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Business
Government support is needed for
poorer households to tackle a 250 per
cent rise in destitution caused by the
pandemic and its aftermath, an econo-
mic think tank has claimed.
The warning from the National
Institute of Economic and Social Re-
search underlines how lower-income
households are most at risk of suffering
a decline in living standards, compared
with “negligible” impacts on the
finance sector and “moderate” ones on
real estate and utilities.
The institute defines destitution as
“income that is so low that a household
is likely to lack essential provision of
heated. National Grid says that along
with more offshore wind farms and
carbon-capture schemes, there will
need to be more than 11 million electric
vehicles on British roads by 2030 and
more than 30 million by 2040.
It also says that natural gas boilers in
homes must be abolished and replaced
with heat pumps, with as many eight
million homes actively managing their
heating demands by storing heat.
Mark Herring, head of strategy at
National Grid, said: “Consumers need
greater understanding of how their
energy use impacts on the wider
[power] system and how changes to
their lifestyle have an impact on net
zero ambitions.”Green targets need action
Robert Lea Industrial EditorHuge rise in destitution for the poorest
shelter, food, heating, lighting, cloth-
ing/footwear and basic toiletries in the
immediate future”. Its model is built
using data on mortality, unemploy-
ment and changes in wage income.
The analysis suggests that destitu-
tion had already risen by the end of last
year and that there would have been a
rise to 133 per cent of previous levels
had the pandemic not occurred. The
estimated 250 per cent rise relates to
2017 levels.
People on low incomes or working in
industries hit hardest by the lockdown,
such as hospitality and general retail,
suffer the worst levels of destitution.
Single-adult households, about one
third of the population, are hit morethan most and there is a higher increase
in poverty among those with children.
The Midlands is badly affected, with
destitution levels rising by more than
200 per cent compared with there
being no crisis. The regional impact
correlates with the industrial one. The
worst-hit sectors are construction and
manufacturing, both of which are big
employers in the Midlands.
The report argues that the govern-
ment must continue to provide
enhanced welfare support for affected
households beyond the end of the fur-
lough scheme in October. It also must
focus on “channels into employment
for the young” to avoid increasing
income inequality and poverty.Philip Aldrick Economics Editor
Britain will fail to hit its target of net
zero carbon emissions by 2050 if it
relies on a steady transformation of its
industrial and consumer economy,
according to National Grid.
In its Future Energy Scenarios report,
the Grid says that three of the four road
maps to achieving the goal could work
— but only if immediate action is taken.
With the caveat that the report has
not taken account of the pandemic, it
says the target will be missed if
ministers focus only on decarbonising
the energy and transport sectors and
neglect efforts to change consumer
behaviour and the way homes areA Mastercard executive allegedly
was involved in a money-laundering
operation at a bank accused of terrorist
financing and organised crime that
had links to Wirecard, the disgraced
German payments group.
A report commissioned by the
owners of FBME Bank in Cyprus un-
covered evidence of apparent criminal
activity, including an alleged operation
designed to trick the international card
payments system into processing high-
risk and potentially illegal transactions.
Private investigators found the
“apparent involvement of a senior
Mastercard employee in criminal activ-
ities” and recommended that the bank’s
shareholders tell prosecutors in the
United States that a source of the
problem “may be with Mastercard”.
The investigation, called Project
Waxwing, was commissioned after the
US Treasury’s Financial Crimes
Enforcement Network froze FBME out
of the American banking system in
- It accused FBME of being used by
customers to “facilitate money launder-
ing, terrorist financing, transnational
organised crime, fraud, sanctions eva-
sion and other illicit activity”. Money
processed by FBME was said to have
links to internet child sex abuse and the
Syria’s chemical weapons programme.
Project Waxwing, along with two
reports from Kroll, the corporate inves-
tigations firm, found problems with
FBME’s card services division, which
was linked to Wirecard via a key client,
who was accused of helping to facilitate
the alleged payments fraud.
The investigation by Nigel Brown
and Alec Leighton, two former British
police officers, found an operation alle-
gedly involving hundreds of thousands
of phantom transactions created to “cir-
cumvent or outmanoeuvre” anti-fraud
and money-laundering systems within
Visa and Mastercard.
The alleged intention was to “dilute”
the high level of “chargebacks”, or re-
turned transactions, being generated by
illicit activity to avoid scrutiny from
Visa and Mastercard. A chargeback
occurs when a customer complains
about a good or service. Their credit
card company will refund them pending
Senior employee
at Mastercard
was ‘involved
in laundering’
James Hurley an investigation. High chargeback rates
are a red flag for fraud. An unnamed
Mastercard executive was alleged to
have helped to facilitate the operation.
Pinging “phantom” transactions back
and forth via UK and Cyprus shell com-
panies added apparently innocuous
payments that diluted the fraud ratio,
allowing illicit activity to continue, the
investigators concluded.
Last year Mr Brown and Mr Leighton
and Dangate and Barrington, their in-
vestigations firms, were sued success-
fully by Ayoub-Farid Michel Saab and
Fadi Michel Saab, the brothers who
owned FBME, for breach of confiden-
tiality. This was after the Waxwing find-
ings were reported to law enforcement
and regulatory authorities. Fadi Michel
Saab died this year.
A Kroll report commissioned in the
wake of the disclosures, seen by The
Times, found that the bank’s senior
management had “collaborated with a
third-party group to launder the pro-
ceeds of potentially illegal activity”
between 2010 and 2014.
A spokesman for FBME’s sharehold-
ers said that the Mastercard allegations
were a “fantasy”, that the Financial
Crimes Enforcement Network’s allega-
tions had not been proven and that the
court had found that the private investi-
gators’ findings were not “supported by
any evidence base”. They claimed that
Kroll’s 2015 report had been “written
from the investigators’ fake affidavits”.
An earlier one commissioned by Visa,
which also found serious problems, had
resulted in action, including the resig-
nation of a card services boss, they said.
Fraser Perring, a short-seller who
raised concerns with Mastercard and
Visa about Wirecard, said the emer-
gence of the alleged operation would in-
crease scrutiny over card companies’ ef-
forts to tackle payments fraud.
Mr Leighton said that he and Mr
Brown could not comment on the in-
vestigations, but added: “I am encour-
aged that our vindication may be on the
horizon.” Wirecard and Visa declined to
comment on the case. A spokeswoman
for Mastercard also would not com-
ment on the case but said it “maintains
a rigorous enforcement process”, with
responses including fines or the suspen-
sion or termination of a licence.
P
ressure is
mounting on
HSBC to consider
selling its
American retail bank to
boost returns and address
international tensionswith China (Katherine
Griffiths writes). The
bank is under fire from
both Chinese and US
authorities amid wider
rows over Huawei and
Hong Kong.
HSBC, which is listed
in London but generates
half of its revenue in Asia
and has Hong Kong as its
largest individual source
of profits, has not steered
clear of the political spat,
as it has done in the past.
On Saturday the bankdenied Chinese media
reports that it had
“framed” Huawei and
had played a role in the
arrest of Meng Wanzhou,
its chief financial officer,
in December 2018 at
Vancouver airport on a
warrant from the United
States.
“HSBC has no malice
against Huawei,” the
bank said in a message on
Wechat, adding that it
had “provided factual
information” only to theUS justice department
about Ms Meng’s
whereabouts.
In June Peter Wong,
HSBC’s Asia-Pacific chief
executive, signed a
petition to back China’s
resolution to impose new
security legislation in
Hong Kong. That drew
criticism from investors,
British politicians and
Mike Pompeo, the US
secretary of state, who
has accused HSBC of a
“corporate kowtow”.Bank under
pressure to
sell retail
arm in US
Trump’s ‘empty threat’ to quit WTO
The former head of the World Trade
Organisation has accused President
Trump of issuing an “empty threat” in
warning that he could withdraw the
United States.
Pascal Lamy said that Washington
had sought to “rob the bank” by leading
a sustained campaign to paralyse global
trade’s supreme court. The director-
general between 2005 and 2013 con-
ceded that the WTO had lost clout
amid mounting economic tensions on
the international stage.
The Geneva-based arbiter — set up
25 years ago to regulate trade between
its 164 members and facilitate multi-
lateral negotiations — is searching forits next head as it grapples with
existential questions over its future. Its
appellate body effectively ground to a
halt at the turn of the year after
America’s persistent refusal to approve
the appointment or reappointment of
its members. The body, which typically
has seven members and requires three
to open a new case, has only one.
The US has accused the appellate
body of exceeding its remit and claims
that China, the world’s second largest
economy, designates itself a developing
economy to gain advantage.
Mr Lamy, 73, said: “The US wanted to
rob the bank and they stole the keys of
the court. They made sure that judges
could not judge.”
He said that America felt that it hadlost some trade dispute cases because of
failings in the system. “They never
complained when they won cases, only
when they lost. Probably a coinci-
dence,” he said.
Mr Lamy claimed that the White
House could not withdraw the US
because “it needs Congress to approve,
which it will not. That is an empty
threat.”
Roberto Azevêdo, the WTO’s
director-general, is departing a year
early. Amina Mohamed, of Kenya,
Ngozi Okonjo-Iweala, of Nigeria, and
Liam Fox, of Britain, are among the
candidates to succeed him. Dr Fox
expressed sympathy with America’s
concern regarding the appellate body
this month.Callum Jones Trade CorrespondentSCOTT EELLS/BLOOMBERG VIA GETTY IMAGES