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.

Tip offs: 0709 284 0531

Quote of the Day

John McDonnell tells the Gallery/Lobby lunch what the priest told him to do…

‘He persuaded me to do this. He said you need to soften your image. So do Mumsnet and do this…. I’m trying to soften my image.’


Guidogram: Sign up

Subscribe to the most succinct 7 days a week daily email read by thousands of Westminster insiders.
Downing Street to Gary Gibbon Downing Street to Gary Gibbon