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Scottish Parliament Speech: Serious and Organised Crime (March 2010)

See this speech in context on They Work For You.

Shortly after my election in 2007, when I was first appointed to the Economy, Energy and Tourism Committee, I proposed a committee inquiry into Scotland's black economy. The case for such an inquiry came out of postgraduate research that my students had undertaken, which was given some publicity in my book "Mending Scotland: Essays in Economic Regionalism".

However, the issue was diverted to Scotland's Futures Forum, where there was consensus on the existence of the problem. At a meeting with the forum, the members seemed convinced of my arguments, but nothing further transpired - the Economy, Energy and Tourism Committee's agenda has also been enough for me to be going on with - although I have been in touch with them and I live in hope.

The problem is not just the bottom-up villainy that goes on but the grey area that has opened up on a huge scale between the sort of wild west that is covered by the Daily Record and The Sun - presumably, The Sun journalists are not at the opera - and the huge disasters that have marked the financial sector. In the 18th century, Adam Smith and his less idealistic friend Adam Ferguson characterised such "luxury and corruption" as a problem to which people were prone in overcommercialised societies, where money talked and the talk was not about fairness or social responsibility.

In the UK's financial collapse, top-down illegalism moved out of the shadows to take centre stage as part of sub-prime lending - often fraudulent - in the shape of what was termed "moral hazard". Dealers, wanting to boost trade volumes and their own bonuses, undertook speculations in the expectation that, if they failed, their banks would be bailed out. Some of that behaviour could be put down to what, back in 1996, Alan Greenspan notoriously called "irrational exuberance", but much was due to a lack of transparency because the boards of prestigious banks, including the Royal Bank of Scotland, did not know what was happening on the London trading floors and in the tax havens where structured investment vehicles, collateralised debt obligations and CDOs-squared - and those are just the easy ones - were traded.

Those disasters brought about what a University of Glasgow sociologist and a Tübingen criminologist had forecast back in 1975 - the year, ironically, in which Gordon Brown published "The Red Paper on Scotland - which one of the greatest British thriller writers subsequently wrote up in a near-documentary account; John Mack and Hans-Jürgen Kerner's book, "The Crime Industry", seems to have very much influenced Eric Ambler's last novel. They argued that globalisation, computers and tax havens were creating a fog into which could disappear not just tax avoiders but much of the £1.3 trillion of business worldwide that is connected with drug dealing, arms smuggling, people trafficking and counterfeiting. That seems a vast and incredible sum, but an article in The Herald estimated that the Barras alone turned over £2 billion in counterfeit goods each year. All those businesses are united by the faculty of money laundering - so Nick Kochan has argued - and the ability of law to get the manipulators, even when evidently guilty, off the hook. Remember that this trade runs from fraudsters such as Vidaurri to our last heavy industrial firm, BAE Systems, which got off bribery charges on the ground that the wider public interest had to prevail over the rule of law.

The particular impact on Scotland can be seen in our drugs problem - three times greater, proportionate to population, than elsewhere in Europe - which finances a huge black economy where gangs that are big enough, as we have heard, to have their own lawyers and accountants can make money disappear and suck in legal aid. Was it coincidence that Scotland has turned out to be a prime "carousel fraud" country?

How do we combat that? That will be the clue to our future. I acknowledge that 1,000 additional police officers - and another 200 next year - will certainly help to make our communities safer and to deter crime. The establishment of the serious organised crime task force, the research on the scale of organised crime in Scotland that has been published and the additional funding that has been announced are more than welcome. However, our ability to reduce the drug hit - which, as we have seen, extends far into society - is the key. Are we prepared to follow European countries such as Switzerland that control drugs in a much more intrusive fashion in order to reduce the influence of crooks and bullies and the big-car, high-roller glamour that is not restricted to crime but which smears itself over spectator sport, gambling and security firms and contaminates legitimate business and law?

Three years ago, Graeme Pearson, resigning as head of the SCDEA, warned that, if we did not check crime, it would subvert the state. Of course, we have seen many examples of that happening worldwide.

I will end with a statistic that will show just how big that grey area is - it is worth bearing in mind that I speak as a veteran of the Buckingham branch of the Labour Party, which was dominated in my time by Robert Maxwell. According to The Guardian, in 2007, benefit fraud in Britain came to just under £1 billion while tax fraud came in at between £97 billion and £150 billion, which was as much as 12 per cent of the gross domestic product of Britain and twice that of Scotland.

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