Today’s post looks at the news that companies that have built NHS hospitals and associated services over the past six years have recorded pre-tax profits of £831 million, with a further £1 billion expected to be made in the next five years. These companies operate under what is known as the ‘private finance initiative’ (PFI), which can be directly traced back to John Major’s Conservative Government in 1992, and indirectly associated with the socially-defining period of Margaret Thatcher’s reign in the 1980s, a reign which is synonymous with the concept of privatisation. This almost absolute transference of service provision to the private sector, will be the focus of this post as we look at the effect that the initiative is having upon the service that the NHS can provide – assessing where the money that can go to the NHS actually ends up will be revealing, and perhaps is what should have been paraded on the side of that infamous bus . The issue of providing certain services t...

On many occasions here in Financial Regulation Matters we have looked at two seemingly separate issues. We have covered, extensively, the developing story of the fraud at HBOS from the initial trial and conviction of a number of fraudsters, to the continued and difficult fight against Lloyds for compensation. At the same time, there have been a number of posts concerning RBS and their abysmal performance, ranging from their continued failings since being nationalised to their settlements with wronged investors and shareholders. However, there are now reports suggesting that these two streams can be neatly brought together, which unfortunate for the inevitable victims of such an amalgamation. This author has written extensively on the concept of oligopolistic dynamics within the credit rating industry and, regrettably, the same dynamics can be seen in the banking industry. The performance of the Reading Unit of HBOS in defrauding vulnerable SMEs was simply just the tip of the i...

Today’s post focuses on the largest business story today which is the news that Lee Jae-yong, the vice-chairman of Samsung and its de-facto head, has been jailed for five years after being found guilty of bribery, embezzlement, and perjury amongst a host of other offences. This massive news for South Korea, however, has the potential to fundamentally alter its environment in terms of the relationship between the massive family-owned conglomerates that dominate the South Korean landscape, and the Government. Yet, whether or not that comes to fruition is the focus for this piece because, as is usually the case, a realistic assessment suggests that the favoured outcome may not be attained. Today’s sentencing of the heir to the sprawling Samsung Empire, Lee Jae-yong, marks the accumulation of a string of events that began in 2016 with the investigation into the then-President Park Geun-hye. Very briefly, Park Geun-hye, the country’s first female President and daughter of the Milita...

In today’s post the focus is on the recent news emanating from China that the Chinese Government has introduced a cessation on foreign investment by Chinese entities on anything over $5 million. However, recent news concerning the potential investment in one of the world’s leading car manufacturers suggests that the outflow of Chinese capital will not be stopped, but rather will now carry a governmental-licence, which has the potential to alter the dynamics of the global capital flow and, more importantly, the global political balance. China has long since employed different variants of economic nationalism , ranging from Mao Zedong’s 30-year reign to Deng Xiaoping’s radical transformation of the Chinese State. Today’s version, led by Xi Jinping , is part of a growing world-wide trend but with one crucial difference from other components of the trend like the United States or the United Kingdom; China has the political ability to enforce its nationalistic policies upon its b...

Today’s post looks at the news that Johnson & Johnson (J&J), the massive pharmaceutical, medical devices and consumer goods company, has been ordered to pay a massive $417 million to a claimant regarding the company’s failure to ‘adequately warn consumers’ about the cancer-related risks of one of its most famous products – talcum powder. In this post the focus will be on the string of claims that have resulted in awards for the claimants against J&J and what it may mean for the company and its reputation. Simply put, scandal is never far away from this particular field of medical science and its connection to the public. There have been a vast number of cases over the years which can be described as ‘corporate scandals’, with many becoming etched into the public consciousness. In the U.K. (although the effects were certainly not restricted to the U.K.), perhaps the most famous corporate scandal in relation to the medical sciences field was the case of those affec...

Today’s post focuses on the news that the Co-operative Bank (the ‘Co-op’ bank) has had a £700 million rescue package approved by its members today. The bank, which has experienced a decline in its fortunes since the Financial Crisis, has presented this recent package as a viable method of stemming the bleeding that goes back to its merger with the Building Society, Britannia, in 2009. The obvious question is whether this latest attempt to halt the slide will be effective, or whether the associated 145-year history looks like it will be coming to an end in the not-too-distant future. As stated above, the co-op bank can trace its roots back to the Co-operative Wholesale Society of Manchester, which was established in 1872. However, this British institution as experienced dire times of late, and that is commonly traced back to 2009 when the company merged with Britannia, a large Building Society; the deal was heralded as the ‘ next step in the renaissance of the co-operative and m...

Usually here in Financial Regulation Matters , the focus of posts is on the world of business and usually its connection with the world around it – business, rather obviously, is part of a much larger societal picture, particularly in this modern era. The focus of the posts is usually upon business and/or regulatory developments, which are then assessed against a broader backdrop. However, today’s post represents a slight departure from that approach in that it responds to the recent wave of headlines praising corporations for taking a stand against the developing situation in the United States regarding President Trump and his views towards outwardly racist groups. For this post there is only one question that is of concern, and that is whether the praise being showered upon companies like Apple, Spotify, and Go Daddy is correct. The first wave of public, and specifically media praise for companies began after a number of CEO’s left the President’s advisory councils . Before th...

Today’s post looks at the news that KPMG has been fined by the U.S. Securities and Exchange Commission (SEC) for ‘ misinforming ’ investors about the value of a certain company. This follows the news from the U.K. where the Financial Reporting Council (FRC) have fined PricewaterhouseCoopers (PwC) for ‘ extensive misconduct ’ relating to its audit of a professional services group. This recent flurry of regulatory activity has led some to discuss the ‘ growing concerns ’ regarding the quality of the Big Four’s output, but in this post we shall see that it is a surprise that this behaviour is not expected of the Big Four, and that the regulatory response should certainly be expected. Only very recently here in Financial Regulation Matters did we discuss the ever-growing problem of accounting firm quality standards, with it being suggested that Andrew Tyrie may be looking to establish some sort of oversight board to further regulate the accounting industry. These suggestions fol...

Today’s post covers a topic that will be of interest to a lot of people all across the world. According to figures from the last couple of years, the Premier League – the highest football league in the U.K. – is massively popular, and its rates of growth in terms of expansion, income, and transmission across the globe grows year on year. The Premier League, which sells the ability to televise its games to multimedia companies like Sky or BT, is preparing to auction off the rights to televise its product at the end of the year, with the expectation that this round of auction will produce new record amounts of revenue. Whilst that is likely, there are external factors that may affect this incessant growth, and those factors are the focus of today’s post. Simply put, the ‘Premier League’ has been an incredible success since its inception in 1992 . Figures taken from the last few years confirm this, with the Premier League being broadcasted to 156 countries with 4.2 billion fans wa...

On quite a few occasions here in Financial Regulation Matters we have focused on the growing credit bubble and its potential effects when it collapses. In today’s post, we are going to continue this assessment by looking specifically at the situation in the United States, which will encompass an array of reports and studies that discuss an ever-growing problem that is beginning to set records. As we often do in Financial Regulation Matters , we will position this discussion within a much wider context and discuss how the proximity of this bubble to the last Crisis is particularly worrying, but also we will look at how impotent the system is at actually constraining it, with the result being methodologies that are moving into absurd territories. We have discussed the rising credit problem on a number of occasions before, but mostly in terms of the warnings posed by British regulators . However, looking at the global picture reveals a much more dangerous situation in that the wo...