George speaking in parliament TODAY at 4pm!

[popinjay]

He just mentioned it on the show. It'll be on the parliament channel. Might be a little bit before 4.

[Mandy]

Thanks Popinjay. I was about to post that. The debate is about the money transfer business which went bankrupt .. and many of his constituents who lost money. George indeed, pressed the government to investigate the business before it shut when concerns were first raised, and this action probably saved people from losing even more money.

[faceless]

I should be able to have it available later.

[Mandy]

Great. Thanks faceless.

[Salim201]

don't think he was on?

[faceless]

not yet, but parliament always over-runs... this current deabte is almost over I think

[Mandy]

The content of the speech is as follows (haven't seen the video though)



George Galloway speech on First Solution in Parliament on 18 July

SUFFERING GREAT

The collapse of First Solution Money Transfer Ltd has affected thousands of the poorest people in Britain, many of them my constituents, and thousands more of the poorest people in the world in Bangladesh.

No-one will know the full scale of the losses until the Insolvency Service has concluded its forensic examination of the accounts but at the moment the directors are claiming £1.7 million is owed to 2,000 creditors. These figures quickly stated cover up the enormous amount of suffering the collapse has caused. One man from Manchester has lost £70,000, his life savings, and brought him to the edge of despair. Another has lost the money he had saved for retirement back in Bangladesh. In yet another case, money saved by a man over a whole year to buy essential medical treatment for his brother has gone missing. And so the tale of woe goes on.

CHRONOLOGY

I was first alerted to the problems in this company almost four weeks ago. Agents working for First Solution from the Home Counties came to me and said that money they had taken in over the previous two months for transfer to Bangladesh, some £150,000, had for the most part failed to get there. They said a meeting had been held between more than 40 agents operating across Britain and the directors of First Solution in the middle of May after money had stopped getting to Bangladesh. They had been told by the directors that there were financial problems but they would soon be put right. More than one month later the situation had simply got worse as the money owed to clients had grown.

As the evidence mounted that there were problems across this company and that good money was being paid in after bad in large quantities daily, my response was to seek the assistance of the authorities to find out what had gone wrong and get it put right. I contacted the Financial Services Authority but to my amazement was told that this particular financial service fell outside their remit and that I would have to approach trading standards.

So my office contacted trading standards at Tower Hamlets council with the evidence that had been presented to me, but they said this is too big for us; you must contact the police. So I sent a personal letter straightaway to the borough commander in Tower Hamlets again outlining the evidence of the very serious problems in this company, of the suspicion of wrongdoing and asking him to engage whatever agencies in the police were responsible for investigating the company.

Commander Savill referred the matter to the local fraud office and an officer then contacted my office to say he was preparing a report to send to Her Majestys Revenue and Customs as they were in fact the regulating body in this instance and should carry out any investigation. This was some three days before the company finally ceased trading.

COMPANY CEASES TRADING

Under mounting media pressure, and here I commend the excellent investigative reporting of Ted Jeory of the East London Advertiser, the company seems to have engaged with its accountants and lawyers and I believe the directors were advised that they were almost certainly trading as an insolvent company, a potentially criminal offence. They were advised by their lawyer to instruct their agents to stop taking business.

To this day many of those agents claim they never received any such instruction. However early in the morning of 21st June, the directors posted a notice on their offices in the London Muslim Centre saying their offices were closed until further notice.

SCALE OF BUSINESS

Now this was no tinpot business. It was a business that had grown from just £4 million turnover in its first year of operation in 2004/5 to an estimated £87 million turnover for 2006/7.

The growth was achieved in a number of ways. Firstly, it offered higher exchange rates for lower fees with a quicker service to more outlying areas of Bangladesh than its rivals and particularly than the banks which are subject to financial security regulation.

Secondly, it was assiduously and ruthlessly promoted as a community service, with its headquarters located in the London Muslim Centre next to the East London Mosque, on Bangladeshi TV station Channel S. Not coincidentally, the driving force behind First Solution, which also included real estate investment, travel and other services, Dr Fazal Mahmood was also managing director of Channel S until the day before First Solution collapsed. I have asked Ofcom to investigate whether there was a breach of the broadcasting code as a result of this close relationship, but so far without success.

QUALITY OF DIRECTORS AND LIQUIDATORS

Dr Fazal Mahmood by the way was convicted in 2004 on two counts of the criminal offence of breaching section 84 of the Immigration and Asylum Act 1999. This raises very serious issues about the absence of a fit and proper persons test for the directors of a company handling millions of pounds in financial transactions every year.

Upon the collapse of the company, the directors appointed an insolvency firm Panos Eliades Franklin & Co to register creditors, set up a creditors meeting and generally advise on liquidation. Panos Eliades fronted up and continues to front up this operation. Mr Eliades however was excluded from membership of the Institute of Chartered Accountants in England and Wales in 2000 and, in a legal dispute over debts with the boxer Lennox Lewis, a New York court and the High Court in London ruled that Mr Eliades had comprehensively lied in order to avoid paying up the debts he was alleged to owe. His partner Mr Franklin is qualified as an insolvency practitioner although subject to restriction and monitoring by the Insolvency Practitioners Association at the moment, in special measures so to speak. One cannot help wondering therefore why amongst all the insolvency firms in all the city of London the directors managed to choose this one.

CREDIBILITY OF INVESTIGATION

Now there is a very important point here. There has been much anger in the British Bangladeshi community and in Bangladesh itself about what has happened.

There is a feeling, which I share, that it should have been impossible for a money transfer company which simply mediates the transfer of money to Bangladesh to lose the money somehow on the way. There has been much rumour and speculation that something criminal must have happened to that money.

Now I am not going to second guess the conclusion of the investigations that are currently going on into the companys accounts. But any investigation must carry credibility with the British Bangladeshi community. Normally with the collapse of a company the investigation would be undertaken in the first place by the insolvency practitioners engaged by the directors and confirmed by a creditors meeting. However there is no way that Panos Eliades Franklin & Co, with their colourful history, could possibly have the credibility to conduct such an investigation.

THE INVESTIGATION

I am very pleased therefore that, as a result of the huge political pressure that has been brought to bear in this case, members of the Limehouse Financial Investigation Team of the Metropolitan Police executed search warrants on the headquarters of First Solution one week after the collapse. I would have much preferred this action to have been taken earlier. I would remind the minister that I alerted the police to the possibility of fraud three days before the company collapsed.

However, I have been privately assured by police officers that they believe they have secured all of the electronic records needed to conduct a proper investigation of the companys business transactions over the last three years and that these records are intact. I hope very much this is the case.

I am even more pleased that the Companies Investigation Branch of the Insolvency Service working is now conducting a forensic examination of the accounts.

THE DIRECTORS' DEFENCE

As far as the four directors of the company are concerned, or perhaps it is three as one seems to have resigned, they have been putting out a robust defence of their honesty. Now I am no great expert on fancy international finance but there is a problem with their explanation. The delays they hold responsible for the difficulties the business faced would, in fact have benefited the company as the long term exchange rate was for the Bangladeshi currency to fall against the pound. The directors account of events does not have credibility at the moment. Moreover, there are an increasing number of people coming to me who are concerned that investments they have made in property in Bangladesh through First Solution have again not reached the other end. This includes Britannia Property Services Ltd, trading as Britannia Samana, which has amongst its directors both the chair of Channel S, the man now known as Mohammed Mahee Ferdaush and Dr Fazal Mahmood.

QUESTIONS THAT MUST BE ANSWERED

The insolvency service and the police in their investigations must provide the answers to a number of key questions:

When were the losses that brought the company down first incurred?

When was the informal overdraft facility with South East Bank arranged and how much was it for?

What role did the informal overdraft facility from South East Bank play in covering up the losses?

Why was the overdraft facility withdrawn?

When would a reasonable person conclude the company had become insolvent?

Is there any evidence of money paid in for transfer being diverted to other uses including speculation?

Did Mohammed Mosaddek Ali Falu, previously an MP in the Bangladesh parliament and now in jail in Bangladesh facing money laundering charges, use First Solution to launder money from Bangladesh to the UK, paying higher than official rates in Takas?

Was First Solution depositing UK Sterling into Falu nominated UK accounts and was Falu supplying Takas in Bangladesh.?

Was the drying up of Taka through money laundering as a result of the anti-corruption drive by the caretaker government the reason why First Solution made losses?

Were there any significant payments out of First Solution Money Transfer Ltd client account to unsecured creditors including any of the directors of the First Solution or other companies of which they are directors at any time in the last three months before the company stopped trading and after the withdrawal of the informal overdraft facility?

GOVERNMENT RESPONSIBILITY

Whatever the outcome of this investigation, it is clear that this important and burgeoning area of financial services needs more regulation. Money transfer companies receive a licence from HMRC which is charged with monitoring money laundering. However there is no regulation of these companies to monitor them for financial security. This seems to me to be a big hole in the regulatory regime, and it is one for which the government must take some responsibility. Some three years ago, the Department for International Development (DFID), encouraged the US Administration sought to encourage a shift of remittances from immigrant communities back to their country of origin from the informal networks that had existed to a low cost but more formal network. £7.5 million was paid to the State Bank of Bangladesh to encourage the Bangladeshi authorities to go down this road at their end.

It is in this context that we saw the emergence and extremely rapid growth of First Solution Money Transfer Ltd. But without proper regulation the dangers of a First Solution collapse was ever present.

A RESCUE PACKAGE?

So the government has a responsibility here for encouraging this process of money transfer without putting in place proper safeguards for the public, I continue to maintain the government has an obligation to help the people who have lost money in this collapse. Now when I raised this with the Economic Secretary to the Treasury she rejected direct help on the grounds that this would encourage  moral hazard. But if it is the government who have encouraged a system which failed to protect the customer, then I believe it is the government who has a moral obligation to help. As for regulation, I believe this needs to be looked at as a matter of urgency and proposals brought forward in the light of the First Solution experience. There needs to be a fit and proper test for directors etc. There need to be regular reporting requirements for the company. There need to be adequate reserves relative to the turnover of business. And there needs to be an accessible regulator who can intervene quickly and effectively when First Solution type problems first emerge.

Money transfer companies can have a role to play in ensuring that poorer people can transfer money more cheaply and quickly than the banks. But it is clear that confidence has been lost in this system, and it would appear more money transfer companies are heading for trouble.

What the minister has agreed to is government assistance in establishing a fund to raise money to pay back the many poor people who have lost money. It is early days and I understand that the agents who have lost so much business and standing in the community are themselves trying to organise a rescue package.

I have already begun writing to the heads of major City institutions to ask them to contribute to the relief fund the Minister and I discussed at a private meeting, for which I thank her.

If government ministers, led by the Prime Minister, were to add their voices to that call and to lead the House by example, I believe we can raise the necessary funds swiftly.

If not, the victims of this collapse will, rightly or wrongly, hold the government responsible.

[faceless]

they're still on a debate about Offender Management. I've had it on since about 3:30pm and I don't even seen him sitting on the benches.

[Mandy]

I hope there the important debate on the desperate plight of people who lost money in the money transfer company's collapse isn't shoved off ("timed-out") .. the above speech of George is strong stuff ..

[faceless]

well that's the broadcast ended now and it never happened...

[Mandy]

mmmm..... disappointing to hear. I hope they roll over business till tomorrow. I will try to find out.

[Mandy]

The Hansard record shows the speech did happen at around 4:15

http://www.theyworkforyou.com/search/?s=speaker%3A10218+section:westminhall&o=d

[faceless]

in that case the Parliament channel must have been showing video that wasn't live. Maybe it will turn up, but I doubt it...

[Mandy]

I assume the video is also accessible on the parliament web site. I have never capped from there, but I think others have done.

[faceless]

ok, I'm grabbing it now, but it's over 1 gb for the file and will take an hour or two before I can (hopefull) cut it up.