The recent story of Shannon Matthews, the child kidnapped by her own mother and her lover, raises a series of disturbing but illuminating observations.
Among the more informed press comments on this case, was the report that the mother was deeply in debt to local loansharks who were pressing her for repayment of her loans, and believing that she might be able to claim some spurious reward for later ‘finding’ her child, she hoped she would thus clear off her debts. Like so many other members of the underclass, whose sole source of income is the welfare benefit they claim, the loanshark is a well-known figure within their community. He will provide cash immediately, but on terms that brook no argument, and at an interest rate or ‘vig’ which is non-negotiable.
He doesn’t mind to whom he lends because he knows the loan will always be repaid, well, as long as his debtors want to keep the use of their legs, or other parts of their anatomy.
The loanshark has been a long-standing member of Britain’s underclass communities for many years, and his enforcers have become part of a common folklore going back to Charles Dickens.
In November 2008, a loan shark was jailed for more than three years after making in excess of £780,000 by targeting people desperate for money.
Scott Linegar, a father of three of Grovelands, West Molesey, threatened friends and family of those who owed him money when payments were late. The 30-year-old told one customer he would “put him in a wheelchair for life” if he did not receive his cash by the end of the day, and warned another he was going to “start hurting his mates”.
He was said to have charged interest of up to 100% a day and owned two houses and an expensive Mercedes car, while disguising his profits by running a tanning salon in Tadworth.
Linegar was only caught when he was involved in a road accident in 2005, and bags containing huge quantities of cash were found in the boot of the car. One bag contained £44,600 in bank notes, another bag contained £1,920.
Police officers also found boxes containing scraps of paper recording telephone numbers and payment amounts, as well as mobile phones. The phones had been used to send text messages to clients who had failed to pay up on time, one containing a racist insult and a threat to “hurt you so bad”.
The present credit crisis raises some interesting issues which are worth exploring, because one of the lesser side-effects of the continued reluctance of the banks to lend money to legitimate clients is that more and more, people who need to borrow money are turning to the loan sharks to get what they need.
This story has remarkable parallels with the situation which developed in the United States in the aftermath of the Wall Street Crash and the Great Depression which followed. There again, a massive credit crisis was experienced, and banks would or could not lend money to businesses who needed short-term cash loans to stay afloat and manage their cash-flow difficulties.
These businessmen looked around for others who had cash to offer on terms, and found a very generous welcome at the hands of the local organized crime gangs. The 1930’s saw the Mafia in the United States consolidate the profits they had made from their booze-smuggling and distribution rackets in the 1920’s during Prohibition, by becoming the lenders of last resort to clients starved of their normal sources of cash. Loansharking became the principal source of new money generation for the mob at this time, a practice which has continued until the present day. Its effect was to cement the mob into a highly organized, well-defined business criminal empire, which has made them nigh-impregnable, and in many cases, quasi-legitimate. Within another generation and their business activities will have become an accepted part of the US business milieu, and they and their families will have become legitimized.
As the present credit crisis deepens, a new form of lender of last resort will continue to emerge from the ranks of the cash-rich individuals who recently had cause for concern about being found in possession of large quantities of cash. The major drug dealer, the VAT carousel fraudster, the high loader pimp and the money laundering cash changer, like their organised criminal counterparts in the US, are all finding new ways of disguising their possession of large sums of money, by ‘cleaning’ up their cash through loansharking. These days, loan sharking can be called ‘Pay Day Lending’, but most loan sharks don’t bother to advertise, they don’t have to, their traditional clients know who they are and where to find them.
The very act of lending their drug profits, in many cases to the very people who paid them in the first place, provides an immediate air of legitimacy to the practice. This can even be legitimized further by the mere act of acquiring a consumer credit licence to act as a money lender, and the drug trafficker is home free. It is very easy to get an OFT licence and the costs are small.
It costs a sole trader £380 for a licence, (includes consumer credit licensing fee of £230 and CCJ levy of £150.00) A partnership, company or other organization costs £725.00 (includes consumer credit licensing fee of £575 and CCJ levy of £150.00). Clearly many new licensees have seen the wisdom of obtaining such a licence, as the OFT’s own website reports “…We are currently experiencing delays in the processing of renewal applications and notifications to update existing licences. We can assure you that the licensing team is working hard to deal with these delays. We apologise for any inconvenience caused to you during this time…”
Not exactly an onerous sum of money to pay when the benefit is to acquire almost limitless immunity from any form of state intervention. Your profits from crime can now be easily intermingled with your interest from your loan-sharking activities, and no-one will be any the wiser.
The banks and particularly those financial institutions which have been bailed out by tax-payer’s money, should be made to start lending again at commercially sensible rates, because the alternative will be to cement the financial and commercial hegemony of a generation of criminals that the money laundering laws were intended to interdict. In the absence of prudent but commercially practical lending policies, criminals are being given a ‘get out of jail’ card, free, gratis, and virtually for nothing. Within a very short time, they will have become completely legitimized, and the purpose of the money laundering legislation will have become nullified.
