Unions Launder Support Via Unity Trust BankBut Isn’t Labour a Bad Credit Risk?
Labour is in dire financial trouble, if it were a business the lawyers would be warning the directors that they were in danger of trading whilst insolvent. In that situation directors become personally liable for a company’s debts, risking the confiscation of director’s assets and criminal prosecution for failing to observe a director’s fiduciary duty. In this time of desperate need they have sought bank financing, primarily from the Cooperative Bank and Unity Trust Bank. The financially strong Co-Op has of course a long history of supporting the Labour party and also owns 26.66% of the small Unity Trust Bank. The remaining 73.23% of the total equity capital of Unity Trust Bank plc is owned by the trade unions and they control the bank’s board*. Total equity capital at 31 December 2005 was £16,429,301.
A £4 million pound loan is therefore quite a large risk for a small operation like Unity to make to a near insolvent organisation like Labour. It represents nearly a quarter of shareholders funds in the event of a default. That is not sound business practise. Guido has a few questions for Ian Morrison, Director of Credit Risk & Compliance at Unity:
What security has he obtained for the trade union members and charities who have their funds at risk?
Has a third-party guaranteed the loan? If so, who?
Are they comfortably within the guidelines for capital adequacy? If so, by what margin?
How does he evaluate the enterprise risk of such a relatively large** and risky loan?
Guido is having some difficulty getting a response from Unity.
How the workers pay for Cherie’s haircuts:*Important in this context that we recall how the government gave the unions a new back door subsidy of £11 million. **£4 million is more than UTB’s total after tax profits for 2005.