First £10 million Treasury Bill on collectors' market recalls a daring heist

 

It was a scheme that helped keep British Government finances afloat but which also enabled a petty thief to carry out the United Kingdom’s biggest-ever robbery. Now Dix Noonan Webb will auction a rare £10 million survivor of this historic and secretive arrangement on 29 September 2014..

The Treasury Bill, which promises to pay the bearer £10 million but is stamped “cancelled”, is expected to fetch a more modest figure of up to £15,000 in the sale. It is the first time that a Treasury Bill with such a huge face value has come onto the collectors’ market.

Until just over a decade ago such notes were issued every week in the City of London under a secretive system which enabled the British Government to manage its short-term borrowing policy and make sure that sufficient funds were always available to meet any net daily cash shortfall. Financial institutions tendered for Treasury Bills every Friday specifying that they wanted the Bills on a particular day the following week.

The Treasury Bills could have maturities of one month, three months, six months or a year (although no 12 months tenders were actually issued). The financial institutions bought them discounted for less than their face value, lending the money to the Government until the maturity date. They were then able to claim the full amount of the Bills from the Bank of England so making a profit. The Bills were often traded on to other financial institutions so the Bank did not know who held them.

The scheme seemed solid but had a fatal flaw.

Messengers collected the Bills from the Bank of England the day specified by the financial institutions and could be cashed in by whoever was physically in possession of them. It was this prospect that led to John Goddard, a 58 year-old messenger with the money brokers Sheppards, being mugged at knifepoint in a quiet side street in the City of London on 2 May 1990. The robber got away with 301 Treasury Bills and certificates of deposit, worth a total of £292 million. It remains Britain’s biggest robbery, far exceeding the £53 million taken in the UK’s largest cash heist at a Securitas depot in Kent in 2006.

The City of London Police and the American FBI infiltrated the gang involved in laundering the Treasury Bills and eventually recovered all but two of them. One man was jailed for his part in the crime but Patrick Thomas, the petty criminal from South London who was believed to have carried out the mugging, was found dead from a gunshot wound to the head before he could be charged. What was extraordinary was that Britain’s biggest and the world’s second largest robbery was carried out by a low level thief brandishing a knife in a London back street. Only the $1 billion theft from the Central Bank of Iraq by one of Saddam Hussein’s sons in 2003 has topped it.

Today the system run by the Debt Management Office, an Executive Agency of the Treasury, is still in place but is computerised and no longer physically prints Treasury Bills. The last Bills were produced in September 2003 and included the one being auctioned here which was given to a Government official as a leaving present after being stamped “cancelled”.

“This is a piece of British financial history,” says Christopher Webb, head of the banknotes and coins department at Dix Noonan Webb. “We recently sold a £1 million Treasury Bill at auction but this is the first £10 million Bill to come onto the market.”