Words … kind of fail here.
Thanks to blogger Hopi Sen, we present — without too much comment — the following, from a recent speech in the House of Lords by Lord James of Blackheath:
For the past 20 weeks I have been engaged in a very strange dialogue with the two noble Lords [Sassoon and Strathclyde], in the course of which I have been trying to bring to their attention the willing availability of a strange organisation which wishes to make a great deal of money available to assist the recovery of the economy in this country.
For want of a better name, I shall call it foundation X. That is not its real name, but it will do for the moment. Foundation X was introduced to me 20 weeks ago last week by an eminent City firm, which is FSA controlled. Its chairman came to me and said, “We have this extraordinary request to assist in a major financial reconstruction. It is megabucks, but we need your help to assist us in understanding whether this business is legitimate”…
Oh, all right, some quick comment by way of context — Lord Sassoon is Commercial Secretary to the Treasury and sits in the Cabinet, Lord Strathclyde leads the Conservative party in the House of Lords. And Lord James is a City grandee who consults Cerberus Capital Management, among others.
So it is kind of a big deal if Lord James got Lord Sassoon to talk to, erm, Foundation X around the time the Treasury was preparing its massive, gigantically time-consuming, spending review.
Which is exactly what Lord James did:
I made the phone call to my noble friend Lord Strathclyde on a Sunday afternoon-I think he was sitting on his lawn, poor man-and he did the quickest ball pass that I have ever witnessed. If England can do anything like it at Twickenham on Saturday, we will have a chance against the All Blacks. The next think [sic] I knew, I had my noble friend Lord Sassoon on the phone.
From the outset, he took the proper defensive attitude of total scepticism, and said, “This cannot possibly be right”. During the following weeks, my noble friend said, “Go and talk to the Bank of England”. So I phoned the governor and asked whether he could check this out for me. After about three days, he came back and said, “You can get lost. I’m not touching this with a bargepole; it is far too difficult. Take it back to the Treasury”.
(Ed –Mervyn! How rude!)
So I did. Within another day, my noble friend Lord Sassoon had come back and said, “This is rubbish. It can’t possibly be right”. I said, “I am going to work more on it”. Then I brought one of the senior executives from foundation X to meet my noble friend Lord Strathclyde. I have to say that, as first dates go, it was not a great success. Neither of them ended up by inviting the other out for a coffee or drink at the end of the evening, and they did not exchange telephone numbers in order to follow up the meeting.
I found myself between a rock and a hard place that were totally paranoid about each other, because the foundation X people have an amazing obsession with their own security. They expect to be contacted only by someone equal to head of state status or someone with an international security rating equal to the top six people in the world. This is a strange situation. My noble friends Lord Sassoon and Lord Strathclyde both came up with what should have been an absolute killer argument as to why this could not be true and that we should forget it. My noble friend Lord Sassoon’s argument was that these people claimed to have evidence that last year they had lodged £5 billion with British banks. They gave transfer dates and the details of these transfers. As my noble friend Lord Sassoon, said, if that were true it would stick out like a sore thumb. You could not have £5 billion popping out of a bank account without it disrupting the balance sheet completely. But I remember that at about the same time as those transfers were being made the noble Lord, Lord Myners, was indulging in his game of rearranging the deckchairs on the Titanic of the British banking community. If he had three banks at that time, which had had, say, a deficiency of £1.5 million each, then you would pretty well have absorbed the entire £5 billion, and you would not have had the sore thumb stick out at that time; you would have taken £1.5 billion into each of three banks and you would have absorbed the lot. That would be a logical explanation-I do not know.
Neither do we. The next bit just has to be excerpted in full to be told:
My noble friend Lord Strathclyde came up with a very different argument. He said that this cannot be right because these people said at the meeting with him that they were still effectively on the gold standard from back in the 1920s and that their entire currency holdings throughout the world, which were very large, were backed by bullion. My noble friend Lord Strathclyde came back and said to me that he had an analyst working on it and that this had to be stuff and nonsense. He said that they had come up with a figure for the amount of bullion that would be needed to cover their currency reserves, as claimed, which would be more than the entire value of bullion that had ever been mined in the history of the world. I am sorry but my noble friend Lord Strathclyde is wrong; his analysts are wrong. He had tapped into the sources that are available and there is only one definitive source for the amount of bullion that has ever been taken from the earth’s crust. That was a National Geographic magazine article 12 years ago. Whatever figure it was that was quoted was then quoted again on six other sites on the internet-on Google. Everyone is quoting one original source; there is no other confirming authority. But if you tap into the Vatican accounts-of the Vatican bank-you come up with a claim of total bullion-
Lord De Mauley: The noble Lord is into his fifteenth minute. I wonder whether he can draw his remarks to a conclusion.
Lord James of Blackheath: The total value of the Vatican bank reserves would claim to be more than the entire value of gold ever mined in the history of the world.
My point on all of this is that we have not proven any of this. Foundation X is saying at this moment that it is prepared to put up the entire £5 billion for the funding of the three Is recreation; the British Government can have the entire independent management and control of it-foundation X does not want anything to do with it; there will be no interest charged; and, by the way, if the British Government would like it as well, if it will help, it will be prepared to put up money for funding hospitals, schools, the building of Crossrail immediately with £17 billion transfer by Christmas, if requested, and all these other things.
These things can be done, if wished, but a senior member of the Government has to accept the invitation to a phone call to the chairman of foundation X-and then we can get into business. This is too big an issue. I am just an ageing, obsessive old Peer and I am easily dispensable, but getting to the truth is not. We need to know what really is happening here. We ,ust find out the truth of this situation.
10.54 pm
Lord Shipley: My Lords, back to the spending review…
Ahem.
(Note that Lord James has made another strange speech, on immigration, recently.)
Finally, here’s Lord Sassoon himself on the matter, via Hansard:
Lord Myners: …Clearly, the noble Lord has access to the solution that, with one leap, will take all the Government’s problems of financing to a better place. The Minister has clearly been remarkably bad at responding to the noble Lord and we look forward to the Minister’s explanation now.
Lord Sassoon: I am very grateful to the noble Lord, Lord Myners. He had great trouble keeping a straight face. I have to say that I took extremely seriously my noble friend Lord James of Blackheath’s suggestions that there were people who could help us out with our financial difficulty. The noble Lord, Lord Myners, thinks it is all a joke. I have been in detailed discussions over the past number of weeks with the noble Lord, Lord James of Blackheath, and of course we take seriously anyone who wants to invest in our economy. I know many people believe that there will be great opportunities in our infrastructure programme to invest in rebuilding our networks to underpin growth.
Looking at the video of the debate, the good Lord may not have been entirely serious on the ‘detailed discussions’ point, however.
All very strange, though. And we can only wonder which other troubled economy will get the Foundation X treatment.
(H/T former-FT Alphaviller Sam Jones)
Update: Felix Salmon and Jon Hendry reckon that Foundation X is The Office of International Treasury Control. Looks like it.
The OITC says it is, erm:
…the largest single owner of gold and platinum bullion in the World, in addition to being a major owner of Bank Debenture Securities, International Treasuries, Cash and other forms of securities…
And it also say it’s the world’s largest owner of Home Mortgage Securities. One hopes the OITC got through the subprime crisis OK.
Strangely enough, the OITC’s head actually has a Linkedin profile:
(Where is this Bond University? Sounds useful.)
And the OITC also warns against financial scam websites. Quite.
Related link:
Westminster blog - FT