Monday, 15 October 2012


Wonga faces questions over borrowing by children

Wonga, the online loans company, is facing questions about whether its checks to prevent children from borrowing cash are adequate following evidence that it has allowed under 18s to build up debts.
Wonga faces questions over borrowing by children

Wonga has faced widespread criticism over its interest rates, allegedly heavy-handed debt collection methods

By Jason Lewis, Investigations Editor8:00AM BST 14 Oct 2012175 Comments

It is the high-interest loans company which came from nowhere to become one of the fastest growing finance firms in Britain.

Wonga has faced widespread criticism over its interest rates, allegedly heavy-handed debt collection methods and, most recently, its £24 million shirt sponsorship deal Newcastle United football club, which some say will tempt impressionable young fans to get into debt.

Now is facing new concerns over evidence it has allowed children to borrow cash, getting themselves, their family, and friends into debt, because its checks to prevent them applying are an inadequate.

Under-18s are banned from taking out loans with the firm, and Wonga dismisses it as "fraud", but a Sunday Telegraph investigation suggests that young people are finding ways to convince Wonga’s "automated, real-time risk and decision system" that they are eligible for its 4,214 per cent APR loans.

The evidence includes:

* Cases of children who lied about their age and successfully applied for loans, building up large debts that they could not afford to repay;

* A debt relief charity says it detects a "worrying trend" with a growing number of children contacting them for help after asking 18-year old friends to take out short term loans on their behalf and then being unable to repay them;

* An MP is preparing a dossier of vulnerable young adults with learning difficulties and mental health issues who have got into debt with the firm.

Critics of Wonga, which earlier this month revealed net profits of £45.8 million for 2011, say its boast of providing cash to loan applicants within 15 minutes does not allow a sufficient "cooling off" period to think carefully about the loan they are taking out and whether they can afford it.

Wonga’s computer system checks whether applicants have a valid bank account – which can be opened by someone as young as 11 – an email address and a mobile phone number, to which it sends a unique PIN code. It also checks applicant’s addresses, asking for the surname of the "bill holder".

Applicants are also given the option of connecting through their Facebook account. Facebook users must be at least 13. "Connecting with Facebook", says Wonga, "helps us to know you better. This will improve your chances of being approved for a loan."

A leading businesswoman told The Sunday Telegraph that her son, who suffers from attention deficit-hyperactivity disorder (ADHD), ran up a series of debts using Wonga when he was 17.

She said: "He simply lied about his age and was able to borrow hundreds of pounds which he couldn’t afford to pay. Then debt collectors hired by Wonga came to us for the money plus interest."

Another parent said Wonga was pursuing them over loans taken out by their 17-year-old daughter on behalf of a friend, also 17. He said they did not find out until "Wonga emptied the bank account (she) uses for her education maintenance allowance and is now unable to get to college".

Wonga was set up by Israeli businessman Errol Damelin, 43, and South African Jonty Hurwitz, also 43, who helped design a mathematical model to allow the firm to issue the maximum number of loans in the shortest time possible at the minimum risk.

Rather than a bank or financial institution, Wonga is a technology firm with Mr Damelin’s ambition for it to be "world class", "like Facebook, Amazon and Apple".

The pair set up the firm in 2007, with Mr Damelin relying on his wife, Julie Blane, a marketing consultant, to cover the bills at their £580,000 East Finchley home while he paid himself just £400 a month as he built the business. By last year one of its directors, thought to be Mr Damelin, was earning £1.6 million.

The business centres on the sophisticated computer program, built by Mr Hurwitz and a team of software engineers.

The partners’ plan was simple, they would borrow from venture capitalists and issue small loans, for up to a month, to customers at a large profit.

They took out a mortgage on their computer model, repaying with an interest rate of between 7 and 12 per cent.

Although Wonga’s cost of borrowing is high – a loan of £400 for a month costs £125.48 in interest and fees – the company claims the traditional APR measure is not relevant to its short term lending.

The business took off, and has now issued more than five million loans, worth up to £1,000 each, with a maximum term of one month.

The business is helped by the lack of legislation in Britain on how much interest can be charged. Other countries, notably Australia and some US states, have placed strict caps on interest rates. Some US states have outlawed loans like Wonga’s completely.

In Britain, television advertising and Facebook marketing helped it go from a loss in 2009 to a strong operating profit.

However earlier this year the firm was criticised by the Office of Fair Trading, which warned it against letters or emails suggesting that customers may have committed fraud and telling them that Wonga would consider contacting the police.

A spokesman for the charity the Debt Advice Foundation said young people were contacting its advice line worried that they owe money to an older friend who had taken out a loan with payday companies, including Wonga, on their behalf and now finding they could not repay the debt.

She said it was evidence of a "worrying" culture change.

Stella Creasy, a Labour MP campaigning for tighter regulation of payday loans, said her office was compiling a dossier of young people who, though old enough to apply for credit, were not capable of making informed decisions and were getting into financial difficulties with the easy credit offered.

Mr Hurwitz now devotes more time to sculpture, a website of his ideas, which he calls "Binge Thinking", and a foundation for child refugees. He has a £2 million home in Haslemere, Surrey, with his wife, Oonagh.

Mr Damelin said careful checks were made to stop children obtaining loans. He said: "If somebody is using fraudulent information to get cash, and then not paying back, they are not the victim – we are the victim."

A Wonga spokesman said: "Like all online businesses, we are not 100 per cent immune to fraud, but it constitutes less than 0.1 per cent of all loans approved and we decline the majority of applications based on creditworthiness or ID-related issues."

She added that in cases of vulnerable adults getting into debt with the firm it had a "hardship team" to "manage these situations as sensitively and swiftly as possible".

Andrew Mitchell

Britain under pressure to end all aid to Rwandan government

Britain is under mounting international pressure to stop all aid to the Rwandan government.
Paul Kagame, the Rwandan president, with Andrew Mitchell in his role as International Development Secretary
Rwanda's President Paul Kagame, Britain's Minister for International Development Andrew Mitchell and Uganda's President Yoweri Museveni talk in Kigali Photo: REUTERS

By Jason Lewis, Investigations Editor 06 Oct 2012

The United Nations and the European Union wants the UK to withhold millions of pounds it is due to hand to President Paul Kagame's government as part of an international campaign to choke his regime of funds.

Rwanda is accused of arming rebels responsible for atrocities, including mass rape, in the neighbouring Democrat Republic of Congo.

They hope that Britain will fall in line after David Cameron replaced Andrew Mitchell as international development secretary in his Cabinet reshuffle last month.

Britain initially agreed to go along with international condemnation of Rwandan involvement and to cancel £83 million it gives it in aid each year.

But Mr Mitchell's last act in the job, before he was moved to the role of Chief Whip, had been to restore about £8m aid to the regime, with another £8m to follow later this year, apparently against the advice of officials in his department and from the Foreign Office.

He based the decision on personal assurances from the Rwandan president and on his own experiences running a small Conservative "charity" project in the country.

Officials were told his personal experience with Project Umubano outweighed evidence from a group of experts from the UN, Human Rights Watch observers and Foreign Office officials.

The Sunday Telegraph has learned that the UN and EU privately expressed their "disappointment" with Mr Mitchell's decision at a hastily convened international contact group meeting at the Foreign Office last month.

A source at the meeting said there were "obvious differences" between Foreign Office officials and "between different officials in the Department for International Development".

Mr Mitchell apparently also ignored police intelligence reports that suggest Rwandan dissidents living in exile in Britain are being targeted by the regime.

Last year the Metropolitan Police took the unusual step of issuing the Rwandan exiles with formal warning notices stating that "the Rwandan government poses an imminent threat to your life".

The United Nations and Europe have both accused President Kagame of giving support and weapons to the so-called 23 March Movement (known as M23) in the Democrat Republic of Congo, accusing it of attacking civilians and "acts of sexual violence".

At a meeting at the UN in New York last week the EU directly accused Rwanda of backing the M23 rebels. President Kagame and senior figures in his regime may now face sanctions over their links to the group and human rights abuses it has carried out.

Two new confidential reports on Rwanda's involvement with the M23 rebels were presented to Security Council officials last week and are likely to lead to further action being taken against the regime at the UN in the next few weeks.

A UN source said: "Britain's position has come as a bit of a disappointment to those who are trying to alter the position on the ground. Everyone else is united in putting pressure on Rwanda."

Britain is Rwanda's largest aid contributor and the source said its involvement in bring pressure to bear on President Kagame was "vitally important".

Internal documents from DfID, released under the Freedlom of Information Act, reveal that in a February 2011 telephone conversation, Mr Mitchell had promised the Rwandan president that Britain would increase its aid from £60m to £90m by 2015. Two months earlier, he had flown to Rwanda for a "90-minute tete-a-tete followed by lunch" with the newly re-elected president.

But the memos also reveal doubts within the department about the "political risk" in Rwanda. Mr Mitchell's ministerial colleague, Stephen O'Brien, highlighted international concern about human rights in Rwanda.

Justine Greening, the new International Development Secretary, must now decide whether Rwanda should receive the second tranche of the money promised by Mr Mitchell. Her office did not respond to requests for comment.

A DFID spokesperson said: "The Secretary of State will consider the issue of budget support to Rwanda carefully before our next decision in December."

It is understood that Mr Mitchell based his decision to continue aiding Rwanda on "personal assurances" from Mr Kagame who had previously attended the Conservative conference and lavished praise on Project Umubano calling it an "unprecedented" example of aid. He is also understood to claim, though, that the decision was later agreed by Downing Street.

The Conservatives' Rwanda project was Mr Mitchell's personal brainchild but was designed to show the caring side of Mr Cameron's Party when it was in opposition.

Now also working in Sierra Leone, the project has seen more than 200 Tory supporters, including Mr Mitchell, his wife Sharon and their daughter Rosie, fly to Rwanda for two-week stints to help as the country slowly recovers from the genocide which saw an estimated 800,000 people murdered there in 1994.

Mrs Mitchell, a GP, has also spent several months working as a doctor in Rwanda.

The Prime Minister praised the project as "the first time that any British political party had engaged in a social action project in the developing world".

He said he and Mr Mitchell had set it up "to raise awareness of global poverty and play a small part in tackling it on the front line".

Yesterday a Conservative spokeswoman said the project, which includes an annual Tories versus locals cricket match, had "provided English lessons to over 3,000 Rwandan primary school teachers, renovated a school, established a small medical library and built a community centre".

Conservative volunteers, including ministers, MPs, Parliamentary candidates and local councillors, pay their own airfares, but much of the start up money for the project came from a wealthy widow from Hove, Helena Frost.

Despite having little interest in politics, according to her family, Mr Mitchell personally persuaded Mrs Frost to provide the funding. Electoral Commission files show that before her death last November, she gave the party £250,000 in donations - £200,000 of which went to fund Mr Mitchell's office in opposition and £50,000 directly to the Rwanda project.

Last night, Mrs Frost's nephew Mark, who was close to his aunt and often accompanied her to charitable events, said he was "slightly taken aback" that she gave so much.

He said: "It would appear Mr Mitchell (was) very charming and very persuasive. It was quite a large sum which doesn't necessarily seem to fit with the amounts she ordinarily gave to the many other charities she supported.

"She was not one to meddle in politics at all and was convinced the money was going to help the poor. She would have not have given money to politicians for political use or gain, she had understood that she was helping the poor in Rwanda."

He added: "This was a private matter and she was reticent about this particular charitable donation.

"She was a wonderful woman who had a great passion for certain causes and for many people. I can only imagine that this may have been the case on this particular case for her to have contributed such large sums to a single cause."

He said Mr Mitchell had been introduced to her through another charity that he was involved with and to which Mrs Frost, who had a considerable personal fortune and had also set up a £6 million charitable foundation in the name of her late husband Patrick, had contributed large sums.

Tuesday, 2 October 2012


Doting wife loses everything after acting as perfect hostess for fraudster Nicholas 'Beano' Levene

He was the flamboyant and charming stockbroker with a reputed golden touch and she was the perfect hostess, loving wife and doting mother.

Nicholas and Tracey Levene.
Nicholas and Tracey Levene. Photo: Edward Lloyd/Alpha

By Jason Lewis, Investigations Editor and Simon Griver in Tel Aviv
7:00AM BST 30 Sep 2012

Together Nicholas and Tracey Levene befriended multimillionaires who he then persuaded to hand over huge amounts of cash for him to invest.

But in reality “Beano” Levene, nicknamed for his love of the boyhood comic rather than his passion for the high life, was gambling the cash and using it to pay for the couple’s life of luxury.

Levene was running a classic “Ponzi” scheme. Behind the facade, his wealth was built on a fantasy of business acumen and was paid for with other people’s money.

Last week the 48 year-old pleaded guilty to running a £32 million fraud stealing from British investors. He is facing a long prison term. In legal cases in Britain and Israel, a series of victims are trying to salvage the money they entrusted to him.

In fact, it can be disclosed, Israel was a second centre of operations for “Beano”, whose nickname there was “Nick the King”. His life in Britain and Israel ran in parallel: a friend to the wealthy, and lavish in his partying, he made friends who became clients to whom he promised healthy returns.

He offered shares in companies that included HSBC, Royal Bank of Scotland, Imperial Energy and Rio Tinto. He told clients he had access to shares unavailable to ordinary investors, which he would trade at a supposedly huge profit.

In the end it came crashing down because the money he had supposedly been investing had been used for spread betting. Instead of buying shares, he would place his clients’ funds in bets on stock market levels and individual shares.

If the share price went up, Levene would pay his clients returns. But when the price fell, he had to pay the spread betting firms. That meant taking new investments and using those to pay his liabilities.

Eventually, the edifice collapsed, leaving clients including Brian Souter and Ann Gloag — the Stagecoach founders who lost £10 million — out of pocket.

From April 2005, he simply stole his investors’ stakes, faked paperwork, and duped new victims to keep the money coming in. He will be sentenced on Oct 22.

The rise of “Beano” began when he returned from Israel to Britain. His electrician father, Martin, and his mother, Anne, had emigrated from their home in Stanmore, north-west London, when Levene was 15.

He served in the Israeli military and worked as a hotel bell boy, but found his real home in the City. It was the peak of the 1980s boom when he started trading, aged 21. Known for his gift of the gab, he used his North London connections to win clients and kudos from his employers.

With his wife Tracey — the couple have three children — he socialised with Sir Philip Green, the retail tycoon, the Tchenguiz brothers and Richard Caring, owner of Annabel’s, the nightclub, and The Ivy restaurant.

By 2004 he had donated £10,000 to the Conservative Party and claimed Howard Leigh, then treasurer, as a “close friend”, although Mr Leigh later said: “I wouldn’t call us close friends, we didn’t go to each other’s homes.”

As markets rose, his promise of 12 per cent returns earned him a £2 million five-bedroom house in Hertfordshire with a heated outdoor swimming pool and cinema room. In Israel there was a £3.4 million villa in Herzliya, Tel Aviv’s wealthiest district, and a home in Eilat on the Red Sea for his parents. The Saturdays, the girl band, played at the bar mitzvah of Levene’s son Daniel.

However, just as his gambling grew in London, in Israel he was also finding victims, including, it can be disclosed, Daniel Jammer, a multi-millionaire German-born Israeli.

Mr Jammer had been celebrating when he met Levene in 2008. His football club, Maccabi Netanya, had gone top of the Israeli Premier League, and Levene, who had been vice chairman of Leyton Orient, offered to buy a stake in his team.

Levene would later claim to have a gambling addiction after losing £50  million. When he met Mr Jammer, Levene owed huge amounts to spread betting firms. The Levenes became friends with Mr Jammer and his wife, holidaying at the Jammers’ Ibiza villa, with Levene offering to cut his new friend in on a major stock flotation.

Last week Mr Jammer declined to talk to The Sunday Telegraph, but his bitterness at the betrayal is clear in court papers filed in Tel Aviv. The documents show Mr Jammer agreed to give Levene £9 million to buy shares in a German transport company but when the flotation fell through Levene failed to return the cash.

Mr Jammer was convinced Mrs Levene was part of the deception – his legal team claim she convinced Mrs Jammer to get her husband to invest. “From conversations they have since had with another couple from abroad who fell victim to the Levenes’ tricks, it became apparent that Tracey knew well even before the money was passed on to Levene that he would neither invest it nor return it,” the papers claimed. The court heard he “was deep in debt and was not able to pay back many people including family members”.

The Jammers tried to force Tracey Levene to sell the villa in Tel Aviv. It was in Mrs Levene’s name but was heavily mortgaged by her husband. The Israeli court ruled that Mrs Levene was unaware of her husband’s Ponzi scheme, but she still lost her Israeli home to British creditors.

A source at the Israeli accountancy firm Deloitte Brightman Almagor Zohar said Mrs Levene’s villa and the home of Sarah Levene Goffer, his sister, were seized and sold, along with an Eilat apartment registered to Levene’s parents, and home contents detailed as “expensive furniture, paintings, and carpets”.

Last week the Levenes’ home in Hertfordshire was listed with four agents priced at £2 million. Land registry documents show Levene had remortgaged the property in September 2008 and within three months a string of creditors had applied for a share in the proceeds of a future sale.

Pictures of the property show a house lined with family pictures and paintings of horse racing and traditional Jewish scenes. But the family have moved out and much of the contents are expected to be sold to pay something towards Levene’s huge debts.

For Levene, the parties in Britain and Israel are very much over.

Killing in Annecy

Gun in Annecy killing may be connected to the region

The killer in the French Alps murder used a gun which may be closely connected to the region, the Sunday Telegraph has learned.
France shooting: Three victims were shot in the head
Police around the BMW at the scene of the shooting in woods near Chevaline in the French Alps Photo: Daily Telegraph

Harriet Alexander in Annecy and Jason Lewis, Investigations Editor
8:30AM BST 16 Sep 2012

Sources close to the investigation have disclosed that Saad al-Hilli, a British engineer, his wife, mother in law and a French cyclist, were shot with a Luger P08, a highly-distnctive weapon which was standard issue to the Swiss Army.

The disclosure raises the possibility that the killer is connected to the areas as the scene of the crime is less than 40 miles from Switzerland.

It comes as The Sunday Telegraph has learned that the French investigation on the ground is being “scaled back” with many of the 120 officers originally on the case returning to normal duties.

French sources said that by last night only 40 gendarmes remained on the case, with many of the Parisian detectives having returned to their base Rosny-sous-Bois in the capital.

In addition to the French forces, 40 British officers were working on the case in the UK, where the French detectives say they are convinced the cause of the crime will be found. A major forensic search was still under way at the family home in Claygate, Surrey, last night, conducted by British officers.

There was also confusion after reports in France that police are looking for a black Mitsubishi Pajero with British number plates in relation to shooting were denied by officers.

Mr al-Hilli, 50, his wife Ikbal, 47, Suhaila al-Allaf, 74, and Sylvain Mollier, 45, a local cyclist, were shot dead in a car park on a remote road, close to Annecy, in the French Alps. The family was on a camping holiday nearby.

Their daughter Zainab, seven, was shot and pistol whipped but their other daughter, Zeena, four, survived. Both are now being cared for in Britain by relatives.

However questions were raised last night by British experts over the conduct of the inquiry, including whether the crime scene had been properly examined and whether the couple’s two children were being used properly as witnesses.

It is now know that the investigators have concluded the gun involved was a Luger P08 gun, which fires highly distinctive 7.65mm calibre bullets and has a capacity of eight rounds.

Given that there were around 25 bullets fired, and the prosecutor confirmed that only one gun was used, the investigators think that the gunman may have used three magazines.

The origins of the gun will be of huge interest to investigators.

Chevaline, where the murders took place, is just 40 miles from the Swiss city of Geneva. The Luger P08 was standard issue for the Swiss army between 1900 and 1945.

Tens of thousands of weapons and ammunition were handed out to all men of military age, who were ordered to store it in their homes. The Swiss army has always been a conscript force made up of all men of fighting age.

The ammunition, which is 21 mm long, is now rare and is used with very few other weapons. The bullets for the Luger P08 are also all marked with their date of manufacture.

Philip Boyce, an internationally recognised UK firearms expert, said: “The ammunition would either have been stored in a dry place since the 1940s or would have to be specially purchased, and therefore would be easily traced. Most Lugers fire 9mm rounds.

“This sort of weapon, because of the non-standard ammunition, would be quite unusual.”

Last week, Eric Maillaud, the prosecutor for Annecy, confirmed that the weapon was a semi-automatic, firing 7.65mm ammunition. But he refused to go into detail about the type of gun, leading to claims that it was a Skorpion, a Czech-made machine pistol developed in the 1950s for use by security and special forces.

The prosecutor also refused repeatedly to discuss the specifics, but The Sunday Telegraph has learnt that the lethal shots were fired at close range - probably less than three feet away.

The significant development comes as questions were beginning to emerge about the inquiry into the multiple murders.

When local gendarmes arrived they had — as protocol dictated — “frozen” the scene, not touching the car or the corpses, until the forensic specialists arrived from Paris. This meant that the al-Hilli’s four-year-old daughter Zeena endured eight hours cowering beneath the legs of her dead mother before she was found.

Local officials were forced to wait until the Institute for Criminal Investigations for the National Gendarmerie arrived from their base in a Paris suburb.

Rivalries between the gendarmes and the police, a separate force, appear to have prevented them from calling in expertise from the National Institute for Scientific Policing, based near Lyon, only a 90 minute drive away - because that is a police rather than gendarme division.

In Britain detectives and forensic teams would have immediately gone to work, rather than “freezing” the scene.

“From the senior investigators point of view, the crime scene provides the best opportunity for evidence,” said retired Detective Superintendent Robert Bridgestock, who led 26 murder inquiries during a 30 year career at West Yorkshire Police.

“You would order a meticulous examination of the vehicle and the surrounding area. You would seal it off until such time as you had secure every scrap of evidence.

“More often than not there will be something, however small, or insignificant it may seem, that will lead you to him.”

There has also been surprise at the speed with which the forensic examination of the scene ended. Although the day after the murder, the area was still cordoned off, there was no visible tent erected to protect the crime scene from the elements - something that would be standard in Britain, and the family’s burgundy BMW was removed within 24 hours of the shooting.

There was also surprise that on Friday afternoon — 48 hours after the crime had taken place, the road up to the murder scene was reopened.

Tyre marks still visible showed the car reversed at speed, and television pictures showed bloodied pebbles and discarded bullet casings. Broken glass was left on the gravel — whether from this crime or a previous incident — and an ancient car radio, its wires yanked out, was still lying on the bank.

Whether the police performed a detailed “fingertip” search, on their hands and knees in the ravine and across the area, is not known.

Mr Bridgestock said: “It would be unusual to leave anything behind at the crime scene. British officers would remove and retain everything even if it appeared insignificant.”

Seven-year-old Zainab, who was shot and pistol-whipped in the attack, suffering a fractured skull, returned to England on Friday after telling authorities that she had seen “a nasty man”.

Zainaib’s life was saved by British cyclist Brett Martin, a retired RAF pilot, who found her in front of the car and administered first aid before leaving the scene to call emergency services. Her younger sister, although unharmed, has been dismissed as a witness and will not be questioned further. The French investigators insist she saw nothing.

Mr Bridgestock said British detectives would have taken a different approach. He said: “The fact is they are the only living witnesses who were there when the attack took place. It takes time and patience, but they would have seen and heard things no one else could and may provide the vital clue that leads you to the killer.”

French prosecutor Eric Maillaud, who is leading the investigation, said last week that three lines of inquiry were being followed and them as a family conflict over money; Saad al-Hilli’s sensitive work as an aeronautic engineer; and his “Iraqi origins”.

However Mr Bridgestock said: “It is easy for an inquiry to get sidetracked. To follow one theory at the expense of others. It is always a danger and you have to keep an open mind and follow the evidence. You must focus of what the crime scene is telling you. Follow the physical evidence and the witness statements. It is too easy to focus on, for example, one victim. There are four people dead and the target could be any one of them or it could be a random attack and they were just in the wrong place at the wrong time.”

Despite the questions French authorities are resolute that they will solve it.

“We’re determined to crack this,” said one senior French investigator.

“The focus may have shifted to Britain, but the French are set on solving it themselves. We want to see this through.”