On 5 August, Labour’s John McDonnell shared a damning letter which takes Boris Johnson’s new chancellor Sajid Javid to the cleaners.
Javid involved with “financial weapons of mass destruction”
The shadow chancellor wrote to Johnson on 31 July calling for “two investigations into Mr Javid’s past conduct in matters of financial stewardship and decision-making”. McDonnell said that one should look into Javid’s involvement with “risky financial instruments that played a key role in contributing to the 2008 financial crash”. Javid, he stressed, had participated in “some of the worst excesses of the casino economy” while working at Deutsche Bank. US business magnate Warren Buffet, he said, had called the aforementioned ‘instruments’ “financial weapons of mass destruction”. And he continued by emphasising:
It will not be lost on those that have suffered the consequences of the last nine years of austerity following the 2008 financial crisis that the newly appointed Chancellor profited from the greed that contributed to it.
He also called for an investigation into Javid’s potential involvement with a tax avoidance strategy. As the Guardian wrote:
The Mail on Sunday reported in 2014 that Javid opted into a scheme known as “dark blue” that channelled bankers’ bonus payments through the Cayman Islands.
And calling for the release of Javid’s tax records, he claimed:
He has not denied his involvement in the scheme and has refused to disclose how much tax he paid.
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For McDonnell, Javid’s alleged previous activity “critically undermines this Government’s response to the scourge of tax avoidance”.
I've written to Boris Johnson calling on him to reconsider the fitness of Sajid Javid to serve in the role of Chancellor pic.twitter.com/uEKqltCERQ
— John McDonnell MP (@johnmcdonnellMP) August 5, 2019
A “financial snake pit rife with greed, conflicts of interest and wrongdoing”
As political economist Will Hutton wrote on Twitter:
Deutsche Bank has paid extraordinary fines of $14 billion for its conduct in investment banking – and is now fighting for its very life given the losses it incurred in investment banking. Sajid Javid was at the heart of it. Now Britain’s Chancellor.
As the Guardian reported:
Javid held several senior executive positions at the German investment bank, including a role selling collateralised debt obligations (CDOs), a type of complex and risky financial product responsible for turbocharging the financial crisis.
It also pointed out that:
Deutsche Bank, which was among the biggest sellers of CDOs, was described by US senator Carl Levin as a “financial snake pit rife with greed, conflicts of interest and wrongdoing” ahead of the 2008 crash…
Deutsche Bank refused a Guardian request for comment.
Holding the financial industry to account
Two days earlier, McDonnell had also promised “a public inquiry into Britain’s financial industry”, saying:
Today I've announced the next Labour government will launch a public inquiry into Britain's financial industry.
We will root out immoral and unlawful practices and ensure finance serves the wider economy.
— John McDonnell MP (@johnmcdonnellMP) August 3, 2019
By seeking to hold both Britain’s new chancellor and the whole financial system to account, McDonnell is showing his clear determination to end the toxic gravy train between the financial sector and government. That is a necessary change that anyone who’s suffered from Tory-led austerity should support wholeheartedly.
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