by STEVE BRADY
A GROUP of shady City speculators escaped a bid to bring them to book for preying on ordinary members of the public when a fraud trial at the Old Bailey collapsed in January. The defendants, led by notorious Stock Market shark Sir Bruce Tuck, of the Jewish Raphael Tuck greetings card family, had deliberately set out to ensnare small investors in the dubious commodities futures City racket with the aim of relieving them of their savings through huge hidden premiums. But the trial Judge, describing the City commodities racket as “a jungle”, ruefully conceded that there was no law against their activities and had to let them go.
The City sharks concerned were swimming in the murky waters of the commodity futures market. Originally, this was a way for users of raw materials to pay in advance at current prices for the raw materials they needed in the future, thus legitimately insuring themselves against sudden price rises and guaranteeing the raw materials producers a market in advance. But speculators soon realised firstly that if they struck a future deal for a commodity ― copper, sugar, potatoes or whatever ― and when that commodity was actually delivered its current price was higher than it had been when they struck the deal, they could resell the commodity at a fat profit. Secondly, they could take advantage of the fact that they need only pay 10% of the agreed price when they struck the deal.
Thus for a relatively modest outlay they buy, say a million tons of a commodity at ￡1 a ton for ￡100,000 down to be delivered next month. On the delivery date, if prices had gone up to ￡t.50 a ton, they sell the lot off at that price, grossing a ￡1.5 million, pay the rest of the ￡1 million specified in the original futures deal, and stroll off whistling with a cool ￡500,000 profit. All without getting their hands dirty, setting eyes on the goods in question or, indeed, moving from the end of the telephone.
Of course, if the price of their commodity falls rather than rises between deal and delivery date, the slickers are in “shtuck”, landed with a big loss. But the skilled City slicker usually knows which commodities are winners worth backing, and is rich enough to cover the odd loss which would wipe out a small investor. The whole thing is a sort of Stock Market equivalent of playing the 'gee-gees', and about as economically productive.
What Tuck and his friends were doing was even safer. They were going round 'cold canvassing' ― conning small investors with glossy brochures into putting up the cash for their risky futures deals, luring them into the shark-infested waters with tempting promises of vast wealth to be gained. Few of the ordinary folk who thus put up the 'ante' for Tuck & Co.'s City gambles understood what they were getting into, and many lost the lot when a duff commodity fell at the first financial fence. But sly Sir Bruce and his cronies were onto a certain winner. They could not lose, since they weren't gambling with their own money. And if they won, they raked off a fat premium on their backers' winnings, a premium averaging 60% and ranging up to 129% of the original cash they had parted with. As the Judge, Mr. Justice Bax, Q.C., pointed out at the trial: “The dangers to the small investor, even in the absence of any fraud at all, are frightening. These dangers to the small investor arise from the whole state of commodity dealing in this country.”
But in fact there was plenty of fraud, it was alleged. When the Department of Trade and the Fraud Squad closed down the swish Belgravia offices of Tuck's Bahama-based Miller-Carnegie company, the enterprise concerned, they found the company wasn't even registered under the Companies Act. Nor had it had a U.K. bank account for its first eight months, cash being slipped quietly off to the Caribbean, and the Fraud Squad men were told lies about another bank account. The City sharks were also involved in “another sinister transaction”.
But the Court discovered when the sordid swindle came to trial that there was in fact no law against it at all. Anyone can set himself up as a "commodity broker", con ordinary folk out of their life savings and lose the lot in an afternoon on the futures market, or charge them most of what sum they do get back in "premiums". They don't even have to keep their own money separate from that of their victims. It's all perfectly legal, a lawful part of our good old free market Capitalist economy.
So after 59 days and a cost to the taxpayer estimated at over ￡500,000, Sir Bruce Tuck and his friends swaggered out of the dock scot free, their wallets bulging with money swindled out of thousands of British folk, who will never see their life savings again. Sir Bruce will doubtless be glad of the money. He has an expensive mansion in Montego Bay, Jamaica, to keep up. And he lost his share of trust fund set up in 1912 by Sir Adolph Tuck after he broke its stipulation that all its heirs must only marry Jews. Sir Brian is married to a former model from Walthamstow.
Under the existing system, the Judge could only end by counselling people to be on their guard against Tuck and his ilk: "So long as it remains lawful for any individual who chooses to do so to call himself a commodity broker or dealer, to tout for business from people either ignorant, timid or greedy, I hope that people who are so approached will react with the utmost caution."
The only final safeguard for ordinary Britons' savings against sharks like Tuck is to smash the Stock Market, the City and the whole rotten Capitalist system, shoot the speculators and the swindlers, and confine trading in commodity futures to those who actually produce commodities and those who actually consume them, according to the principles of honesty and fair trading.