This guy wouldn’t have anything to do with me. I don’t know what he is going on about. Seriously, I’m laughing but this is absolute bollocks. I’ve never heard anything so ridiculous. You speak to anyone from our department working in protection; the whole point of turning up for physical training exercise half cut never happened. I’ve been very critical of my department whilst serving, and subsequently, but one thing I would say is from a professional standpoint – the inability through alcohol to perform work is something I’ve never ever seen in my life so I don’t know why he has an axe to grind against me. When I left in 2002 my profile was pretty high for reasons you know. It would appear to me he has caught into this and thought, ‘I’ll throw some shit at Ken Wharfe’. My record of service was exemplary and I was physically fit up until I left, and still am. Whilst I find it amusing, for Page to say that makes me slightly uneasy.
The Met Gold group shared this unease the more they considered Page’s defence statement. The following claim was especially relevant to his response to the financial charges. ‘The prevailing attitude within the Royalty Protection Department was that it was a licence to print money for officers. Thousands of pounds could be earned on overtime for doing very little.’ Worse still, the examples Page gave were ‘selling steroids and hard-core pornography from within the locker rooms [of Buckingham Palace]’.
It wouldn’t take much to envisage this material in the hands of a tabloid headline writer.
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The mudslinging aside, Page still needed to answer head on in his defence statement the fraud and money laundering case against him. He chose to do so by blaming a casino culture of reckless gambling inside SO14 at the expense of royal security. The way the Hearts scheme at St James’s Palace had been dealt with was given as an example of the recklessness and double standards at work in Royalty Protection.
In terms of his own Buckingham Palace hedge fund, Page admitted he ‘foolishly’ put officers on commissions and handed out gifts and bonuses for bringing in others. Soon, he said, he found himself at the top of ‘a pyramid scheme’. He also admitted abusing his police position with others to facilitate the scheme while on duty.
Up until the formation of ULPD in 2003, Page claimed ‘senior officers at Buckingham Palace had been turning a blind eye’. He admitted making ‘substantial losses’ on various spread-betting accounts but denied acting fraudulently. He said some of the witnesses now aligned against him were unreliable or lying about their true involvement in the pyramid scheme and the money they had invested or got back.
Having given an indication of his defence, Page’s lawyers requested disclosure of more than 10,000 documents amassed by Operation Aserio. One question they wanted answered was when and what did other government agencies and watchdogs, such as Her Majesty’s Revenue & Customs and the Financial Services Authority, know about his hedge fund?
And what did twelve banks and building societies – NatWest, HSBC, Alliance & Leicester, Lloyds TSB, Halifax HBOS, Nationwide, AA Savings, Abbey, Barclays, Woolwich, Virgin One, National Savings, Scarborough and MBNA – do about the huge volume of money being transferred between account holders?
While waiting for answers, Page offered me this insight into how he really felt heading towards trial:
I am quite happy to stand up and argue the toss in court. But what I am also arguing the toss with is this is a corrupt investigation. The DPS aren’t the beacon of excellence that is claimed. They decide who they are going to arrest and who they are going to let go. Integrity is negotiable in their eyes because they are the protectors of the Met. If they want to hush a story up it is clear they will go to any lengths to do it.
If I am guilty of something, fair enough, give it to an outside force to deal with. What they are doing is pinning it all on me. If there is an offence it’s a wider offence. There’s more people implicated. If you go along the lines of money laundering then anyone who has had any part of monies going backward and forward is guilty of money laundering. That has all been airbrushed over. Basically the statements they’ve taken off people have been directed, as much as they can, against me, myself and I. Their line is: ‘He was a rogue officer.’ Let’s face it; they don’t want ten, fifteen, twenty people in the dock, all officers. It will be horrendous.
Then there was this self-defensive and frugal admission:
I should have took my head out of the clouds a lot earlier and I should have realized that this road I was embarking on was only going to end in one avenue and that was disaster. And in my defence I can say the intention was never to deceive anyone it was to make money for myself, first and foremost, but then for everyone else. But that confidence and that drive went too far. It just went too far and reality went out of the window. We all got sucked into it, not just me. Armed police escorts, people being let into garden parties and God knows what. When you step back and realize what’s gone on, you realize it’s something that I regret, I regret doing. I’m not proud of what I’ve done but at the other side of the coin I don’t see why I should be treated – because I’m now a potential damaging item to the Met – that I should be fitted up in the way that I have been and that evidence should be tweaked and massaged in order to make it fit the box in order to push a conviction against me for something I believe I am not guilty of. It’s not criminal. It’s neglect but it’s not criminal. And if it is criminal then there should be another hundred people in the dock with me that the police know about and have evidence against. But we know that will never happen.76
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While prosecutors in the UK were considering Page’s defence statement, the greatest modern exponent of the Ponzi scheme, Bernie Madoff, was confessing to the US authorities about how he stole billions of other people’s money on Wall Street and in London.
Madoff confessed but refused to cooperate with his prosecutors. Many of his immediate family were involved in the firm, but Madoff, who was about to turn seventy, said it was all his own doing. He told the court, ‘When I began my Ponzi scheme I believed it would end shortly and I would be able to extricate myself and my clients from the scheme … I always knew this day would come.’
Other than the scale of the fraud, there were many behavioural and structural similarities between Madoff and Page.
The Wall Street kingpin had the trust of people, especially among the Jewish community, and he was able to make investors believe they were part of an exclusive club whose success depended on secrecy. His business grew not just because people liked and trusted Bernie but because he paid brokers and feeder funds healthy commissions to send investors his way. And the more the investors were willing to part with, the more commission the broker received. Secrecy was a condition of getting into the Madoff club and he promised high returns but expected his investors to ask few questions, just invest in his ability to make money.
Madoff and Page targeted different types of initial investor but with the same aim, to use their credibility to lure in others. Madoff hooked key US and European investment banks, European royals and members of the House of Lords. He was credible because of his former position as chairman of Nasdaq, the New York stock exchange trading securities. In the same way, Page’s police-officer status lent him credibility among fellow royal policeman and civilians, and he used his SO14 posting and warrant card to lure wealthy business people.
Social psychologist Robert Cialdini identified six things people use to gain trust. Among them are returning favours, commitment, consistency, being an authority figure and being liked. They can all be faked, he observed.
Madoff and Page created illusions that being part of their hedge fund meant being part of an elite group of savvy investors that set them apart from the mugs and muppets. Madoff would deliberately turn people away to maintain this illusion. Like Page, he wasn’t registered to dispense investment advice, and would lure investors with a promise to subsidize losing months from his own winnings.
Returns of 10–12 per cent year on year were simply t
oo good to be true. Madoff claimed losses in only three months in seven years of trading. Those who reported suspicions of fraud to the US regulator were ignored until it was too late. One whistle-blower had raised the alarm as early as 2000. But the regulator did not listen; quite possibly because, like the Met’s anti-corruption squad, it is too close to what it regulates and didn’t want to prick the bubble.
The US regulator eventually opened an investigation into Madoff in 2006 but concluded a year later that there was no evidence of a Ponzi scheme. Journalist Erin Arvedlund, who investigated his career, wrote that investors and regulators ignored red flags because laziness and greed overwhelmed good judgement, because Madoff was trusted, safe and conservative and had been referenced by family and friends. Others, she said, knew Madoff was cheating but went along with it because he was a successful cheat.77
However, when confidence in the banks started to shake in late 2007, Madoff’s investors began to panic and wanted their money back. He couldn’t cover the bill even with the millions he had squirrelled away. Finally the regulator stepped up and in.78
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On 14 September 2008, news that US investment bank Lehman Brothers was bankrupt sent a financial shockwave around the world and triggered the worst financial crisis in seventy years. In the days that followed, global stock markets collapsed and wiped $600 billion off share prices.
Generally speaking, the banks, auditors and regulators had created a massive illusion that they were well capitalized. In other words, the banks were claiming they had a cushion of deposits to absorb any losses from their fuelling of the credit and housing bubbles. This had been done through the sale of toxic derivatives made up of high-risk debt that was fraudulently sold to small investors and pension funds as low or no risk.
Suddenly, the world woke up to the fact that bankers had been operating a giant Ponzi-type mis-selling of these toxic investment schemes, especially in the mortgage market, known as collaterized debt obligations (CDO) and credit default swaps (CDS).
The bankers and hedge funds had earned huge fees and bonuses from deceiving almost everyone in the chain. Mortgage owners had been suckered in with teaser interest rates, and investors looking for higher returns bought CDOs unaware of the high risk because credit agencies had conspired to downgrade it.
Whole countries were now at risk of bankruptcy and, in the case of Iceland, it did go bust, owing ten times what it earned. A massive deregulation of the financial sector had led to an insane credit boom in Iceland where newly privatized banks borrowed ten times the gross domestic product and encouraged people to invest in derivatives that were now all worthless.
On 15 October, Page was watching a television news item featuring Iceland’s prime minster, days after Laura had been made bankrupt. ‘He should be in the dock holding my hand,’ Page quipped to his wife.
Meanwhile, UK Prime Minister Gordon Brown had just announced a massive bank bailout plan worth over £500 billion to put things on a ‘sounder footing’. It involved injecting money, guaranteeing bank bonds and effectively nationalizing some banks. Despite their reckless and greedy management, some bank executives walked away with huge pensions, pay-offs, but not a hint of prison.
The nearest any of those responsible for the financial collapse came to a court was when they were questioned by parliamentarians. In October, Alan Greenspan, former chairman of the US Federal Reserve, appeared before Congress. The man who had fuelled the credit bubble and championed unfettered free-market capitalism, in the belief that banks and markets would self-correct and not allow themselves to implode, now admitted this was ‘a mistake’.
The eighty-two-year-old millionaire consultant banker told the Committee on Oversight and Government Reform: ‘Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.’
Asked if it was ideology that made him regulate mortgage derivatives and bank lending ineffectively, Greenspan admitted there was ‘a flaw’ in the model he and others had promoted. The flaw was that greed had trumped self-preservation in the financial sector.
It was around this time that I discussed with Page his model for gambling on the financial markets. SO14 officers and civilians had been dazzled by Page’s apparent ability to make money from buying and selling currencies and commodities. He had once schooled an awestruck Richard Humby about the ‘system’ he used to hedge his bets.
‘What was your system?’ I asked.
‘I just made it up,’ Page replied.
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Geoffrey Rivlin QC is a no-nonsense judge who runs his court like a benign dictator. He is a stickler for detail and protocol, polite but not accustomed to being challenged.
As the most senior judge at Southwark Crown Court, Rivlin was always going to be the presiding judge for Regina v. Paul and Laura Page. Southwark is where most of the capital’s fraud and police misconduct cases are tried. It sits on the south bank of the Thames in between London Bridge and Tower Bridge and opposite the City skyscrapers and the Tower of London on the north bank of the river.
On 21 October 2008, all parties in the case met at court to discuss management of the trial, which was due to start in six months. Page was unable to be there but the content of his defence statement was the main topic of debate.
‘A great many allegations are made by Mr Page in relation to his workplace and what’s going on there. As far as the Crown are concerned, a great deal is totally irrelevant,’ said Richard Mandel, the junior prosecution barrister. Page, he said, should have to flesh out the allegations in his defence statement and identify individuals in SO14 who were responsible for the colourful misconduct being alleged.
Rivlin agreed and summonsed both sides to his chambers. According to a well-placed source, the judge was ‘panicking’ over the defence statement, in particular the references to the Royal Family. He believed that the case could spiral out of control from a straight fraud into a media circus unless experienced barristers, so-called Queen’s Counsel, held the reigns. Rivlin ordered that each side should have a QC and a junior barrister paid for by the taxpayer.
Laura couldn’t wait to get home to tell her husband what had happened in court.
‘Guess what? We’ve all been given QCs for the trial.’
‘That’s great love, it means they are taking us seriously,’ Page replied.
‘But that’s not the best bit. Just before the hearing started the prosecution barrister approached my barrister and told him they would make a deal. If you pleaded guilty they would drop the charges against me.’
After discussing the offer with their legal teams, it was decided that they would carry on. Although the case against Laura was weak, it was still a gamble to go to trial. But Page had one last roll of the dice left in him and persuaded his wife to come along for the ride.
The Met and Palace’s worst fears came true when, in the first weeks of December 2008, news leaked of the contents of Page’s beefed-up defence statement. My article in The Times also exposed the attempt to prevent Page from putting forward in his defence details about the Palace culture.
Page’s MP, Andrew Mackinlay, was quoted saying: ‘The Royal Family and Household are not above the law; neither are the inner workings of the Metropolitan Police. Nobody would entertain such an application if it were Joe Bloggs. My constituent is entitled to present his case in full.’79
A second article followed days later highlighting a lasting image from Page’s defence statement. It referred to his claim that Prince Andrew would make his personal protection officers fetch the golf balls he hit around Buckingham Palace garden when they should have been guarding him. The story was picked up by the next edition of the satirical TV quiz Have I Got News for You.
Judge Rivlin was not amused by the coverage and appeared to accept the prosecution suspicion that Page was behind the leak. At the hearing on 15 December to deal with media coverage, newly appointed senior prosecuto
r Douglas Day QC drew the judge’s attention to Anjam Khan’s witness statement in which he said Page had claimed he would sell his story for £450,000. The figure seemed heavily inflated to anyone with an inkling of how journalism works. Consider this. The Daily Telegraph paid around £100,000 for the CD Rom containing all MPs’ expenses, the political scandal of the decade.
Rivlin was also worried at the volume of senior SO14 officers, members of the Royal Household and DPS that Page’s legal team was planning to summons to give evidence. Page would have called the Queen if he could, but she is exempt from giving evidence.
His team planned to call the head of SO14, Lord Loughborough, who the Queen had just honoured for services to policing. The citation in the Queen’s New Year’s Honours List said Lord Loughborough had the Met commissioner’s ‘total confidence’ to protect the royals and ‘lead his staff effectively’.
On 4 February 2009, Judge Rivlin gave his ruling on future publicity surrounding the case. He was particularly peeved that newspapers had ignored his request to remove from the Internet the published articles. Rivlin ordered no more publicity about the defence statement or the case in general until the trial started on 15 April.
It is the view of the prosecution that some parts of this [defence] statement amount to clear attempts by Mr Page to deflect the case away from himself by putting attention on others – allegations which he knows are likely to attract significant media attention … I am now quite satisfied that the prosecutions concerns are justified, and that the stance that has been taken or is likely to be taken by the media is such as to make the action I propose to take today all the more urgent and necessary … my only concern is the risk of interference with the administration of justice and that this trial should not be adversely effected by publicity of any kind. It is not my concern to place any gag on anyone.
For Queen and Currency: Audacious fraud, greed and gambling at Buckingham Palace Page 30