Don't be fooled by Richard Branson's defence of Virgin trains

Richard Branson didn't like my column about his rail company – but he can't deny that taxpayers are piling up debts to subsidise his profits

• 
• • Aditya Chakrabortty
  • The Guardian, Monday 24 June 2013 20.00 BST

Richard Branson. Photograph: Bloomberg via Getty Images

The rich are different from you and me: they hire PR advisers. As night follows day, any criticism of Richard Branson will be met with a fierce counterblast from his troops. So it was last Friday, when a column in Branson's name appeared in the Guardian.

The Virgin boss was displeased with my piece on this page arguing that the hundreds of millions he and his partners made from the West Coast mainline had been handed to them by taxpayers. He wanted to rubbish the thesis, and reassure you that it simply wasn't true. As the headline on his article put it: "Hard work, not handouts, put our trains back on track." And the rather innovative way Sir Richard sought to persuade you of his case was by not addressing the main points and instead kicking up a load of sand.

First, he denied that the "serious money" to buy Northern Rock was fronted up by foreign investors. Tell that to the National Audit Office. In its May 2012 report on the sale of the Rock, the parliamentary auditors laid out the sources of the £772m paid for it. Virgin directly put up £200m; that compares with the £269m chipped in by the US fund manager Wilbur Ross and £50m from a private-equity fund based in Abu Dhabi. The remainder, reports the NAO, was a short-term bank loan "repaid using cash extracted from Northern Rock plc". How this £253m was taken out of the former building society we'll know for sure when the latest accounts are filed with Companies House, but to me it sounds a lot like the asset-stripping that was much talked about at the time. Whatever, my point stands: in the whip-round for buying the Rock, Virgin was not the major contributor.

Then there are the hundreds of millions you and I have given Virgin to run its railway. Branson's response here is particularly tortured: the facts won't allow him to deny receiving huge subsidies, but he does want to deny that our hard-earned money is what made the difference. To do that, he first makes out what a huge risk he took on with the West Coast franchise. Now, I wouldn't want to make out the pre-1997 line as some Elysian pleasure-rail. But you do have to wonder just how rickety this business venture was, given that over its 16 years of business, Virgin trains has only racked up a loss twice: in 1997 and 2006. Over that period, this tremendously precarious enterprise has yielded a pre-tax profit of £674m. The Virgin boss doth protest too much, I think; perhaps to drown out the sound of the cashtills ringing.

Finally, to the point Branson doesn't want us to discuss: the amount we've given to him. Let's go back to the report that prompted my earlier column. A group of researchers based at Manchester University's Centre for Research on Socio-Cultural Change looked at both the openly admitted subsidies (the £9bn-odd paid by us for upgrading the track used by Virgin) and the hidden handouts of train companies paying Network Rail super-low prices to use its lines. Under Railtrack, train operators used to pay £3bn a year in rail-access charges; now that figure has nearly halved to just over £1.5bn. Virgin is the third-biggest recipient of this secret subsidy, paying less in 2012 for using the track than it did in 2004. That is despite having a lovely new line to run on, which allows it to offer a more frequent and lucrative service. Without these subsidies, Branson and co would be in the red. But with them, it is taxpayers who are in the red: Network Rail has a debt of £30bn, which is growing at £5bn a year. This is money that will almost certainly have to be paid back by you and me.

I've said this before, but I have no particular grouse with Branson. I've taken Virgin flights and found them fine; I've also stood on a Virgin train from Rugby onwards, but such is life. I haven't been holding out for an invitation to Necker. But Virgin Rail is merely a player, a lobbyist and a big beneficiary of a terrible system, where Britons hand money to private companies who then claim to be running a profitable business while relying on a subsidy from us. Last week, we read about how the town of Fermanagh prepared for the upcoming G8 summit by sticking posters over its empty shopfronts to make them look bustling. Something similar is going on with the use of public money in the notionally private industry of rail: it's a Potemkin market, nothing more.

Branson's reply is part of a sector's attempt to duck this argument with the aid of bluster and selective facts. And since neither the government nor the train operators want to disrupt these secret handouts or to rip the veil away from our privatised system, it's easier for the press not to probe too deeply.

Yet poll after poll shows the public wants to take the rail network back into national ownership. That's all the more remarkable, given the lack of support from major political parties (it's left to Green MP Caroline Lucas to introduce a private-member's bill calling for renationalisation), and the vacuum in the media where serious discussion of alternatives to the current mess should be. Far easier, I guess, to have a secret £30bn debt with our names on it.

When The Gods Laugh - A short biography of Shimon Peres

If the life of Shimon Peres was a play, it would be difficult to classify. A tragedy? A comedy? A tragicomedy?

URI AVNERY

IF THE life of Shimon Peres was a play, it would be difficult to classify. A tragedy? A comedy? A tragicomedy?

For sixty years it looked as if he was under a curse of the Gods, much like the curse of Sisyphus, who was condemned to roll an immense boulder up a hill, and every time he approached his goal the rock would roll down again to the bottom.

Disclosure: our lives have run somehow on parallel lines. He is one month older than I. We both came to Palestine as boys. We have both been in political life from our teens. But there the similarity ends.

We met for the first time 60 years ago, when we were 30 years old. He was the Director General of Israel’s most important ministry, I was the publisher and editor of Israel’s most aggressive news magazine. We disliked each other on sight.

He was David Ben-Gurion’s main assistant, I was Ben-Gurion’s main enemy (so defined by his security chief.) From there our paths crossed many times, but we did not become bosom friends.

ALREADY IN his early childhood in Poland, Peres (still Persky) complained that his mates in (Jewish) school beat him up for no reason. His younger brother had to defend him.

When he came to Palestine with his family, he was sent to the legendary children’s village Ben Shemen, and joined a kibbutz. But already as a teenager his political acumen was evident. He was an instructor in a socialist youth movement. It split and most of his comrades joined the left-wing faction, which looked more young and dynamic. Peres was one of the few who remained with the ruling party, Mapai, and thereby drew the attention of the senior leaders.

He had to make a much more momentous choice in the 1948 war, a war all of us considered a life-and-death struggle. It was the decisive event in the life of our generation. Almost all the young people hastened to join the fighting units. Not Peres. Ben-Gurion sent him abroad to buy arms – a very important task, but one that could have been carried out by an older person. Peres was considered a shirker at the supreme test and was never forgiven by the 1948ers. Their contempt plagued him for decades.

At the early age of 30 Ben-Gurion appointed him director of the Defense Ministry – a huge advancement, which assured him a rapid rise to the top. And indeed, he played a major role in pushing Ben-Gurion into the 1956 Suez war, in collusion with France and Britain.

The French were struggling with the Algerian war for independence and believed that their real enemy was the Egyptian leader, Gamal Abd-al-Nasser. They got Israel to spearhead an attack to topple him. It was a complete failure.

In my opinion, the war was a political disaster for Israel. It dug the abyss separating our new state from the Arab world. But the French showed their gratitude – they rewarded Peres with the atomic reactor in Dimona.

Throughout this period, Peres was the ultimate hawk, and a central member of a group which my magazine, Haolam Hazeh, branded as “Ben-Gurion’s youth gang” – a group we suspected of plotting to assume power by undemocratic means. But before this could happen, Ben-Gurion was kicked out by the old party veterans, and Peres had no choice but to join him in political exile. They formed a new party, Rafi, Peres worked like mad, but in the end they garnered only 10 Knesset seats. Peres and the boulder were back at the bottom.

Redemption came with the Six-day War. On its eve, Rafi was invited to join a National Unity government. But the big prize was snatched by Moshe Dayan, who became Minister of Defense and a world idol. Peres remained in the shadows.

The next opportunity arose after the 1973 Yom Kippur war. Golda Meir and Dayan were pushed out by an incensed public. Peres was the obvious candidate for Prime Minister. But lo and behold, at the last minute Yitzhak Rabin appeared from nowhere and snatched the crown. Peres was left with the Defence Ministry.

The next three years were a continuous story of subversion, with Peres trying by all available means to undermine Rabin. As a part of this effort, he allowed right-wing extremists to establish the first settlement in the heart of the West Bank – Kedumim. He has rightly been called the father of the settlement movement, as he was earlier called the father of the atom bomb.

Rabin coined a phrase that stuck to him: “Tireless Backstabber”.

This chapter ended with the “dollar account”. Upon leaving his former job as ambassador in Washington, Rabin had left an open account in an American bank. At the time, that was a criminal offense, generally settled with a fine, but Rabin resigned in order to protect his wife.

It was never proved that Peres had a hand in the disclosure, though many suspected it.

AT LONG last, the way was clear. Peres assumed the leadership of the party and ran for elections. The Labor Party was bound to win, as it always had before.

But the Gods only laughed. After 44 years of continuous Labour Party dominance, in the Yishuv and the state, Peres managed to achieve the unthinkable: he lost.

Menachem Begin made peace with Egypt, with Moshe Dayan, Peres’ competitor, at his side. Soon afterwards, Begin invaded Lebanon. On the eve of that war, Peres and Rabin visited him and urged him to attack. After the war went wrong, Peres appeared at a huge peace rally and condemned the war.

In the election before that, Peres had a shattering experience. In the evening, after the ballots were closed, Peres was crowned on camera as the next Prime Minister. On the following morning, Israel woke up with Prime Minister Menachem Begin again.

The elections after that ended in a draw. For the first time Peres became Prime Minister, but only under a rotation agreement. When Shamir assumed power, Peres tried to unseat him in a dubious political plot. It failed. Rabin, caustic as ever, called it “the Dirty Exercise”.

Peres’ unpopularity reached new depths. At election rallies, people cursed him and threw tomatoes. When, at a party event, he posed the rhetorical question: “Am I a loser?” the audience shouted in unison: “Yes!”
To change his luck, he underwent a cosmetic operation to alter his hangdog look. But his lack of grace could not be remedied by a surgeon. Neither could his oratorical skills – this man, who has delivered many tens of thousands of speeches, has never expressed a truly original idea. His speeches consist entirely of political platitudes, helped along by a deep voice, the dream of every politician. 

(This, by the way, disproves to me his pretence of having read thousands of books. You cannot really read so many books without a trace of it showing up in your writing and speeches. One of his assistants once confided to me that he prepared resumes of fashionable books for him, to save him the trouble of actually reading before quoting them.) 

IN THE meantime, Peres the hawk turned into Peres the peacenik. He had a part to play in achieving the Oslo accord, but it was Rabin who garnered the glory. The same, by the way, had happened before with the daring Entebbe raid, when Peres was Minister of Defence and Rabin Prime Minister.

After Oslo, the Nobel committee was about to award the Peace Prize to Rabin and Arafat. However, immense world-wide pressure was exerted on the committee to include Peres. Since no more than three persons can share the prize, Mahmoud Abbas, who had signed the agreement with Peres, was left out.

The assassination of Rabin was a turning point for Peres. He had been standing near Rabin when the “peace song” was sung. He came down the stairs, when Yigal Amir was waiting below, the loaded pistol in his hand. The murderer let Peres pass and waited for Rabin – another crowning insult.

But, at long last, Peres had achieved his goal. He was Prime Minister. The obvious thing to do was to call immediate elections, posing as the heir of the martyred leader. He would have won by a landslide. But Peres wanted to be elected on his own merit. He postponed the elections.

The results were disastrous. Peres gave the order to assassinate Yahya Ayyash, the “engineer” who had prepared the Hamas bombs. In retaliation, the entire country blew up in a tsunami of suicide bombings. Then Peres invaded South Lebanon, a sure means to gain popularity. But something went wrong, artillery fire caused a massacre of civilians in a UN camp, and the operation came to an inglorious end. Peres lost the elections, Netanyahu came to power.

Later, when the feared Ariel Sharon was elected, Peres offered him his services. He successfully whitewashed Sharon’s bloody image in the world.

IN ALL his long political life, Peres never won an election. So he decided to give up party politics and run for president. His victory was assured, certainly against a nondescript Likud functionary like Moshe Katzav. The outcome was again a crowning insult: little Katzav won against the great Peres. (Causing some people to say: “If an election cannot be lost, Peres will lose it anyway!”)

But this time the Gods seem to have decided that enough was enough. Katzav was accused of raping his secretaries, the way was clear for Peres. He was elected.

Since then he has been celebrating. The remorseful Gods shower him with favors. The public, which detested him for decades, enveloped him with their love. International celebrities anointed him as one of the world’s great.

He could not get enough of it. Hungry for love all his life, he swallowed flattery like a barrel without a bottom. He talked endlessly about “Peace” and the “New Middle East” while doing absolutely nothing to further it. Even TV announcers smiled when they repeated his edifying phrases. In reality he served as a fig leaf for Netanyahu’s endless exercises in expansion and sabotaging peace.

The culmination came this Tuesday. Sitting alongside Netanyahu, Peres celebrated his 90th birthday (two months before the real date), surrounded by a plethora of national and international celebrities, basking in their glamour like a teenager. It cost a lot – Bill Clinton alone got half a million dollars for attending.

After all the cruelties they had inflicted on him all his life, the Gods laughed benignly.

Why are the BRICs all crumbling? Welcome to the permanent revolution

PAUL MASON in The Independent

Friday 21 June 2013

In most of the Bric countries economic rise has involved increased inequality, exacerbated corruption and failing public services - and that's just half the story

Tear gas cannot stop it. Not even when fired point blank into the faces of protesters. State censorship is powerless against it. The bloodless prose of the official media cannot encompass it. But what is it? What is the force that put a million people on the streets of Brazil on Thursday, turned Turkey’s major cities into battlefields and – even now – bubbles under from Sofia to Sarajevo?

The answer is in the detail: the self-shot videos, the jokes scrawled on handwritten signs, the ever-morphing hashtags on Twitter and the Guy Fawkes masks. Brazil’s protests may have started over the equivalent of a 5p rise in bus fares, but the chants and placards in Rio speak to something different: “We’ve come from Facebook”, “We are the social network”, and in English: “Sorry for the inconvenience, we are changing Brazil”.

The bus-fare protest in Sao Paulo involved, at first, maybe a few thousand young activists. There was CS gas, burning barricades, some Molotovs and riot shields, but never enough to stop the traffic, which flowed, surreally, past it all. When police arrested 60 people, including a prominent journalist, for possessing vinegar (to dull the sting of tear gas), it became the “Salad Revolution”. Then, last weekend, tens of thousands turned into hundreds of thousands, and the protests spread to every major town.

It’s clear, now, what it’s about. Brazil’s economic rise has been spectacular – but as in most of the so-called Bric countries it has involved increased inequality, exacerbated corruption and the prioritisation of infrastructure over public services. “Less stadiums, more hospitals,” reads one plaintive placard. The fact that the whole process was fronted by the relatively liberal and pro-poor Workers’ Party led, for a time, to acquiescence. The government sold the idea that hosting the World Cup, clearing some of the slums and pacifying the rest with heavy policing, together with a new transport system in the major cities, would complete Brazil’s emergence as a developed country.

But the World Cup is draining money from public services; the cost of the urban transport system is squeezing the lower middle class. And blatant corruption enrages a generation of people who can see it all reported on social media, even if the mainstream TV ignores it.

If this were just one explosion it would be signal enough that the economic model for the so-called emerging markets – rapid development at the cost of rising inequality – is running out of democratic headroom. But the same social forces were on the streets of Istanbul. The same grievances forced the Bulgarian government to sack its recently appointed and seemingly professionally unqualified state security chief on Wednesday.

In Turkey’s Taksim Square, as the tear gas drifted, roaming around with a microphone was a bit like being at a graduate careers fair. What do you do, I would ask. They would be always young, often female, and in perfect English reel off their professions from beneath their balaclavas: doctor, lawyer, marketing exec, shipping, architect, designer.

This too is one of the fastest developing countries on earth. And here too there was a mixture of economic grievance and concern about freedom. Some complained that, despite the growth, all the wealth was being creamed off by a corrupt elite. At the same time, the ruling AK Party, with its religious base, was seen as encouraging what the Turkish fashion writer Idil Tabanca has called “a growing unspoken air of animosity toward the modern”.

And everywhere there is protest – from Taksim and the Maracana Stadium to the Greek riots and Spanish indignados of two years ago – there is “non-lethal” policing that seems designed to turn passive bank clerks into bandanna-wearing radicals. It is striking that in both Brazil and Turkey, excessive force against peaceful demonstrators was the moment that turned a local protest into a globally significant revolt.

But the grievances, in the end, tell only half the story. It is the demographics, the technology and the zeitgeist that make the wave of current protests seem historic. Look first at the symbolism: the V for Vendetta mask is everywhere now – but it originated as the signifier of the Anonymous hacker movement. The hand-scrawled placard signifies a revolt not just against the state but against the old forms of hierarchical protest, where everybody chanted the same thing and followed leaders. In every tent camp protest I have ever been in, it is clear that the unspoken intention is to create a miniature utopia.

Velocity of information matters as much as action itself. It is striking how badly the incumbent elites in each case totally lose the information war. Whether it’s Greece, Turkey, Egypt or Brazil the unspoken truth is it is hard to gain a voice in the official media unless you are part of the in-group. This creates the mindset that drove Egyptian TV to ignore Tahrir, and Turkish TV to replace 24-hour news with cookery programmes as the fighting raged outside their studios. But it doesn’t work. People have instant access not just to the words, stills and videos coming from the streets, but to publish it themselves. As a result, when crisis hits, the volume of “peer to peer” communication – your iPhone to my Android, my tweet to your uploaded video – overwhelms any volume of information a state TV channel can put out. And when it comes to the content of the “memes” through which this generation communicates, the protesters and their allies find suddenly that everything they are saying to each other makes sense, and that everything the elite tries to say becomes risible nonsense.

In each case – from Egypt, through Greece, Spain and the Russian election protests – the revolt was already there, simmering in cyberspace. And in each case, the ultimate grievance was the difference between how life could be for the educated young, and how it actually is. They want a liberal, more equal capitalism, with more livable cities, and more personal freedom. But who will provide it?

Each time the movement subsides, the old generation’s commentators declare it dead, overhyped, romanticised in the heat of the moment. But the protests keep coming back. In 1989, we learned that people prefer individual freedom to communism. Today, in many countries, it is capitalism that is associated with cronyism, repressive force and elite politics, and until that changes, this Human Spring looks likely to continue.

The Sreesanth In All Of Us

The story of the demise of India’s angriest cricketer is the story of an average man who dreamt big, had a taste of a glamorous world, never established himself, kept fighting to stay in that world, and, in the process, threw it all away. By Shiv Visvanathan 

Posted on June 19 Wed, 2013 in Man's World India By Editor

A wise old friend watching my hysteria over the spot-fixing scandal silenced me by saying, there is a bit of Sreesanth in all of us. “What went wrong with Sree was what could go wrong with any one of us. Sreesanth is the boy next door. Only, he does not go to IIT but becomes a professional cricketer.” 

Sreesanth looks like an overgrown teenager. “Look at him,” she said, “he looks like a Malayali Dennis the Menace, impudent, scruffy and desperate for attention. Instead of a hapless Joey, who followed Dennis lovingly, Sree gets a calculating Jiju. Jiju fixes Sreesanth’s life.”

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Also read

Sreesanth - A Modern Day Valmiki

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It is not easy to be a Sreesanth. Sreesanth, like most of us, is a process, a rite of passage. He has not arrived yet. Occasionally, he gets a peck at the Holy Grail, but the next moment, he is dropped from the team. To have not yet arrived, like a Dravid, Zaheer or a Kumble has, is a painful thing. You always feel an extra desperation for a cameo role. You want to be a personality, a character, memorable beyond a game. Modest people do not have to have modest dreams. Sreesanth dreamt big. He wanted to be seen and heard. 

In cricket, substance could always do with style. Like any teenager — and remember, most Indian males are teenagers till 40 — Sreesanth enjoyed building hype around himself. He grimaced, he threw tantrums, he created a new dialect in sledging. His encounters made news. He was funky and spunky. He was a caricature of a cricketer, whose adrenaline drove his judgments. Sometimes, when your juices flow and you stand up to artful sledgers, such as Andrew Symonds, you become, even feel like a man. 

You have to watch Sreesanth’s performances from an ethological perspective. He grimaces like a gorilla, beats his chest; when he gets a wicket, he runs, screaming, across the pitch and glowers triumphantly at the batsman. It is animal aggression displayed like a tribal ritual. Of course, one has to be careful. When you encounter a bigger, more violent animal, such as Bhajji, retreat and humiliation is in order. A tear or two makes you human. 

In cricket, like in hunting, you have to go for the kill. Without victory, your antics become a distraction, a sideshow. Being a sideshow is painful when you are on stage. Off stage, you get more leeway. You are seen as entertainment; you command attention. Cricket and B-grade Bollywood have a wonderful affinity for each other. The sports pages are hand in glove with Page 3. For someone like Sree, the world of bars, night clubs and women becomes an appendage to your status as a cricketer. The distractions become the attractions. Late nights chew into your discipline. 

Time eats into sportsmen like a termite. You can be precocious at 20, not five years later. Your fans behave like accountants; they demand a list of your exploits on the field. Your team-mates shrug off the hype, they only want to kill. Suddenly, sledging is not entertainment; it is a distraction, time lost. 

It is not that you do not try. You push yourself hard, but regular results are not easy. You watch senior cricketers such as Dravid and Tendulkar rework their bodies, their styles. There is steel in their temperaments, they deliver like metronomes, and you watch with awe. You know you cannot be them, but you want to play alongside them. You realise that cricket, like character building, is hard work. Practice is a way of life for these stalwarts. 

You start keeping a diary. You promise to keep your cool. You work at it. But your temper bursts like an unwelcome pimple, when you least want it to. Worse, when success is elusive, people sense the buffoon in you. You are laughed at. Life suddenly seems unfair. 

The social world outside does not see all this. On the field, you might be a lesser player, but off the field, you are still a star, a name. Then, the other talents that you have nurtured come into play. You can sing, you have dreams of being a rock star. A film or two might enhance your world, especially if you have two nubile women cast alongside you. The romance of cinema blending with the romance of cricket is your ultimate dream. Suddenly, life and its possibilities appear like fun. It matters little if you have to produce the film yourself. 

You realise that walking the ramp, with a model in tow, is a bit like running up to bowl. Adrenaline pumps through you. The applause is heartening. Instead of drab national colours grimed in sweat, your costume smells of scent. You dance and sing, your body moves with ease and the fantasy of a new spectacle takes over. A star like Sreesanth should be twice born, once in cricket and again in film. It is heady. 

Meanwhile, you work desperately on yourself, at anger management. It just means you have to avoid brawls in public, not beat up intrusive passengers at airports. After all, you have a status to maintain. You are still Sreesanth the star, a man known to chief ministers. Shashi Tharoor, your secret hero, has called you the pride of Kerala. 

Playing for the nation is a heady experience. But then there is the magic world of IPL, part circus, part gladiatorial game, part hype. It is the greatest spectacle of all. Lalit Modi makes Barnum sound second rate. 

IPL is finance capital. Everything is a commodity. Every ball, every run is commoditised and auctioned by punters. An over can provide the earnings of a decade. The trouble with IPL is that it is ruthless. Yesterday’s stars are forgotten. You live in the instant. Everything has to be bigger, better, quicker. You live only as a spectacle, and you need spectacles in daily life. You want the best of women and entertainment. Sadly, life gets inflationary. The more you enjoy this, the less you count in the world of cricket. 

Yet, you feel good in this social world of bars and night clubs and starlets. The juices flow. Your ego inflates as people salute you. Sreesanth is still a star. You are seen as fun, even if friend Jiju helps get the women. Giving in to temptation always appears fail-safe. You cannot go wrong. Match-fixing is sinister. Spot-fixing seems like a cleverer world: a win-win world in which the punter and the fan are both happy. It is like rewriting a tiny part of the script; the integrity of cricket remains untouched. All it requires is a few coded signals. A few minutes become a lifetime investment. It reduces anxiety. Money to throw around is always welcome. Jiju and he convince each other that it is a perfect move. 

Problem is, life is full of reverse-swings. Idiot cops outsmart you. The Delhi police paint you as the artful dodger. A world collapses. One minute you are high on the game and your companion, and then cops pick you up. You think it is a mistake. You ask them to call your political friends. They seem implacable. Life as a joyride is over. You look in the mirror and the sledger has become a sleazeball. You wish time had stopped a year ago. 

Suddenly, you are dirt, contaminated stuff, an object to be analysed. You cannot huff and puff and blow your opponents away. You have destroyed other people’s fairytales. That is what no one will forgive you for. The press performs postmortems on your career. People take your world apart looking for reasons and causes. 

There is only one thing Sreesanth will not be able to forgive himself for. It is the television interview in which his mother and sister protest his innocence. He has destroyed their fairytale too. One can smell sadness like rot in the air. The dream has ended. 

Reputed firms employ criminals to steal rivals' information

Some of Britain’s most respected industries routinely employ criminals to hack, blag and steal personal information on business rivals and members of the public, according to a secret report leaked to The Independent.

The Serious Organised Crime Agency (Soca) knew six years ago that law firms, telecoms giants and insurance were hiring private investigators to break the law and further their commercial interests, the report reveals, yet the agency did next to nothing to disrupt the unlawful trade.

It is understood that one of the key hackers mentioned in the confidential Soca report admitted that 80 per cent of his client list was taken up by law firms, wealthy individuals and insurance companies. Only 20 per cent was attributed to the media, which was investigated by the Leveson Inquiry after widespread public revulsion following the phone-hacking scandal.

Soca, dubbed “Britain’s FBI”, knew six years ago that blue-chip institutions were hiring private investigators to obtain sensitive data – yet did next to nothing to disrupt the unlawful trade.

The report was privately supplied to the Leveson Inquiry into press ethics in 2012 yet the corruption in other identified industries, including the law, insurance and debt collectors, and among high-net worth individuals, was not mentioned during the public sessions or included in the final report.

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McLibel leaflet was co-written by undercover police officer Bob Lambert

Sreesanth - Another Modern Day Valmiki

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Tom Watson, the campaigning Labour MP, said: “What is astonishing about this whole murky affair is that Soca had knowledge of massive illegal invasions of privacy in the newspaper industry – but also in the supply chains of so-called blue-chip companies.

“I believe they are sitting on physical evidence that has still not been disclosed fully to forensic investigators at the Metropolitan Police. The law should also be rigorously applied to other sectors that have got away with it.”

One of five police investigations reviewed by Soca found private detectives listening in to targets’ phone calls in real-time. The report said a “telephone interception specialist manufactured several devices which were physically attached to the target’s landline at the relevant signal box by a British Telecom-trained telecommunications engineer.”

During another police inquiry, the Soca report said officers found a document entitled “The Blagger’s Manual”, which outlined methods of accessing personal information by calling companies, banks, HM Revenue and Customs, councils, utility providers and the NHS.

“It is probably a good idea to overcome any moral hang-ups you might have about ‘snooping’ or ‘dishonesty’,” it read. “The fact is that through learning acts of technical deception, you will be performing a task which is not only of value to us or our client, but to industry as a whole.”

The Independent understands that one of the key hackers mentioned in the report has admitted that 80 per cent of his client list was taken up by law firms, wealthy individuals and insurance firms while only 20 per cent of clients were from the media.

A security source with knowledge of the report – codenamed Project Riverside – said clients who hired corrupt private investigators included:

* a major telecoms company;

* a celebrity who broadcasts to millions of people every week;

* a well-known media personality, who hired a private investigator to hack his employee’s computer as he suspected she was selling confidential information to business rivals;

* a businessman who hired hackers to obtain intelligence on rivals involved in an ultimately unsuccessful £500m corporate takeover.

A company which was owed money by property developers also hired private detectives to track down the firm’s family information, detailed transactions from four bank accounts, information from credit card statements and an itemised mobile phone bill. The company paid £14,000 for the information.

However, the most common industry employing criminal private detectives is understood to be law firms, including some of those involved in high-end matrimonial proceedings and litigators investigating fraud on behalf of private clients.

Illegal practices identified by Soca investigators went well beyond the relatively simple crime of voicemail hacking and included live phone interceptions, police corruption, computer hacking and perverting the course of justice.

Despite the widespread criminality uncovered by Project Riverside between 2006 and 2007, none of the suspects identified in the report was charged with criminal offences until after the phone-hacking scandal four years later.

Police were finally forced to act after the scandal that caused the closure of Britain’s biggest-selling newspaper, the resignation of two Scotland Yard police chiefs and the establishment of the Leveson Inquiry.

The Labour MP Keith Vaz, chairman of the Home Affairs Select Committee, said: “I am deeply concerned about these revelations. I will be seeking an explanation from Soca as to why this was not told to the Committee when we took evidence from them about the issue of private investigators.

“It is important that we establish how widespread this practice was and why no action was taken to stop what amounted to criminal activity of the worst kind.”

The former News of the World deputy editor Neil Wallis added: “Until The Independent told me about this, I had not the slightest clue of the scale of illegal information theft going on among our supposedly respectable professions. Did Lord Justice Leveson only conduct his inquiry into 20 per cent of the problem?”

The Soca report, which contains “sensitive material” that may be subject to “public-interest immunity” tests – effectively banning it from ever being published even if it were disclosed during legal proceedings – found private investigators to be experts at “developing and cultivating useful relationships” through “socialising with law enforcement personnel”. One particular method identified was to become a member of the Freemasons, which has been repeatedly linked to corruption in the police and judiciary.

Victims of computer hacking identified by Soca – who suffered eBlaster Trojan attacks which allowed private  investigators to monitor their computer usage remotely – include the former British Army intelligence officer Ian Hurst. He was hacked by private investigators working for News of the World journalists who wanted to locate Freddie Scappaticci, a member of the IRA who worked as a double-agent codenamed “Stakeknife”.

Another victim was Derek Haslam, a former Metropolitan Police officer who was persuaded by Scotland Yard to go undercover and infiltrate Southern Investigations, a private detective firm, as a “covert human intelligence source”.

A Soca spokesman said: “Soca produced a confidential report in 2008 on the issue of licensing the private investigation industry. This report remains confidential and Soca does not comment on leaked documents or specific criminal investigations. Information is shared with other partners as required.” Scotland Yard declined to comment.

McLibel leaflet was co-written by undercover police officer Bob Lambert

Exclusive: McDonald's sued green activists in long-running David v Goliath legal battle, but police role only now exposed

• Paul Lewis and Rob Evans
• guardian.co.uk, Friday 21 June 2013 14.54 BST

Bob Lambert posed as a radical activist named Bob Robinson.

An undercover police officer posing for years as an environmental activist co-wrote a libellous leaflet that was highly critical of McDonald's, and which led to the longest civil trial in English history, costing the fast-food giant millions of pounds in fees.

The true identity of one of the authors of the "McLibel leaflet" is Bob Lambert, a police officer who used the alias Bob Robinson in his five years infiltrating the London Greenpeace group , is revealed in a new book about undercover policing of protest, published next week.

McDonald's famously sued two penniless green campaigners over the roughly typed leaflet, in a landmark three-year high court case, that was widely believed to have been a public relations disaster for the corporation. Ultimately the company won the libel battle it need never have fought, having spent expensively on lawyers.

Lambert was deployed by the special demonstration squad, a top-secret Metropolitan police unit that targeted political activists between 1968 until it was disbanded in 2008. He co-wrote the defamatory six page leaflet in 1986 — and his role in its production has been the subject of an internal Scotland Yard investigation for several months.

At no stage during the civil legal proceedings brought by McDonalds in the 1990s was it disclosed that a police infiltrator helped author the leaflet.

 The McLibel two: Helen Steel and David Morris, outside a branch of McDonald's in, London, after winning their case in the European court of human rights, in 2005. Photograph: Martin Argles for the Guardian

A spokesman for the Met said the force "recognises the seriousness of the allegations of inappropriate behaviour and practices involving past undercover deployments". He added that a number of allegations surrounding the undercover officers were currently being investigated by a team of police officers overseen by Derbyshire police's Chief Constable Mick Creedon.

And in remarks that come closest to acknowleding the scale of the scandal surrounding police spies, the spokesman added that: "At some point it will fall upon this generation of police leaders to account for the activities of our predecessors, but for the moment we must focus on getting to the truth."

Lambert declined to comment about his role in the production of the McLibel leaflet. However he previously offered a general apology for deceiving "law abiding members of London Greenpeace", which he said was a peaceful campaign group.

Lambert, who rose through the ranks to become a spymaster in the SDS, is also under investigation for sexual relationships he had with four women while undercover, one of whom he fathered a child with before vanishing from their lives. The woman and her son only discovered that Lambert was a police spy last year.

The internal police inquiry is also investigating claims raised in parliament that Lambert ignited an incendiary device at a branch of Debenhams when infiltrating animal rights campaigners. The incident occured in 1987 and the explosion inflicted £300,000 worth of damage to the branch in Harrow, north London. Lambert has previously strongly denied he planted the incendiary device in the Debenhams store.

 While McDonald's won the initial legal battle, at great expense, it was seen as a PR disaster. Photograph: Image Broker/Rex Features

Lambert's role in helping compose the McLibel leaflet is revealed in 'Undercover: The True Story of Britain's Secret Police', which is published next week. An extract from the book will be published in the Guardian Weekend magazine. A joint Guardian/Channel 4 investigation into undercover policing will be broadcast on Dispatches on Monday evening.

Lambert was one of two SDS officers who infiltrated London Greenpeace; the second, John Dines, had a two-year relationship with Helen Steel, who later became the co-defendant in the McLibel case. The book reveals how Steel became the focus of police surveillance operations. She had a sexual relationship with Dines, before he also disappeared without a trace.

Dines gained access to the confidential legal advice given to Steel and her co-defendant that was written by Keir Starmer, then a barrister known for championing radical causes. The laywer was advising the activists on how to defend themselves against McDonalds. He is now the director of public prosecutions in England and Wales, one of the most senior legal figures in the country.

Lambert was lauded by colleagues in the covert unit for his skilful infiltration of animal rights campaigners and environmentalists in the 1980s. He succeeded in transforming himself from a special branch detective into a long-haired radical activist who worked as a cash-in-hand gardener. He became a prominent member of London Greenpeace, around the time it began campaigning against McDonalds in 1985. The leaflet he helped write made wide-ranging criticisms of the corporation, accusing it of destroying the environment, exploiting workers and selling junk food.

Four sources who were either close to the spy at the time or involved in the production of the leaflet have confirmed his role in composing the libellous text. Lambert confided in one of his girlfriends from the era, although he appeared keen to keep his participation hidden. "He did not want people to know he had co-written it," the woman said.

Paul Gravett, a London Greenpeace campaigner, said the spy was one of a small group of around five activists who drew up the leaflet over several months. Another close friend from the time recalls Lambert was really proud of the leaflet. "It was like his baby — he carried it around with him," the friend said.

When Lambert's undercover deployment ended in 1989, he vanished, claiming that he had to flee abroad because he was being pursued by special branch. None of his friends or girlfriends suspected for a moment that special branch were actually his employer.

It was only later that the leaflet Lambert helped to produce became the centre of the huge trial. Even though the activists could only afford to distribute a few hundred copies of the leaflet, McDonald's decided to throw all of its legal might at the case, suing two London Greenpeace activists for libel.

Two campaigners — Steel, who was then a part-time bartender, and an unemployed postman named Dave Morris — unexpectedly stood their ground and refused to apologise.

 Steel and Morris outside the high court at the start of the very first proceedings in the McLibel trial, in 1990. Photograph: Photofusion/UIG via Getty Images) exploitation|criticising|defendents|royal|corporation|morris|act Photograph: Photofusion/UIG/ Getty Images

Over 313 days in the high court, the pair defended themselves, with pro bono assistance from Starmer, as they could not afford to hire any solicitors or barristers. In contrast, the corporation hired some of the best legal minds at an estimated cost of £10m. During the trial, legal argument largely ignored the question of who wrote the McLibel leaflet, focusing instead on its distribution to members of the public.

In 1997, a high court judge ruled that much of the leaflet was libellous and ordered the two activists to pay McDonalds £60,000 in damages. This sum was reduced on appeal to £40,000 — but McDonald's never enforced payment against Steel and Morris.

It was a hollow victory for McDonald's; the long-running trial had exposed damaging stories about its business and the quality of the food it was selling to millions of customers around the world. The legal action, taking advantage of Britain's much-criticised libel laws, was seen as a heavy handed and intimidating way of crushing criticism. However the role of undercover police in the story remained, until now, largely unknown.

Our banks are not merely out of control. They're beyond control

Jailing reckless bankers is a dangerously incomplete solution. The market is bust. Institutions that are too big to fail are too big to exist

• 
• • Joris Luyendijk
  • The Guardian, Wednesday 19 June 2013 20.35 BST

'The banking system is highly dysfunctional, deeply entrenched, and enormously abusive, both to its own workers and the society it operates in.' Photograph: Adrian Dennis/AFP/Getty

Seeing the British establishment struggle with the financial sector is like watching an alcoholic who still resists the idea that something drastic needs to happen for him to turn his life around. Until 2008 there was denial over what finance had become. When a series of bank failures made this impossible, there was widespread anger, leading to the public humiliation of symbolic figures. But the scandals kept coming, and so we entered stage three – what therapists call "bargaining". A broad section of the political class now recognises the need for change but remains unable to see the necessity of a fundamental overhaul. Instead it offers fixes and patches, from tiny increases in leverage ratios tobonus clawbacks and "electrified ring fences".

Today's report by the parliamentary commission on banking standards (to which I gave evidence) is a perfect example of this tendency to fight the symptoms while keeping the dysfunctional system itself intact. The commission, set up after last year's Libor scandal, identifies all the structural problems and nails the fundamental flaw in finance today: "Too many bankers, especially at the most senior levels, have operated in an environment with insufficient personal responsibility." Indeed, as they like to say in the City, running a mega-bank these days is like "Catholicism without a hell", or "playing russian roulette with someone else's head".

In response, the commission proposes jailing reckless bankers. Restoring the link between risk, reward and responsibility is a crucial step towards a robust and stable financial sector. But the report's focus on individual responsibility is also dangerously incomplete because it implies that the sector is merely out of control. This plays into the narrative that things can be fixed by tweaking rules and realigning incentives; in other words, by bargaining.

In reality the financial sector is not out of control. It's beyond control. During the past two years I have interviewed almost 200 people working in finance in London: "front office" bankers with telephone-number bonuses as well as those in "risk and compliance" who are meant to stop them being reckless. I have also spoken to many internal and external accountants, lawyers and consultants.

The picture emerging from those interviews is of big banks not as coherent units run by top bankers who know what they are doing. Instead these banks seem, in the words of Manchester University anthropologist Karel Williams, "loose federations of money-making franchises". One risk analyst talked about her bank as "a nation engaged in perpetual civil war", while a trader said, "You have to understand, it's us against the bank."

I could give 50 similar quotes. Taken together, they leave but one conclusion: employees at the big banks themselves do not believe their top people know what's going on; the big banks have simply become too complex and too big to manage. If this is true, the solution is not so much to jail the top bankers when something goes wrong, it is to break up the banks into manageable parts. But the British establishment still seems incapable of accepting the notion that a bank that is too big to fail or manage is a also bank that is too big to exist.

The same seems to apply to the need to restore market forces in the financial sector: the second source of structural dysfunctionality. Imagine a restaurant had served up product as toxic as that which big banks, credit rating agencies and accountancy firms were churning out until 2008. You would expect that restaurant to have closed. You would also expect new restaurants to have opened up in the area. This is how a free market should work: competition drives out bad practices.

But where are the new credit-rating agencies, accountancy firms or big banks? Even worse, not only are there just four major accountancy firms, they are also financially dependent on the very banks they are supposed to audit critically. It's the same with thethree credit-rating agencies dominating the market.

And it gets worse. Imagine that a restaurant in your neighbourhood made the kind of money paid to top employees in banking, credit-rating and accountancy firms. You'd expect people rushing to open more restaurants, and with that increased competition you'd expect wages to come down. Again, this is how competition works. There are thousands and thousands of young graduates aching to get into investment banking, so no shortage of prospective chefs. So where are the new players in high finance?

The reality is that global high finance is de facto a set of interlocking cartels that divide the market among themselves and use their advantages to keep out competitors. Cartels can extract huge premiums over what would be normal profits in a functioning market, and part of those profits go to keeping the cartel intact: huge PR efforts, a permanent recruiting circus drawing in top academic talent; clever sponsoring of, say, an ambitious politician's cycling scheme; vast lobbying efforts behind the scenes; and highly lucrative second careers for ex-politicians. There is also plenty of money to offer talented regulators three or four times their salary.

Capitalists have an expression for this, and it's "market failure". Here is the source of so many of the perversities in modern finance, and the solution is not only to denounce those who can't resist its temptations, it's to take away those temptations. That probably means smaller banks, smaller and independent accountancy firms and credit-rating agencies, simpler financial products, and much higher capital requirements.

Before studying bankers I spent many years researching Islam and Muslims. I set out with images in my mind of angry bearded men burning American flags, but as the years went by I became more and more optimistic: beyond the frightening rhetoric and sensationalist television footage, ordinary Muslim people go about their day like all other human beings. The problem of radical Islam is smaller and more containable than Islamophobes believe.

With bankers I have experienced an opposite trajectory. I started with the reassuring images in my mind of well-dressed bankers and their lobbyists; surely at some basic level these people knew what they were doing? But after two years I feel myself becoming deeply pessimistic and genuinely terrified. This system is highly dysfunctional, deeply entrenched, and enormously abusive, both to its own workers and the society it operates in. The problem really is exactly as bad as the "banker bashers" believe.