249. ⁠Epstein, Mandelson & the system that failed survivors

16:38Robert:She was chairman of Santander in the UK. She's chairman of the Proust. She's chairman of the Royal Shakespeare Company, very impressive person. You know, spoke to Butler after his analysis of the sort of state of the economy, the state of the financial sector after the financial crisis. That was all passed on to Epstein. And it included in it some really quite sensitive policy recommendations like, you know, the government should sell 20 billion of assets to reassure markets that the public finances were under control. It had recommendations about how you should go into the general election trying to offset fears about future tax rises.

17:23Robert:This is all not only sensitive political information, but information of enormous use if you're an investor, right? And to the banks themselves, as it were. This was all forwarded by Mandelson to Epstein. As I spoke to Butler, he's deeply upset. He feels totally betrayed. This confidential information was passed on. Shrita Vadira conducted a highly detailed survey of whether banks were providing credit in the aftermath of the financial crisis. This is something that you and I, when we were at the BBC, were absolutely immersed in the so-called credit crunch and how serious that was for the economy.

18:09Robert:She does this detailed analysis of whether or not the problem is the supply of credit or demand for credit. And again, comes up with really very sensitive conclusions of direct relevance, if you're a bank, to what you think the government is then going to do in terms of pressure on you or future policy. Hugely confidential information. This again, all forwarded by Mandelson to Epstein. And, you know, talking to those close to Vadira, she's absolutely shocked beyond belief, partly because she'd worked. You know, she was in Mandelson's department at the time this stuff was forwarded. So she feels again, I understand, utterly let down and utterly betrayed.

19:01Steph:And just on that point, you know, about us working together in that time, everything, every piece of information which you got, which you delivered on the news, it had impact in terms of, you know, market reaction. and so that you can't underestimate how important and how I guess dangerous it is to have leaked information because I remember times you know we were sitting there talking about what could go out on the news that wouldn't cause a run on the banks but equally trying to be transparent about everything going on and and so to think he was just forwarded on these emails and then who we've To someone who was hugely connected.

19:45Robert:Yes, to the financial sector. So it's not, you know, let's be clear. Look, we still haven't quite got to the bottom of where Epstein's absolutely enormous wealth came from. You know, but most people believe a lot of it came from sex trafficking. But, you know, there's a lot that is still to be uncovered about that. And, you know, one of the things that's come out of the Epstein files when you look at the bank accounts is the enormous flows of money, you know, something like a billion dollars in and out of his account over just one account over a period of time. And, you know, one of the reasons this scandal is going to run for years is because, you know, obviously unpicking where all that money went and where it came from is going to be hugely, hugely important.

20:35Robert:There's that other astonishing disclosure. I mean, you'll remember when we were reporting on all of this at the BBC, during the financial crisis and afterwards, the contentious issue of bankers' bonuses. Yes. Right. And, you know, the suggestion, not the suggestion, actually, the reality was that one of the reasons why the banks took such crazy lending risks and investment risks was to generate short term profits that inflated the value of bonuses and share options. And so one of the most important reforms after the financial crisis was to restrict the amount that bankers could make from these short term gains to provide a disincentive for them to use effectively taxpayers money, because taxpayers effectively underwrite banks always, you know, effectively to dissuade banks from taking these short term risks.

21:37Robert:So, you know, putting a much higher tax on bankers' bonuses was not just a way for the government to get some money because India doesn't raise that much money. It's actually more about saying to the banks, right, it's fine to make money if you're taking sustainable investments over the long term, but you mustn't, within your remuneration structures, have incentives for people to take crazy risks. That's why that tax was introduced. And here you have Epstein on behalf of the banking community complaining about this tax on bankers bonuses. And then Mandelson actually saying to Epstein, you know, you should tell your friends and in particular your friends at J.P.

22:24Robert:Morgan to mildly threaten the chancellor, who at the time was Alistair Darling, for various negative consequences for the UK if they don't reform and soften the tax on bonuses. And in particular, they wanted these share options bits of that to be, you know, the tax to be reduced. And quite interestingly, you know, an old friend of mine, Faisal Islam, who actually has now got a job that I used to have at the BBC, economics editor, wrote this very interesting blog two days ago, saying that he had a conversation years ago with the late Alistair Darling, where Alistair Darling said to him, he was really shocked.

23:11Robert:that he had a conversation with Jamie Dimon, the boss of J.P. Morgan, where Jamie Dimon said how angry he was about the bankers' bonuses. And Faisal says, you know, when he read that email from Mandelson telling Epstein to tell the bankers and tell J.P. Morgan to Miles, you know, he said, my God, you know, this was like, you know, I read the script for what actually then got passed on to, you know, to Darling himself. And obviously, Darling felt bruised because he was still talking about it a year or so later. It is, honestly, it's sort of jaw-dropping, again, this breach of trust. And the idea that as business secretary, because this is the point, right?

24:07Robert:It's not just that he's passing on completely improper advice to Epstein. It is that he's also betraying a close colleague, the then Chancellor, as the Darling. Can you imagine if Alistair Darling was still alive, what he would feel that his colleague in cabinet, right, is basically telling a banker to have a go at him.

24:30Steph:It's incredible. But also, he's not just letting down his colleagues, he's letting down the country. He is there as a representative of the taxpayers and he was advising bank executives on how to bully our chancellor. like and and all of that it isn't just about the rich men at the top this is about this this impacts everybody's lives in terms of what happened next with banking and and that's what i don't get is i mean mandelson must have got into the job for power never to to you know help the uk i don't

25:05Robert:know if he ever lack of personal loyalty is literally yeah off the charts i mean um you know I was just thinking about what it must be like to be Gordon Brown in these circumstances, because, you know, here is Gordon Brown who brings in Mandelson. You know, Mandelson is, as you say, redeemed many times. And, you know, one of the big jobs that he ends up with is a commission, is a is as a commissioner for the European Union. Right. And, you know, so he's got this big European Union. commissioner job. And then Gordon Brown, who had very difficult, always difficult relations with Mandelson, nonetheless thinks, okay, this guy does know about commerce and about, you know, encouraging entrepreneurialism.

25:57Robert:So he brings him back into, when Gordon Brown becomes prime minister, he brings Mandelson back into the government. He effectively makes him his deputy and he makes him business secretary. But as I say, he's effectively the number two in the government. And then you see towards the end of his time in office that Mandelson is basically scheming with Epstein about how to get Gordon Brown out. And there's this, again, I mean, there are a whole series of jaw-dropping emails, but on the day that, that Gordon Brown actually resigns in public. This is after that election where the Tories become the biggest party, but they don't have an overall majority.

26:59Robert:And there are days of uncertainty about whether or not Cameron will be able to put together a coalition to actually govern. And we have tremendous instability in markets over this period. Pound is going up and down in a very volatile way because it's just very unclear whether or not we're going to get a stable government after all of this. And Gordon Brown wants to stay in office. And the Lib Dems do well. And there is this theoretical possibility that actually Brown could do a deal with the Lib Dems to stay in office. So Mandelson is trying to persuade Brown to give up the reins of power. And this is all there in black and white.

27:49Robert:He's basically leaking to Epstein how much he wants. He's a minister in a Labour government, and he's leaking to Epstein how much he wants Brown out. And then on the day, finally, Brown has decided he's going to go. So at nine o 'clock that morning, there's this email from Mandelson to Epstein saying, basically, I can't remember the exact words, but he basically says, I've persuaded Gordon Brown to go. So Epstein knows that Brown is going, which is market sensitive information, which Brown does not confirm publicly until five o 'clock that afternoon. So he's not only scheming to get Brown out, but he's also, as I say, passing on hugely price sensitive.

28:37Robert:Who knows whether Epstein either personally traded on it or passed it on to other people who might have traded on the information. Manderson had no boundaries, no boundaries whatsoever, apparently, of a sort of moral sort of, you know, when it came to either, you know, loyalty to somebody who had given him respectability again in British politics by bringing him back and giving him. I mean, just amazing. Imagine betraying somebody who brings you back in those circumstances to that extent. And then, as I say, passing on this hugely price sensitive information.

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31:08Robert:A KFC tale in the pursuit of flavor. The greatest insult the colonel ever suffered was being served a wrap that was just a snack by a friend. So he took two crispy tenders, lettuce, tomatoes, and pepper mayo, and wrapped them in a soft tortilla. It wasn't a snack, it was a meal. He called it a twister and never called that friend again. The colonel lived, so we could chicken. The Twister, now back at KFC, classic or with bacon. Also try it spicy. It's finger licking good. Prices and participation may vary.

31:40Steph:What's going to happen next, do you think?

31:42Robert:There is just another point that brings us back to Starmer and the stability of this government that I think is important. So we talked earlier about why Starmer would appoint somebody like Mandelson to that hugely important job of ambassador in Washington when it was known that he had a very unhealthy relationship with a sex criminal, Epstein. And when we know that Mandelson's own history is, you know, one of being forced to resign because of scandalous things that he had done. Right. Yeah. And the justification that they give, they believed and they they say there's also evidence that this judgment of theirs was correct.

32:39Robert:That because of his business connections and his negotiating skills, he was likely to be a very effective negotiator. Negotiating skills.

32:50Steph:Negotiating skills. Let's call this out. It's not negotiating skills. He was just giving people information.

32:55Robert:But let's just, though, go to what I would regard as the really deep and possibly for this government lethal flaw in all of this. Right. So, you know, and they would say, for example, you know, we got this these better tariff arrangements with, you know, the US, arguably partly because of, you know, whether, you know, you know, Mandelson's ability to sort of woo the Trump administration. But the other side of it, which is the bit that I think shows that this is a sort of a policy sort of essentially not on solid foundations, but on sand is I do think that the back of the judgment that Starmer and his people will have made is, well, it's sort of OK to appoint somebody like Mandelson, who's got this apparently sleazy relationship with Epstein.

33:57Robert:Because, of course, there is so much evidence that Trump had a relationship with Epstein. And therefore, you know, certainly in terms of this relationship with the most powerful man in the world, the Epstein connection is not a bar on appointing him to high office. And this is the biggest problem, I think, for Starmer, is it shows to an extent the way that his relationship, his so-called pragmatic relationship with the Trump administration is based on turning a blind eye to normal moral and ethical considerations. And, you know, you would argue that so much else of our relationship with America at the moment, given the, you know, the extraordinarily upsetting policies that the Trump administration has pushed through, whether it's their approach to immigration, whether it is the many would say the murders committed by his ICE, you know, enforcement officers.

35:10Robert:We don't comment on all of that. We don't regard any of that behavior as a bar to having close relations with America. We don't regard, you know, many would say that there've been a number of occasions where Trump has breached international law. Again, we don't regard that as a bar to having close and friendly relationship with America. And, you know, you would argue that the same, you know, lack of, you know, moral, the same lack of any ethical basis also, you know, is behind the decision to appoint Mandelson. And ultimately, if you see that the way that the Mandelson appointment has backfired and damaged Starmer, I think you can read across from that that simply saying, you know, the national interest means ignoring ethical considerations, you know, may at some point really cause serious damage to him and this government.

36:16Robert:And so I think you can't, you know, I just, you know, I just think that the Mandelson episode and the way that it is damaging Starmer should give all of them pause for thought about whether, in effect, the sort of carny approach is more of standing up to Trump is broadly more sustainable for a country with our values and our history than the one of we're never going to comment on, you know, essentially when we think Trump has crossed a moral line, we're just going to ignore it.

36:49Steph:The other thing in it as well is, you know, coming back to that appointment of him to US ambassador, the person who was doing it before him, Karen Pierce, was doing a good job, wasn't it? It wasn't like we needed to replace her because she was doing all right. And so, again, why take that risk?

37:06Robert:One of the things I talked about very much in the run-up to the appointment of Madison was precisely that. I mean, Karen Pierce, everybody, both on this side of the pond, in the Foreign Office, but also within the Trump team, they all said Pierce had done an amazing job of building a relationship with Trump and his team. She was at the end of her term, but it was a live possibility that she would have been asked, she could have been asked to stay on another year. She would have stayed on another year if asked to do so. And again, you know, Starmus' misjudgment in not doing that looks very serious.

37:52Steph:Yes. So in terms of what happens next, we know that there's now a criminal investigation into Peter Mandelson. But do you think there's going to be more that comes out?

37:59Robert:Well, there's a ton of stuff that's going to happen. I mean, we haven't talked about the Financial Conduct Authority, which is the city regulator that looks at market abuse. There's something called the Market Abuse Directive and there's the Financial Services and Markets Act, both of which are important bits of legislation that are intended to prevent market manipulation. And so one of the things that almost certainly will happen alongside the Metropolitan Police investigation is an investigation by the FCA about essentially whether any of the information that was passed to Epstein by Mandelson counts as breaches of that legislation, whether we've got market manipulation and market abuse breaches here.

38:46Robert:And then, you know, there are mammifications for so many senior business people. I mean, there's an absolutely gripping piece in The Telegraph about arguably one of the UK's most successful tech investors. He's a bloke called Ian Osborne, who was in public relations, then set up an investment vehicle. So he is the co-founder and chief executive of an investment fund called Hedo Sophia. I'm never quite sure whether I'm saying it properly. I mean, I'm assuming it means something like, you know, love of pleasure, hedonism and knowledge and all that kind of stuff. Anyway, it's a highly successful investment fund.

39:32Robert:The Telegraph has written this absolutely gripping piece about the back and forth emails between Osborne and Epstein, in which Osborne is helping Epstein with all sorts of sort of basically financial campaigns. And there's also sort of jaw-dropping emails from Epstein to a woman that allegedly seems to have set up with Osborne. and it's an email about whether or not this woman had sex with Osborne. I think, sorry, whether he had sex with Osborne, you know, Osborne has subsequently put out a statement saying he had no idea that this woman, you know, was not just a friend. I mean, the whole, as I say, it's an absolutely gripping read.

40:41Robert:You know, whether or not Osborne can continue to run this business, well, we'll see, won't we? he's certainly got questions to answer about his relationship with Epstein. Ian Osborne says that he had absolutely no knowledge of Epstein's sex crimes. You know, just in the case of Mandelson, when you put in Mandelson's name, there are 6 ,000 different document entries, you know, relating to Mandelson's relationship with Epstein. You know, there are going to be a huge number of powerful people in finance, in business, unbelievably anxious now about what more is going to come out about their relationship with Epstein.

41:23Robert:So this is by no means over. This will continue. I mean, I do think this is the financial scandal of our time. It's almost certainly in the British context, the political scandal of our time, as and when more detail emerges, if it ever does, about Trump's relationship with Epstein, it may well turn into the defining scandal of Trump's term in office. You know, the magnitude of, you know, the Epstein, Epstein's relationship with the rich and powerful. And not just a scandal in terms of finance and politics and everything else.

42:09Steph:let's not forget this is about women as well and how some of the most powerful people in society viewed women, you know, women, young women who came from, you know, a lot of them from poor backgrounds, broken homes, who were treated appallingly.

42:25Robert:But that's one of the reasons, actually, that's the central reason, it's not one of the reasons, it's the central reason why this is the worst such scandal of our lifetimes. Of course it is.

42:34Steph:Right, we should probably wrap things up. No doubt we will be talking about this again and as we say, the ramifications of it are still unfolding. But thank you very much for listening to us. That's it from us. Bye-bye.

42:44Robert:Goodbye.

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