George Trefgarne on the City pages of the Daily Mail
is on the trail of the UTB scandal. [Not online]. He draws attention to the fact that 12 out of 17 directors have resigned in the last two years. Hardly evidence of good corporate governance.
The article refers to the £6 million sale of the Labour HQ to help repay £2m to UTB due at the end of last month. Guido understands that there was, after paying off the mortgage to the Co-Op Bank, only £500,000 or so in equity left over. Not even enough to meet this month’s wage bill. Guido suspects that the loan was rolled over on UTB’s books. That the Labour party is making 1 in 5 employees redundant tells you all you need to know. Guido can confirm that UTB has been obliged to report to the FSA monthly as to the status of the Labour party loan.
The Warwick agreement should not be part of the bank’s qualifying credit criteria considered by the UTB’s Risk Review committee. UTB’s board, politically connected as it is, is largely inexperienced in the ways of banking. “Loans for favours” to the unions are the only reason why this union-controlled bank has risked lending so much to the financially troubled Labour party – when no commercial bank would do.
Neither the Labour party nor Unity Trust Bank will comment.