50 billion dollars (£33.5billion)! That’s the amount former chairman of the Nasdaq stock exchange, Bernie Madoff, is alleged to have fiddled, making this a much bigger fraud than that of Nick Leeson. Whilst many people will not feel sorry for some of those affected by this scandal such as HSBC which is exposed to the tune of $1billion, RBS at $601million. The biggest hit is Santander’s Optimal Fund Management Unit at a whopping $3.1billion. Ordinary people probably will feel much more sorry for the charity workers that are getting the sack just before or after Christmas as a result of this. It is the biggest swindle ever perpetrated by one person.
It is somewhat telling that this has been discovered during an economic crisis. As the money markets have dried up Madoff’s Ponzi scheme collapsed. Based on paying off older investors with money given to him by newer investors such a scheme gives the appearance of large profits but with nothing of substance behind it. More schemes like this, perhaps not of such a scale, will be discovered as the crisis and recession deepens as investors begin, in a similar manner, to attempt to withdraw their finances from such schemes.
But this scheme probably could have been discovered before now, as a BBC news report discloses the US Securities and Exchanges Commission have received letters about this going back at least 9 years telling them that Madoff Securities was “the world’s largest Ponzi scheme”. It appears to be a case of exceptional blindness at best. The fraud of the rich isn’t usually a priority for capitalist politicians, indeed the whole neo-liberal era has been about stripping back regulation on the state.
The rules are different if you are poor though. Everyday on TV you see adverts from the UK government saying it is cracking down on benefit fraud. However, according to the DWP’s own website benefit fraud only amounted to £800million in the 2007-08 financial year – a pittance compared to the likes of Madoff (His fraud is 41 times bigger!). Not satisfied with driving down the living standards of working class people, we are portrayed as the criminals when the rich can swindle almost as they please. As ever its one rule for the rich and one rule for the rest of us.
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