Mr Leonard James Callaghan and William David Ormsby-Gore, Fifth Baron Harlech and chairman of Harlech Television.”

Another clue to the role of Callahan came with the Stonehouse row in the House of Commons in April 1976.

Stonehouse, the runaway Labour MP now gaoled, attacked the relationship between Hodge and Callaghan.

Stonehouse told the House that the head of the Civil Service (Sir William Armstrong now chairman of the Midland Bank) “named Sir Julian Hodge as a person who couldn’t be appointed to the Bank of England Court — although he was nominated by the then Chancellor of the Exchequer the present Prime Minister (Callaghan) — because he was not a worthy person for the appointment”.

When Hodge was asked by a reporter about this remark, he flippantly replied “its complete news to me. I think that was a figment of Mr Stonehouse’s imagination. I have never heard of it before but it is very interesting”.

It is surprising that Sir William Armstrong has never publicly denied opposing Hodge as a member of the Bank of England Court.

And Hodge’s reply must also be set against a revealing profile of him which appeared in May 1966.

Written by the then Conservative MP and South Wales industrialist Sir David Llewellyn, and published in the Voice Of Welsh Industry, the two-page article explained that Julian Hodge had ‘arrived’ as a member of the establishment.

“So much so,” continued Llewellyn, “that recently his name is been canvassed as a new Director of the Bank of England. Since he enjoys the Chancellor’s confidence (Mrs Hodge was the guest of the annual dinner of Cardiff South East Constituency Labour Party), the chances are this is an honour deferred.”

RHUDDLAN PENNY

IN APRIL 1969 Hodge said that “the more successful it is making profits, the more funds it will bring to bear on the problems of developing Welsh industry.” A week later, he’d changed his tune: “It must be recognised that in the development business we cannot always behave like hard-fisted moneylenders.”

Nor was this mere gossip or idle speculation — Llewellyn was not only a director of four Hodge companies but also a close friend of the family and there can be little doubt that his words echoed Hodge’s personal feelings on the subject.

The reason why these clues are important is a simple one.

Although the certificate of incorporation for the Commercial Bank of Wales was issued during the Heath administration, the political go-ahead may have come much earlier .

There are many people — John Ellis among them — who believe the green light was given in the dying weeks of the 1964-70 Wilson government.

So why did George Thomas and James Callaghan favour the Commercial Bank of Wales?

All the promises made for it soon evaporated and, unlike the people of Wales, the two politicians must surely have known this would happen — and that the Ellis bank would have served Wales better.

In March 1973 Hodge explained that Thomas and Callaghan joined the board of directors because of their dedication to the Welsh economy.

He added:

“I shudder to think what some of the areas in Wales would be like today without their masterly help in the past.”

You only have to walk the single mile from the Commercial Bank of Wales headquarters in St Mary Street to the decay of Riverside in George Thomas’ constituency or the squalor of James Callaghan’s Roath to understand the bitter betrayal that the selling of the Commercial Bank of Wales represents.

♦♦♦

IT WAS not just George Thomas and James Callaghan who backed the Commercial Bank of Wales — the Labour Party in Wales also gave it support.

Besides Thomas and Callaghan, each with £5,000 worth of shares, other Labour MPs also bought shares in the bank.

The present Secretary of State John Morris had £1,300 worth, Leo Abse (£4,000), Donald Coleman (£500), Ifor Davies (£100), Fred Evans (£1,000), Cledwyn Hughes (£1,000) and Alec Jones (£500),

Many Labour councillors — such as formal Cardiff City Council planning chairman David Seligman with £100 — also supported the enterprise.

RHUDDLAN PENNY

“JIM CALLAGHAN will not, according to Julian Hodge, receive ‘any remuneration as a director’ — any more than will George Thomas,” reported the New Statesman in August 1972. The Western Mail noted, in March 1974, that “Cardiff MPs Mr James Callaghan and Mr George Thomas have resigned as £1,000-a-year directors of the Commercial Bank of Wales because they have been appointed to posts in the government.”

“The general feeling of the time,” according to Emrys Jones, secretary of the Welsh Labour Party, “was that a bank of this nature established in Wales could be of value in aiding industry and helping to attract new industry into Wales.”

What did these Labour politicians get for their support — besides dividends — and, more important, what benefits came to the people of Wales?

In April 1976, when Callaghan became Prime Minister and there was criticism of his links with the Welsh merchant banker, Hodge strongly defended the bank’s record.

“Jim believed in the importance of a regional bank for Wales and events have shown that belief to have been abundantly justified because the Bank of Wales in the past two years has been instrumental in providing thousands of jobs for the indigenous people that they would not otherwise have got.”

“It has been a tremendous help to Welsh industry in the past two years. Thousands of jobs have been saved and I can prove it ”

As usual no one challenged the ‘Welsh wizard’ to prove that ‘thousands of jobs have been saved’ by the bank and that it has succeeded in ‘providing thousands of jobs’.

♦♦♦

THE BANK is not independent — despite an attempt by chief executive Michael Gwyther to prove otherwise.

On October 26 he told the Western Mail — “a surprising number of the public do not realise that the Commercial Bank of Wales is an independent organisation with 7,000 shareholders”.

Gwyther forgot to mention that in, October 1972, sixteen of these 7,000 owned 57 per cent of the bank with the remaining 6,984 shareholders held less than 40 per cent.

Today, in 1977, two shareholders control 42 per cent of the bank.

Gwyther’s main concern in the Western Mail article was to prove that people were wrong in assuming the Commercial Bank of Wales to be a Hodge bank.

An extensive press and TV advertising campaign is partly designed to emphasise its independent identity.

The most significant of these appeared in the Western Mail in December 1976.

It quoted Charlie Webber, general manager of Avana Bakeries in Cardiff, on the installation of an air conditioning unit in part of the plant.

“It was,” he said, “the Commercial Bank of Wales who gave us the courage to invest at a time when industry was in recession and the food industry particularly badly hit.”

A glowing tribute by any standards — except Rebecca’s.

The ad left out the most significant factor of all — the chairman of the Avana Group and holder of 6.9 per cent of the ordinary shares, is none other than the chairman of the Commercial Bank of Wales, Sir Julian Hodge.

Much more important — just two months before Gwyther stressed the independence of the bank in the Western Mail — Hodge had become its largest shareholder.

In August he quietly bought out the Standard Chartered Banking Group, increasing his family stake in the bank from 6 to 22 per cent …

♦♦♦

SO MUCH for the bank’s independence — now for its Welshness.

In the same Western Mail article Gwyther added that Hodge “regards it as the bank of the people of Wales, Welsh-based with a Welsh board, having a Welsh outlook and primarily concerned with the Welsh economy “.

The bank of the people of Wales?

Although the bank has bilingual cheque-books and uses the 12th century ‘Rhuddlan penny’  from North Wales as its symbol, one in every five shares is owned by a subsidiary of the First National Bank of Chicago, the ninth largest US bank with deposits of £19 billion.

The ‘Welsh board’ contains two American nominees of the First National Bank.

“Primarily concerned with the Welsh economy?”

Almost half of the bank’s activity – the so-called ‘instalment credit’ business that includes hire purchase and second mortgages — is of no direct benefit to welsh industry.

In 1975 the bank lent £7.4 million in this way and almost 80 per cent went to clients outside Wales.

The bank lent exactly the same amount to industry in the form of loans and overdrafts — yet nearly a third went to companies outside Wales.

Only half of one percent of all requests for finance were successful and the policy of the bank, in the words of the Western Mail, is one of ‘spreading investment as widely and thinly as possible’.

The money that is lent Welsh industry does not come cheaply — in January the banks base rate was 15 per cent compared to the Co-op’s 14 per cent, with overdrafts often a great deal more expensive.

The performance of the Commercial bank of Wales is a far cry from the extravagant claims made for it back in the early seventies.

Emrys Jones, Welsh Labour Party secretary, admits “it doesn’t seem to have lived up to its promises”.

The truth is that the Commercial Bank of Wales is not, and was never intended to be, a genuine Bank of Wales.

Unlike the Liberal proposals — which included a Board of Trustees ‘drawn from the trade unions, Welsh Farmers Union, industry and the universities’ to make sure ‘the Bank of Wales will belong to the people of Wales’ —  the prime concern of the Commercial Bank of Wales is to make profits for Sir Julian Hodge.

And his friends …

 ♦♦♦

COMING UP
THE INVESTIGATION into the closed world of BBC Wales continues with a detailed analysis of the crisis that engulfed the Corporation between 2008 and 2011. The article — The Sister Of The Woman From Auntie — examines the relationship between former Director Menna Richards and her sister. The current regime — headed by Rhodri Talfan Davies, a family friend of Menna Richards — has taken the unprecedented step of announcing it will no longer answer questions from Rebecca Television 

♦♦♦

DONATIONS  If you would like to support the work of Rebecca Television, you can do so by clicking on the DONATE button.

Donate Button with Credit Cards

CORRECTIONS  Please let us know if there are any mistakes in this article — they’ll be corrected as soon as possible.

RIGHT OF REPLY  If you have been mentioned in this article and disagree with it, please let us have your comments. Provided your response is not defamatory we’ll add it to the article.


GORDON ANGLESEA CHARGED

July 11, 2015

rebecca_logo_04

FORMER NORTH WALES POLICE superintendent Gordon Anglesea has been charged with historic child abuse offences.

On Thursday, a spokesman for Operation Pallial, the National Crime Agency investigation into historical child abuse in North Wales, said:

“A 78-year-old man from North Wales has been charged with five offences of sexual assault and two offences of buggery … “

“Gordon Anglesea, from Old Colwyn, is alleged to have abused three boys between 1979 and 1987, when they were between 11 and 16 years old.”

“He was arrested by officers from Operation Pallial in December 2013.”

“He has been released on conditional bail and is due to appear at Mold Magistrates Court on the 6th August 2015.”

GORDON ANGLESEA The former North Wales Police superintendent has had his bailed extended until September.  Picture: © Daily Mirror

GORDON ANGLESEA
THE RETIRED North Wales Police superintendent Gordon Anglesea has been charged.
Picture: © Daily Mirror

♦♦♦

COMING UP
THE INVESTIGATION into the closed world of BBC Wales continues with a detailed analysis of the crisis that engulfed the Corporation between 2008 and 2011. The article — The Sister Of The Woman From Auntie — examines the relationship between former Director Menna Richards and her sister. The current regime — headed by Rhodri Talfan Davies, a family friend of Menna Richards — has taken the unprecedented step of announcing it will no longer answer questions from Rebecca Television 

♦♦♦

DONATIONS  If you would like to support the work of Rebecca Television, you can do so by clicking on the DONATE button.

Donate Button with Credit Cards

CORRECTIONS  Please let us know if there are any mistakes in this article — they’ll be corrected as soon as possible.

RIGHT OF REPLY  If you have been mentioned in this article and disagree with it, please let us have your comments. Provided your response is not defamatory we’ll add it to the article.


THE GREAT WELSH WATER CONSPIRACY

July 2, 2015

rebecca_logo_04

TOMORROW the annual general meeting of Welsh Water will endorse a five year plan that is likely to see over a million customers overcharged.

Bills could be more than £50 million higher than necessary in each of the next five years.

The reason is the company may decide to spend more on capital expenditure than it has agreed with the regulator Ofwat.

Rebecca Television has discovered that Ofwat has already imposed an £85 million penalty on the company for over-spending on capital investment in the previous five years.

The decision went completely unnoticed in Wales.

When it was founded, Welsh Water promised it would be run “solely” for the benefit of customers.

It’s not true.

The real beneficiaries of Welsh Water are the highly-paid directors and the holders of the company’s colossal debts.

These debts — in the form of Eurobonds — are among the safest and most profitable investments in the world.

Additional capital spending makes them even more attractive to investors.

Interest on the bonds is paid via a complex mechanism which includes a subsidiary company in the tax haven of the Cayman Islands.

Welsh Water has been unable to provide convincing evidence this procedure isn’t being used for tax avoidance.

Rebecca Television will be writing to First Minister Carwyn Jones asking him to impose a “windfall tax” on the company.

Since it took over the business, Welsh Water has taken more than £8 billion from customers — and given them a paltry cash dividend of less than 2 per cent …

♦♦♦

LAST YEAR’S Rebecca Television article The Great Welsh Water Robbery sent shock waves through the board of Glas Cymru.

For the first time in its 14 year history the company — which owns Welsh Water — faced a sustained critique of its stewardship of the business.

The main thrust of the investigation was that  customers have been cheated of a quarter of a billion pounds in reduced bills.

CARWYN JONES THE FIRST Minister was the only party leader to reply to our email. He said: “I’m sure Welsh Water will have taken note of the issues you raise in your article on Rebecca Television. Photo: Welh Government

CARWYN JONES
THE FIRST Minister was the only party leader to reply to our email. He said: “I’m sure Welsh Water will have taken note of the issues you raise in your article on Rebecca Television.”
Photo: Welsh Government

At the same time, the board of directors were rewarding themselves handsomely — taking double the amounts given to their counterparts in the publicly-owned Scottish Water.

Mainstream Welsh media ignored the article, most notably BBC Wales.

Current Director Rhodri Talfan Davies has strong family ties with Welsh Water’s senior independent board member Menna Richards.

She joined the board of the not-for-profit utility just as her friend and mentor Geraint Talfan Davies was leaving.

Geraint is, of course, the father of Rhodri.

Political parties at the Welsh Assembly were also unmoved.

Plaid Cymru, the Conservatives and the Liberal Democrats didn’t answer our email.

Only First Minister Carwyn Jones took the trouble to respond:

“I am sure that Welsh Water will have taken note of the issues you raise in your article on Rebecca Television,” he said.

He added:

“Welsh Water has recently reiterated to Welsh Government their commitment to using any financial gains in the next investment period 2015-2020, which are estimated to be around £200 million, to benefit customers, either through dividends or accelerated investment.”

It turns out the company had already decided to abandon the customer dividend for this year — and may continue the policy throughout the five year period. 

♦♦♦

THE BOARD of Glas Cymru hit back at Rebecca Television

At last year’s annual general meeting (AGM) in Swansea in July, chairman Bob Ayling spent five minutes addressing the article’s criticisms.

The article was also discussed at an earlier board meeting.

Ayling told the meeting that the board rejected our analysis.

METEORIC MENNA THE SENIOR £68,700 a year part-time non-executive director of Glas Cymru is former BBC Director Menna Richards. She followed another former BBC Director Geraint Talfan Davies — her mentor and friend — onto the board of the water company. While at the BBC she helped the son of Geraint — Rhodri — up the Corporation ladder so quickly that he was able to step into her shoes. Photo: PA

METEORIC MENNA
THE SENIOR non-executive director of Glas Cymru is a former BBC Director Menna Richards. The £68,700 a year part-timer followed another former BBC Director Geraint Talfan Davies — her mentor and friend — onto the board of the water company. While at the BBC she helped the son of Geraint — Rhodri — up the Corporation ladder so quickly he was able to step into her shoes …
Photo: PA

He defended the company’s decision to spend more on capital expenditure rather than return profits to consumers in the form of “customer dividends”.

The recession had begun, he said, and the board was happy with its decision not to resume “customer dividends” — it gave the company more room for manoeuvre.

This was generally accepted by members.

But there were rumblings of discontent about the pay of board members.

This is running at more than double the rate enjoyed by their opposite numbers at publicly-owned Scottish Water.

A member who was present — he’s asked us not to reveal his name — told us that on the issue of executive pay, Ayling:

“ … was on more shaky ground and didn’t sound convincing.”

When Rebecca Television asked the company to confirm this account of what happened at the AGM, it said:

“The event was not recorded, and as the meeting was private it would therefore be inappropriate to share any notes of the meeting.”

We replied by saying Glas Cymru was revealing less information than a company with shareholders.

In the early 1990s Rebecca Television bought a handful of shares in what was then a privately-owned Welsh Water as part of the research for the Channel 4 Dispatches programme “Privateers on Parade’.

Any shareholder can attend AGMs.

The Dispatches programme included the fact that the chairman of Welsh Water at that time — John Elfed Jones — had become a millionaire as a result of privatisation.

The programme played a small part in Labour’s massive £5.2 billion windfall tax on the privatised utilities in 1997.

Welsh Water simply repeated:

“… these are private meetings” :

JONES THE SALARY CHRIS JONES is one of the masterminds of Glas Cymru — and he’s been well paid for his trouble. In 2013-2014 he was paid a total. Photo: Glas Cymru

JONES THE SALARY
CHRIS JONES is one of the masterminds of Glas Cymru — and he’s been well paid for his trouble. He’s picked up nearly £4 million in salary and bonuses since the company was formed in 2001.
Photo: Glas Cymru

But whatever concerns some members felt, there were no moves to cut executive pay or force the board to resume paying dividends to customers …

♦♦♦

AT THE time of the AGM last year, Welsh Water and the industry regulator Ofwat were negotiating bills for the next five years.

For the period 2015-2020 Welsh Water submitted a business plan.

It asked Ofwat to allow it to charge bills which would, by 2020, be 4 per cent below inflation.

As part of that exercise, Ofwat looked at the company’s performance over the previous five years.

If found that that company had spent an additional £234 million on capital expenditure — improving its infrastructure.

This sum is close to the £250 million Rebecca Television claims should have gone to consumers in the form of  “customer dividends”.

Ofwat was not impressed — and decided to reduce the amount the company could take from customers over the next five years.

As a result, it reduced the amount Welsh Water could charge customers over the five year period by £85 million.

The company denies this deduction amounts to a penalty.

“Customer bills are lower as a result of this adjustment,” it admitted but added:

“it is a ‘reconciling adjustment’ and not a ‘penalty’.

“This is one of many adjustments to reflect that outcomes were different to plans.”

“All companies have reconciling adjustments and this happens at every Ofwat review.”

An Ofwat spokesman told us:

“It might not be a penalty in the strict legal sense of the word, but it certainly penalises the company …”

“The mechanism was there to act as an incentive to make accurate investment forecasts and for companies to invest efficiently as set against our assumptions.”

In the end, the result of Ofwat’s decision — whether “penalty” or “adjustment” — is that customers will get a “customer dividend” of £85 million over five years.

Instead of the minus 4 per cent it had been asking for in the price review, Welsh Water were ordered or reduce it by another one per cent.

By 2020 bills will be five per cent lower.

At an average of £416 a year, they will still be among the highest of the ten companies serving England and Wales — only South West Water and Wessex Water are higher.

And it will still be a long way off the average bill of £376.

If Welsh Water did what Rebecca Television is calling for —giving a decent “customer dividend” — bills would be much closer to the average …

♦♦♦

THIS IS not the first time Ofwat has stepped in to try and protect Welsh Water customers

In 2013 Ofwat realised its 2010-2015 price review had been too generous to the water industry in England and Wales.

In March of that year Ofwat chairman Jonson Cox — a former chief executive of Anglian Water — gave a lecture.

“Customers, particularly vulnerable customers, are having a tough time,” he said.

He noted that, across the industry, bills had risen by 7 per cent in real terms since 2005.

But, he added:

” … over the same period there have been reductions in some household incomes of as much 5 per cent.”

He noted that the water industry had enjoyed higher profits because of lower interest rates and higher inflation.

“Given that the licence relates to a long-term monopoly public service, I would have hoped that companies would have shared gains that derive from external factors with their customers …”

In October 2013 he wrote to all water companies.

“As you know,” he wrote:

“having compared the harsh pressure on customers and the generous returns to water company shareholders from macro-economic factors over recent years, I … have been banging the drum about customers and water bills for most of the last year.”

JONSON COX THE CHAIRMAN of Ofwat called on the ten big water and sewerage conpanies in England and Wales to consider giving up all or some of their planned price rise in 2014-2015. Welsh Water was one of five companies which refused … Photo: Ofwat

JONSON COX
THE CHAIRMAN of Ofwat called on the ten big water and sewerage conpanies in England and Wales to consider giving up all or some of their planned price rise in 2014-2015. Welsh Water was one of five companies which declined to do so …
Photo: Ofwat

He asked them to consider forgoing all or part of the price increase for the year 2014-2015.

Five of the ten companies did so — ten million households got lower bills as a result.

Welsh Water customers were not among them.

We asked the company for an explanation.

A spokesman said:

“To say that Welsh Water did not do this is incorrect.”

“Between 2010-2015, we were already delivering below inflation bill increases for customers thanks to our business model.”

But it was that very business model that Jonson Cox was complaining about.

He wanted them to give customers an additional reduction in 2014-2015.

We went back to Welsh Water, pointing out their reply was “circular and nonsensical.”

The company did not answer the point.

Welsh Water is also being economical with the truth in its statement about “delivering below inflation bill increases for customers thanks to our business model.”

Ofwat insisted its tough regulation was the main driver in forcing down prices at Welsh Water.

A spokesman said:

“Back in 2009, the company’s final business plan proposed that bills remain in line with inflation …

“Ofwat’s challenge saw bills reduced by 7 per cent in real terms.”

♦♦♦

WELSH WATER makes great play of the work it does to help poor and vulnerable customers.

One “member” told us the company bombards him with large amounts of material about the help it gives poor and vulnerable customers.

In its 2014 accounts the company said:

“Around 60,000 are currently receiving help to pay their bills through our social tariff …”

When we asked for financial details, the company told us:

“ … 63,000 (Winter 2014) customers benefit from a range of our social tariffs, compared to only 70,000 (April 2014) for all of the English water and sewerage companies combined.”

The reply included no figures.

We did some research and found some statistics.

We went back to Welsh Water — and this time they provided figures.

It turns out that the actual number of customers receiving financial benefit is just under 47,000.

Of these 12,000 were people in receipt of benefits: they all got the same amount — a flat £25.

The remainder — over 34,000 customers — received an average payment of £188.

REWARDS GALORE NIGEL ANNETT is another of the key architects of Glas Cymru. The company's so-called

REWARDS GALORE
NIGEL ANNETT is another of the key architects of Glas Cymru. The company’s so-called “not-for-profit” model didn’t stop him getting a salary worthy of a major Footsie 250 business — in 2013 it was £538,000. His opposite number at Scottish Water — owned by the government — was happy with less than half that amount. When Annett stepped down as chief executive he was also awarded an CBE …
Photo: PA

The total cost was just under £6.8 million.

There is no doubt that Welsh Water out-performs its rivals on this score.

But, since they all provide assistance at some level, we think the extra amount Welsh Water give is around the £5 million mark.

This is undoubtedly a benefit of the Glas Cymru structure.

But the programme doesn’t seem to be having any impact on bad debts.

In 2014 the bad debt provision — from those customers  “… who choose not to pay or who are not able to pay …” — was £28 million.

That’s £1 million up on 2013.

Only a third of this money will ever be collected.

So the company still seems to have a long way to go before it meets the social needs of its poorest customers.

That’s why the “customer dividend” is so important.

At £50 million, it’s more than ten times bigger than the company’s “social dividend”.

♦♦♦

YESTERDAY WE wrote to Welsh Water telling them the thrust of this article and inviting a response.

We said our investigation suggests “the company operates for the benefit of bond-holders rather than customers.”

We said that if the company goes ahead and spends more in the next five years on additional capital expenditure than has been agreed with the regulator Ofwat:

“ … you will be overcharging customers by at least £250m.”

The company’s “response” was a long statement.

It does not answer the points we made and it is not included here — it’s attached, in full, as a note at the end of the article.

The result of spending more on capital expenditure is that the company’s “gearing” — the ratio of debt to the company’s overall value — falls. 

This improves the credit rating of the £2 billion worth of bonds the company has issued. 

In the early 2000s the bonus paid to directors like current chief executive Chris Jones was partly based on these credit ratings.

♦♦♦

SEVERAL TIMES this year we’ve asked Welsh Water for a list of the companies and institutions which invested  £2 billion in the company’s bonds.

Each time, the company has declined to give it.

UGLAND HOUSE THE CAYMAN Islands headquarters of solicitors Maples and Calder was home to nearly 19,000 companies in 2008 — one of them is the financing subsidiary of Welsh Water. The Carribean island is a tax haven — there's no income tax and no Corporation Tax. Photo: Maples and Calder

UGLAND HOUSE
THE CAYMAN Islands headquarters of solicitors Maples and Calder was home to nearly 19,000 companies in 2008 — one of them the financing subsidiary of Welsh Water. The Carribean island is a tax haven — there’s no income tax and no Corporation Tax.
Photo: Maples and Calder

The bonds are issued using a complex mechanism involving a subsidiary company in the tax haven of the Cayman Islands.

Because they are also listed on the Luxembourg stock exchange, they are known as Eurobonds.

The principal advantage is that Welsh Water does not have to impose a “with-holding tax” of 20 per cent on the interest.

This “with-holding tax” is a UK measure designed to prevent tax avoidance by foreign companies lending money to British businesses.

This is why we wanted to know if any of Welsh Water’s £2 billion worth of bonds were held by foreign companies.

If so, they can legally avoid paying UK tax.

Welsh Water told us, variously, that their bonds are held “primarily”, “predominantly” and “principally” by UK institutions.

These pay tax in the normal way.

But the company would not supply the full list.

Welsh Water deny that their bond operation permits tax avoidance:

“ … we have not undertaken any ‘tax avoidance’ activity.”

The company added:

“Note that the Cayman financing company was set up in advance of the purchase of Welsh Water by Glas Cymru.”

“ … Glas bought both Welsh Water and the financing company at the same time in 2001.”

“Our understanding of the commercial rationale of the Cayman financing company was that it was more cost efficient to set up the financing company in the Cayman Islands in 2001, as opposed to the higher costs of setting up a financing company in the UK.”

The first part of this statement is nonsense.

The Cayman financing company was set up a team which included the current chief executive Chris Jones.

The company’s Cayman Islands subsidiary is based at the offices of the law firm Maples and Calder.

It’s called Ugland House.

The building has been singled out by President Obama as the base of many US companies which use it to avoid tax.

PRESIDENT OBAMA CONDEMNED US companies who used the Cayman Islands as a way of avoiding American taxation. Photo: White House

PRESIDENT OBAMA
CONDEMNED AMERICAN companies who used the Cayman Islands tax haven as a way of avoiding US  tax.
Photo: White House

In 2008 Obama — then a Senator — said:

“You’ve got a building in the Cayman Islands that supposedly houses 12,000 corporations”.

“That’s either the biggest building or the biggest tax scam on record.”

Yesterday we emailed Welsh Water to say

“the company has not been able to satisfy Rebecca Television that its bond operation — using Cayman Islands and Luxembourg — is not used by some foreign entities to avoid UK taxation. “

The company did not answer the point.

Our investigation into this issue continues …

♦♦♦

IT’S CLEAR Welsh Water has abandoned the principle of a “customer dividend” — at least for this year.

There is no indication it will resume the dividend during the next four years.

GORDON

GORDON “WINDFALL TAX” BROWN
IN 1997 Gordon Brown was welcomed to the Treasury by Permanent Secretary Terry Burns. Brown went on to impose a massive “windfall tax” on bloated privatised utilities like Welsh Water. ironically, three years later the ennobled Burns became the first chairman of Glas Cymru, the company which bought Welsh Water in 2001. Now Rebecca Television is calling for a second “windfall tax” on the company …
Photo: PA

Tomorrow’s AGM in Llandrindod Wells has the chance to persuade the board to change its mind.

If it doesn’t Rebecca Television believes the Welsh Government should consider a windfall tax on the company.

In 1990s the newly-privatised Welsh Water was an obscenely profitable business. 

In 1991, for example, it made a profit of £128 million on a turnover of £287 million.

For every pound it was taking from customers, it was pocketing 45 pence in profit.

Normal business struggle to make ten per cent … 

In 1997 the incoming Labour government hit the company’s owners — Hyder which also owned South Wales Electricity — with a massive £282 million “windfall tax”.

Today’s Glas Cymru is nothing like as excessive as the old privatised Welsh Water.

But consumers are still not getting the financial benefit of the so-called “not-for-profit” model.

We believe the Welsh Government should impose a windfall tax of at least £250 million on the business.

Rebecca Television will be writing to First Minister Carwyn Jones to ask him to consider a proposal to levy a “windfall tax” of £250 million on the company.

♦♦♦

Note

This is the full statement Welsh Water provided yesterday:

“As a company owned on behalf of our customers, our track record shows that 
customers are central to every decision we take and that is they who benefit from our 
unique business model in the industry.  We are committed to providing safe and 
reliable services at the most affordable price. 

“Between 2010-2015 our model has enabled us to return £136 million to customers by 
accelerating investment in our services, reducing bills and helping even more 
customers who genuinely struggle to pay their bills.  We have also already pledged to 
help more than 100,000 of our most disadvantaged customers by 2020.  The average 
household bill will also fall by £21 compared to current prices which means our 
customers will have benefitted from a decade of below-inflation increases by 2020.  

“Customer will continue to benefit from our model and we will continue to reinvest 
and return value to customers – either through a customer dividend or increased 
investment to improve services for customers over the next five years”. 

♦♦♦

DONATIONS
If you would like to support the work of Rebecca Television, you can do so by clicking on the DONATE button.

Donate Button with Credit Cards

CORRECTIONS  Please let us know if there are any mistakes in this article — they’ll be corrected as soon as possible.

RIGHT OF REPLY  If you have been mentioned in this article and disagree with it, please let us have your comments. Provided your response is not defamatory we’ll add it to the article


THE MACUR REVIEW: A LOSS OF CONFIDENCE

March 11, 2015

rebecca_logo_04

11 March 2015

REBECCA TELEVISION has withdrawn from the Macur Review of the 1996-1999 North Wales Child Abuse Tribunal.

In a letter to Home Secretary Theresa May, Editor Paddy French expressed concern at the delay in publishing a report.

It’s more than two years since the Review was set up.

French said: “the passage of time has seriously eroded my confidence in the process.”

Prime Minister David Cameron announced the review in November 2012.

THERESA MAY WHEN THE Home Secretary made a statement in the Commons in November 2012 about the North Wales child abuse scandal, she was asked by Labour MP Paul Flynn to examine claims made by Rebecca Television. She told him the inquiry "will, indeed, be looking at that historical evidence. That is part of the job they will be doing." Photo: PA

THERESA MAY
WHEN THE Home Secretary made a statement in the Commons in November 2012 about the North Wales child abuse scandal, she was asked by Labour MP Paul Flynn to examine claims made by Rebecca Television. She told him the police “will, indeed, be looking at that historical evidence. That is part of the job they will be doing.”
Photo: PA

It followed the BBC Newsnight report which identified Lord McAlpine as a paedophile involved in the North Wales child abuse scandal.

When the allegation was later shown to have been a mistake, the government decided to carry on with the Review.

In November 2012 Justice Secretary Chris Grayling appointed Lady Justice Macur to lead it. 

Today, 26 months later, her report is unfinished and is unlikely to be complete before the election …

♦♦

WHEN JUSTICE Minister Chris Grayling set up the Macur Review, he gave it two tasks.

The first was to look at the “scope” of the North Wales Child Abuse Tribunal, chaired by retired High Court judge Sir Ronald Waterhouse.

The second was to see if “any specific allegations of child abuse falling within the terms of reference were not investigated …”

Lady Macur was to make recommendations if she felt any further action was needed.

Long before the Macur Review, Rebecca Television was arguing — in an investigation called The Case Of The Flawed Tribunal — that the inquiry had not been fit for purpose.

SIR RONALD WATERHOUSE THE RETIRED High Court judge chaired the £14 million Tribunal which held more than 200 days of hearings and heard the testimony of 264. But one important witness was never heard ...

SIR RONALD WATERHOUSE
THE RETIRED High Court judge chaired the £14 million Tribunal which held more than 200 days of hearings and heard the testimony of 264 people. But one important witness was never heard …

One of the key cases that led to that conclusion was the way the Tribunal handled the case of convicted paedophile John Allen.

Allen and his family owned the Bryn Alyn complex of private children’s homes in the Wrexham area.

Between 1974 and 1991 local authorities all over England and Wales paid him more than £30 million to take care of some of their more difficult children.

In February 1995 — a year before the Tribunal was set up — Allen had been gaoled for six years after a jury convicted him of indecently assaulting six boys in his care.

But the Waterhouse Tribunal did not investigate Allen properly.

It prevented a key witness from giving evidence that he had reported serious allegations of sexual abuse against Allen more than a decade before he was brought to book.

Not only did the Tribunal suppress his evidence, it also censored television journalists from reporting what he had to say.

In 1997, while the Tribunal was sitting, officials learned that the broadcaster HTV was preparing a programme about Allen.

The channel’s current affairs programme, Wales This Week, had interviewed John Allen’s number two, Des Frost.

Frost told journalists that in the early 1980s he had gone to the police about allegations that Allen was abusing boys.

This was more than ten years before Allen was finally convicted.

He claimed to have contacted detectives in Cheshire because he was concerned that if he went to the North Wales Police John Allen might get to hear of it.

Frost feared he might lose his job.

DES FROST THE FORMER social worker and lay preacher, John Allen's No 2 in charge of finance, was never called to give evidence to the Tribunal. Frost claimed he reported allegations against Allen many years before the paedophile was brought to book. The failure to test his evidence means the Tribunal's conclusion that "there was no significant omission by the North Wales Police in investigating the complaints of abuse to children in care" is suspect.

DES FROST
THE FORMER social worker and lay preacher — joint second-in-command at Bryn Alyn — was never called to give evidence to the Tribunal. Frost claimed he reported allegations against Allen many years before the paedophile was brought to book. The failure to test his evidence means the Tribunal’s conclusion that “there was no significant omission by the North Wales Police in investigating the complaints of abuse to children in care” is suspect.

When the Tribunal heard that Frost had been interviewed by Wales This Week, officials warned the programme’s lawyer not to reveal any new allegations.

This would be considered contempt of court.

Journalists believed that this was because the Tribunal was planning to call Frost as a witness and hear his testimony.

One of those reporters was Rebecca Television editor Paddy French who was working for the programme as a freelance at the time.

The allegations were removed from the programme.

In the same week that broadcasters were muzzled, North Wales Police took a statement from Frost.

Frost believed they were acting on behalf of the Tribunal — but the Tribunal only employed ex-police officers from other other forces.

Frost was never called to give evidence to the Tribunal.

The Macur Review was asked to see if “any specific allegations of child abuse falling within the terms of reference were not investigated …” .

Clearly, Des Frost’s allegation that he reported child abuse by John Allen in the early 1980s was not investigated by the Tribunal.

The fact that the Tribunal also prevented HTV from broadcasting his allegations deepens suspicion.

JOHN ALLEN THE OWNER of a profitable string of private children's homes in the Wrexham area, Allen is one of the central characters in the North Wales child abuse scandal. He groomed young boys — abusing many — and extended his influence on some of them by providing an "after-care" service in London and Brighton.

JOHN ALLEN
THE OWNER of a profitable string of private children’s homes in the Wrexham area, Allen is one of the central characters in the North Wales child abuse scandal. He groomed young boys — abusing many — and extended his influence with some of them by providing an “after-care” service in London and Brighton.

Was there collusion by the Tribunal, or some of its officials, and North Wales Police to suppress Frost’s testimony to protect the reputation of the force?

♦♦♦

AT THE same time the Macur Review was set up, Home Secretary Theresa May announced a parallel police inquiry.

This became Operation Pallial, carried out by the newly-created National Crime Agency.

Like Macur, Pallial was to carry out an initial assessment, followed by recommendations.

Palliall was asked to “assess any information recently received” about historic child abuse in care and “review the historic police investigations into such matters”.

In stark contrast to the Macur Review, Pallial completed its review in just six months.

In April 2013, it presented its initial report.

It found “no evidence of systemic or institutional misconduct by North Wales Police …”

NORTH WALES POLICE OPERATION PALLIAL cleared the force of any historic misconduct in relation to its investigation of child abuse allegations. But did Operation Pallial examine the circumstances which led to Des Frost being interviewed by its officers in 1997 — the week broadcasters at HTV were being censored by the Tribunal? In 2010 Rebecca Television asked the current chief constable, Mark Polin, this question but he never answered. We also wrote to the officer who carried out the interview. He didn't reply, either. An official complaint against this officer found that the response should come from a senior figure. In the end, there was no explanation from anyone in the force.  Photo; Rebecca Television

NORTH WALES POLICE
OPERATION PALLIAL cleared the force of any historic misconduct in relation to its investigation of child abuse allegations. But did Operation Pallial examine the circumstances which led to Des Frost being interviewed by its officers in 1997 — the week broadcasters at HTV were being censored by the Tribunal? In 2009 Rebecca Television asked the current chief constable, Mark Polin, about why this interview took place and what happened to the officer’s report. He didn’t answer. We also wrote to the officer who took the statement from Frost. He didn’t reply. An official complaint against this officer found he had raised the issue with his superiors  expecting that “ownership to respond … rest with someone higher in the organisation.” No response was ever received … 
Photo: Rebecca Television

But it found “significant evidence of systemic and serious sexual and physical abuse …” and recommended a full-scale criminal investigation.

Since then, Pallial has charged 15 people with child abuse offences while a further 18 remain on bail while investigations continue.

One of those charged was John Allen who stood trial for the second time.

In December 2014 he was gaoled for life after a jury convicted him of abusing 18 boys and one girl, aged between seven and 15.

The offences were committed between in the 1970s and 1980s.

The allegations Des Frost claimed he brought to the attention of the police date from the 1970s …

♦♦♦

THE MACUR Review was also asked to look at the “scope” of the Waterhouse Tribunal.

The Tribunal was established in 1996 by William Hague who was in the Cabinet as Welsh Secretary.

He persuaded John Major to allow him to set up the inquiry, the first ever Tribunal into child abuse.

But there were conditions.

Thatcher did not want the proceedings to spill over into England — she feared it would become an over-arching inquiry into child abuse throughout England and Wales.

(This is what is happening — nearly two decades later — with the current major inquiry headed by New Zealand Judge Lowell Goddard .)

As a result, the remit of the Waterhouse Tribunal was tightly drawn by the Thatcher government.

BRYN ALYN  DURING THE Tribunal, John Allen admitted that he had spent £180,000 in presents for some of the boys at Bryn Alyn, both during and after their time in care. On one occasion, police questioned him about a letter addressed to him which had been found in the pocket of an ex-resident. The tone of the letter — which has disappeared — suggested blackmail but Allen managed to reassure police that there was an innocent explanation.

BRYN ALYN
DURING THE Tribunal, John Allen admitted that he had spent £180,000 in presents for some of the boys at Bryn Alyn, both during and after their time in care. On one occasion, the Tribunal heard, English police found a letter addressed to him which had been found in the pocket of an ex-resident. The tone of the letter — which has disappeared — suggested blackmail but North Wales Police decided there was an innocent explanation …

It was “to enquire into the abuse of children in care in the former county council areas of Gwynedd and Clwyd since 1974”.

In other words, it was restricted to North Wales.

This prevented the Tribunal from examining another deeply disturbing aspect of the John Allen affair.

As previously noted, John Allen was paid more than £30 million to look after children in his care.

Much of this money did not go into conventional child care.

Some of it went on an expensive country mansion, a villa in the south of France and a half share in a Mediterranean yacht called Dualité.

Allen also used enormous sums of petty cash which were never properly accounted for.

But, significantly, a slice of this money also went into an informal “after-care” system for selected boys when they left Bryn Alyn.

This included the provision of accommodation in Brighton and London.

Some of the young men who lived in these properties became homosexual prostitutes.

During his first trial in February 1995, John Allen went “missing” for a week.

He turned up in Oxford claiming he’d suffered a nervous breakdown.

He claimed he could not remember anything about the previous seven days.

During the week he was missing, a former Bryn Alyn resident, Lee Johns, was found dead at his home in Brighton.

Johns had given evidence during the trial that he had been abused by Allen.

LEE JOHNS A TROUBLED inmate of Bryn Alyn, Lee Johns became a rent boy after he left the children's home. He gave evidence in the trial of John Allen in 1995 but he was found dead in his Brighton flat shortly afterwards. The inquest returned a verdict of suicide.

WATERHOUSE TRIBUNAL
THE FORMER council chamber in North Wales used by the Tribunal during its public hearings. One issue the Tribunal could not investigate was the significance of John Allen’s informal “after-care” service for some ex-residents in London and Brighton. Events outside of North Wales were forbidden territory …  

The jury later decided that Johns was one of the six boys Allen had indecently assaulted.

The inquest verdict on Lee Johns was suicide — but his family are convinced he did not take his own life.

Three years earlier, Lee Johns had been seriously injured in a catastrophic fire at a flat in Hove.

Five people died in the blaze which had been started deliberately.

Among those who died was Lee’s younger brother Adrian, another former resident of Bryn Alyn.

Both Lee and Adrian had previously lived in properties provided by John Allen.

The man who started the blaze killed himself a few days after the fire.

These events were not examined by the Tribunal because they took place outside North Wales.

Lady Macur was asked to assess if the “scope” of the Waterhouse Tribunal was adequate.

Again, the questions surrounding John Allen’s informal “after-care” service in London and Brighton system show it was not.

♦♦♦

THERE IS another reason why Rebecca Television believes the Waterhouse Tribunal was suspect.

In 2000, shortly after his report was published, Paddy French had a confidential three hour meeting with Sir Ronald Waterhouse at his home near Ross-on-Wye.

French laid out much of the criticism which was later revealed in the Rebecca Television articles.

The meeting was off-the-record.

It was not until Waterhouse died in May 2011 that French was able to reveal what had taken place.

SECRET CORRESPONDENCE SIR RONALD WATERHOUSE exchanged letters with Paddy French after their meeting in 2000. But he insisted that their meeting and the letters remain secret. It wasn't until his death in May 2011 that French was free to reveal what had happened between them.

SECRET CORRESPONDENCE
SIR RONALD WATERHOUSE exchanged letters with Paddy French after their meeting in 2000. But he insisted that the interview and the letters remain secret. It wasn’t until his death in May 2011 that French was free to reveal what had happened between them.

“I felt he was shocked by what I told him,” said French, “particularly the allegations concerning Des Frost.”

“But was he shocked because he and the Tribunal had been found out — or was it because he had been wrongly persuaded Frost had nothing to say?”

“He wouldn’t say.”

In 2006 Waterhouse attended a function and had a revealing conversation with Welsh Assembly member Mark Isherwood.

“He told me quite clearly,” Isherwood said, “that he now accepted that documentation had been withheld from the Tribunal which he chaired,”

But whatever Waterhouse knew or felt, he took to the grave.

♦♦♦

REBECCA TELEVISION warned the Macur Review it was considering pulling out of the process.

On February 18 editor Paddy French wrote to say he was “considering withdrawing my statements” to the Review and writing to the Home Secretary to explain why such a “drastic step” was necessary.

“It’s clear to me that the Review will not be complete by the election and, by the time the new administration is in place and able to take a decision, we will be into the autumn”.

“This creates a surreal situation where a Review, designed to see if there ought to be a re-examination of the territory explored by Waterhouse, will have taken almost as long as the original Tribunal itself.”

LORD LEVESON BRIAN LEVESON managed to hold public hearings where more than 300 witnesses gave evidence and produce a 2,000 page, three volume report in just 17 months. The Macur Review is still not complete after 26 months.  Photo: PA

LORD LEVESON
BRIAN LEVESON managed to hold public hearings where more than 300 witnesses gave evidence and produce a 2,000 page, three volume report in just 17 months. The Macur Review is still not complete after 26 months.
Photo: PA

To date, the Review has taken 26 months — the Tribunal was complete in 39 months.

Operation Pallial, as has already been pointed out, produced its initial review within six months.

Lord Leveson, who also had the problem of a parallel criminal investigation to contend with, held a long series of public hearings and still managed to produce a three volume report in less than a year and a half.

Lady Macur answered by saying she had seen and “noted” the contents of the February 18 email.

On February 20 Paddy French emailed to ask her “to formally remove my statements from the Review’s report.”

He also asked her to “include my reasons … in the Review’s report when it is finally complete.”

On February 24 a spokeswoman for Lady Macur emailed to say:

“The Judge has asked me to let you know that she has found no reason to refer to your submissions specifically in her report and therefore it will not be necessary to indicate why she has removed them.”

“The report will indicate that you have made contact with the review and that you attended an interview with Lady Justic Macur.”

On March 2 French wrote to Home Secretary Theresa May.

LADY MACUR A JUDGE in the Family Division of the High Court when she was appointed, she is now one of the senior members of the judiciary. Nine months after the Review was set up, she was appointed one of the 42 Court of Appeal judges. The position brings with a seat on the Privy Council . Photo: judiciary.gov.uk

LADY MACUR
A JUDGE in the Family Division of the High Court when she was appointed, she is now one of the senior members of the judiciary. Nine months after the Review was set up, she was appointed one of the 42 Court of Appeal judges. The position brings with a seat on the Privy Council.
Photo: judiciary.gov.uk

He noted that in a November 2012 press release Lady Macur had said:

“I am grateful to be assured that sufficient resources will be made available to me to conduct this Review which will be thorough and expeditious.”

French said:

“I feel the Review has left itself open to the charge that, whatever else it is, it is not ‘expeditious’.”

He added:

“I would now ask you to consider referring my concerns — and those of others — directly to Justice Lowell Goddard.”

Goddard is the chair of the Independent Inquiry into Child Sex Abuse.

A copy of French’s letter was sent to Justice Minister Chris Grayling, who commissioned the Macur Review, to Welsh Secretary Stephen Crabb and to Lady Macur herself.

No responses had been received by the time this article was posted.

♦♦♦

WHAT IS deeply disturbing about the Macur Review comes down to one single point.

Lady Macur must have been in a position to know which way her report was going to go within a year.

If, at that point, she had concluded the Waterhouse Tribunal had failed to carry out its task properly, then she was in a position to produce a report calling for an inquiry to take the process further.

Her report did not have to be totally comprehensive — all it needed to do was to present the evidence gathered to support that conclusion.

The work of comprehensively sifting all the evidence could have been left to the new inquiry.

In other words, a report calling for a new inquiry could have been published within a year or eighteen months.

If, however, she had concluded that the Waterhouse Report could not be challenged, then a different scenario presents itself.

She would then want to produce a more detailed report demonstrating that the criticisms of the Tribunal — including those presented by Rebecca Television — were unfounded.

This would inevitably take longer.

There might, though, be compelling reasons for dragging the process out even longer.

The first is that, if the Macur Review published a report clearing Waterhouse, it is likely there would  considerable criticism.

LOST IN CARE A massive 937 page report — but was it fit for purpose?

LOST IN CARE
THE MASSIVE 937 page report of the Waterhouse Tribunal — but was it fit for purpose? As well as the failure to hear the Des Frost allegations, Rebecca Television also pointed out shortcomings in the inquiry’s handling of freemasonry.

Such criticism might persuade Home Secretary Theresa May to refer the Waterhouse issue to the new Goddard Inquiry.

Theresa May has proved a tough Home Secretary.

She appears to want to avoid any suggestion that’s there’s been any kind of cover-up on her watch.

This leads to speculation that Lady Macur and the judicial establishment of England and Wales might not be happy presenting the Review report with her still in office.

In these circumstances, perhaps, it might be better for Lady Macur to take so long producing her report that by the time it was published a more docile Home Secretary might be in place.

The Waterhouse issue could then be quietly laid to rest …

♦♦♦
Published: 11 March 2015
© Rebecca Television
♦♦♦

NOTES
1
Paddy French’s statement to the Review was dated 13 January 2013. He met Lady Macur at the Royal Courts of Justice on 5 March 2013.
2
For more details of the Rebecca Television criticism of the Waterhouse House — The Case Of The Flawed Tribunal —  see the Investigations page here
♦♦♦

COMING UP
THE INVESTIGATION into the closed world of BBC Wales continues with a detailed analysis of the crisis that engulfed the Corporation between 2008 and 2011. The current regime, headed by Rhodri Talfan Davies, has taken the unprecedented step of announcing it will no longer answer questions from Rebecca Television 

♦♦♦

DONATIONS  If you would like to support the work of Rebecca Television, you can do so by clicking on the DONATE button.

Donate Button with Credit Cards

CORRECTIONS  Please let us know if there are any mistakes in this article — they’ll be corrected as soon as possible.

RIGHT OF REPLY  If you have been mentioned in this article and disagree with it, please let us have your comments. Provided your response is not defamatory we’ll add it to the article.


GORDON ANGLESEA RE-BAILED AGAIN

January 28, 2015

rebecca_logo_04

BAIL FOR the former North Wales Police superintendent Gordon Anglesea has been extended again.

When Anglesea attended an undisclosed police station this afternoon he was re-bailed until May.

A spokesman for Operation Pallial, the National Crime Agency investigation into historical child abuse in North Wales, told Rebecca Television that Anglesea was also “further interviewed”.  

Anglesea was arrested in December 2013.

The total number of people arrested now stands at 35.

GORDON ANGLESEA The former North Wales Police superintendent has had his bailed extended until September.  Picture: © Daily Mirror

GORDON ANGLESEA
THE RETIRED North Wales Police superintendent has had his bail extended.
Picture: © Daily Mirror

♦♦♦

COMING UP
THE INVESTIGATION into the closed world of BBC Wales continues with a detailed analysis of the crisis that engulfed the Corporation between 2008 and 2011. The current regime, headed by Rhodri Talfan Davies, has taken the unprecedented step of announcing it will no longer answer questions from Rebecca Television 

♦♦♦

DONATIONS  If you would like to support the work of Rebecca Television, you can do so by clicking on the DONATE button.

Donate Button with Credit Cards

CORRECTIONS  Please let us know if there are any mistakes in this article — they’ll be corrected as soon as possible.

RIGHT OF REPLY  If you have been mentioned in this article and disagree with it, please let us have your comments. Provided your response is not defamatory we’ll add it to the article.


A PRETTY DESPICABLE MAN

October 27, 2014


rebecca_logo_04

PIERS MORGAN insists he knew nothing about the “dark arts” of illegal news-gathering while he was Editor of the Daily Mirror.

But an investigation by Press Gang, the new Rebecca Television media website, suggests a different version of events …

PIERS DESPICABLE

In the years up to 2003, Piers Morgan’s Mirror used the services of private investigator Steve Whittamore.

Whittamore routinely broke the law to gain valuable information for the paper.

His records show that one of the Mirror reporters who used his services was Tom Newton Dunn.

Today, Newton Dunn is the political editor of The Sun.

Press Gang reveals that, back in 2001, Newton Dunn was implicated in an attempt to gain access to police records on a Tory politician.

For the full story, click on Whodunnit…?

♦♦♦

COMING UP
OUR INVESTIGATION into the dark recesses of BBC Wales continues with The Torpedo Programme. Director Rhodri Talfan Davies refuses to answer any questions about the independent production company Torpedo run by former Director Menna Richards’ sister. Attempts to obtain information using the Freedom of Information Act have also failed. But, using other sources, Rebecca Television tells the story how millions of pounds of licence payers’ money ended up in the company’s coffers …

♦♦♦

DONATIONS  If you would like to support the work of Rebecca Television, you can do so by clicking on the DONATE button.

Donate Button with Credit Cards

CORRECTIONS  Please let us know if there are any mistakes in this article — they’ll be corrected as soon as possible.

RIGHT OF REPLY  If you have been mentioned in this article and disagree with it, please let us have your comments. Provided your response is not defamatory we’ll add it to the article.


ANOTHER RE-BAIL FOR GORDON ANGLESEA

September 11, 2014

rebecca_logo_04

BAIL FOR the former North Wales Police superintendent Gordon Anglesea has been extended again.

Anglesea was the 18th person to be arrested as part of Operation Pallial  — the re-investigation of historical child abuse allegations in North Wales — in December last year.

When he answered bail today at an undisclosed police station he was re-bailed until January next year.

A spokesman for the National Crime Agency, which runs Operation Pallial, told Rebecca Television:

“enquiries are ongoing.”

GORDON ANGLESEA The former North Wales Police superintendent has had his bailed extended until September.  Picture: © Daily Mirror

GORDON ANGLESEA
THE RETIRED North Wales Police superintendent has had his bail extended until January.
Picture: © Daily Mirror

♦♦♦

COMING UP

THE INVESTIGATION into the closed world of BBC Wales continues with a detailed analysis of the crisis that engulfed the Corporation between 2008 and 2011. The current regime, headed by Rhodri Talfan Davies, has taken the unprecedented step of announcing it will no longer answer questions from Rebecca Television 

♦♦♦

DONATIONS  If you would like to support the work of Rebecca Television, you can do so by clicking on the DONATE button.

Donate Button with Credit Cards

CORRECTIONS  Please let us know if there are any mistakes in this article — they’ll be corrected as soon as possible.

RIGHT OF REPLY  If you have been mentioned in this article and disagree with it, please let us have your comments. Provided your response is not defamatory we’ll add it to the article.


Follow

Get every new post delivered to your Inbox.

Join 1,364 other followers