Government The Inquiry Into Collapse Of Kaupthing Iom

[The Old Git]

Haven't the facts been pointed out to them several times already over three threads?

 

True, but they could just not be listening.

 

That's the mental image I have of one poster in particular. Fingers in both ears "la la la - I want all my money back right now - la la la"

[Slim]

They're having fun with the regulator in Antigua eh? Bribed hundred of grand by Stanford to keep his dodgy funds hused up. Naughty!

[pongo]

pongo: plenty of funds use the BVI or Cayman because of slack regulatory supervision.

 

Those are not EU states. The question relates to EU states.

 

----

 

There is not one blanket standard level of supervision but there are common rules on basic solvency and professional staffing etc - but basic is perhaps the operational word. Companies will deliberately set up subsidiaries in EU states with more favorable tax regimes and with 'lighter' supervision.

 

Interesting. Can you provide any examples of companies deliberately setting up subsidiaries in EU states because those states have lighter financial supervision (ie lighter administration of common regulation) than other EU states? Or link to any articles which identify this as an issue?

 

Not the different taxes issues, which is a different matter.

[bellyup]

Constantly calling people liars only draws attention to the fact that you are making endless excuses for undue diligence and poor banking procedures.

 

No, it draws attention to the fact that they are liars. If you continue to say that every other jurisdiction in the world apart from the Isle of Man is ensuring a 100% payout to depositors after it has been shown to you that this is not the case, you are a liar. If you continue to say that the Isle of Man was in breach of regulations when it has been shown to you that it was not, then you are a liar. You might be a liar who has unfortunately lost some money in a banking crisis, but you are still a LIAR

 

Actually what what said was every jusrisdiction in the world barring Guensey and Jersey. But why would the Isle of Mand who is actively promoting itself as a SAFE banking centre want to ally with the defaulters in this respect?

 

Better to stand up with the good guys confidence and trust and reputation are delicate things easily lost.

[bluemonday]

Isle of Mand

Bloody hell, the Prince of Darkness has bought this place?

[manshimajin]

Interesting. Can you provide any examples of companies deliberately setting up subsidiaries in EU states because those states have lighter financial supervision (ie lighter administration of common regulation) than other EU states? Or link to any articles which identify this as an issue?

 

Not the different taxes issues, which is a different matter.

Yes. I did some work for a UK financial services group that used this route to get around what it saw as very bureaucratic regulatory supervision in certain Central European EU States. It chose Ireland as a base in part for tax in part for the more progressive supervision. Interestingly it did not see the UK FSA as exercising good quality supervision. I tend to agree. The UK FSA was too concerned with procedural minutiae and not enough with financial security and risk management.

 

It is very common for big EU financial service groups to use 'home base' for supervision and have 'branches' in other states.

 

I think it is really important to understand that 'lighter' does not mean worse in every case. Sometimes 'smarter' supervision is 'lighter' supervision that focuses on important core issues of financial security rather than how letterheads or business cards are set out (ie the UK FSA approach was in the past biased towards the latter).

[hboy]

Interesting. Can you provide any examples of companies deliberately setting up subsidiaries in EU states because those states have lighter financial supervision (ie lighter administration of common regulation) than other EU states? Or link to any articles which identify this as an issue?

 

Insurance companies in Gibralter are prime examples. EU passporting coupled with extremely light touch regulations, Malta is similar as its an EU State but the regulatory infrastructure is relatively new and quite business focussed. Same applies in many smaller EU States - you go there for regulatory arbitrage but get the same passporting rights as any major EU Member State.

[pongo]

Gibraltar seems to do very nicely within the EU whilst still being, ahem, tax competitive for companies. From some points of view they seem to have the best of both worlds.

 

According to the internet some of the banks in Gibraltar operate as branches rather than subsidiaries of UK banks are therefore covered by UK depositor protection.

 

PS - thanks for answering my question manshimajin

[bellyup]

How do you know it was £550m?

You must have inside information. According to the information here even the experts are not that clear.

 

I find the whole subject very confusing. Even the experts seem to be struggling with all this.

How the MHK's who voted for the SOA could possible do this with a clear understanding what they were voting for is beyond me.

 

As we have seen this week in the Keys questions Mr Cannan was given a hard time by the treasury minister for changing his mind, who can blame him when even the experts seem to be unclear over what was the best solution for the depositors.

 

Oh well I am sure it will all blow over eventually, and when the report comes out, no one will be too blame, lessons will be learned etc. etc.

 

It wont blow over .

Too many people who have been hurt in this.

The SOA was a solution that was disadvantageous to many of the depositors thats why it was voted out. I agree that some members of the MHK dont really understand the issues. Listening to a transcript one asks if the depositors are going to pay the costs of Alix ( even though an embarrassed Alan Bell had said they were not) however it appears things have changed as the IOMG is refusing the costs of using Mike Simpsons ( who is acting and being paid for by the depositors )assistance in the preparation of the SOA. They expect the depositors to pay for something they neither wanted asked for or had any input into

 

The SOA was scheme so complicated and flawed that as you say no one had a clear understanding of what was what . ( how did they think some poor OAP without access to lawyers or computers was expected to get it)

[oldmanxfella]

The SOA was scheme so complicated and flawed that as you say no one had a clear understanding of what was what . ( how did they think some poor OAP without access to lawyers or computers was expected to get it)

 

It was presented badly and the mere fact that an alternative to the DCS was presented created an atmosphere of mis trust amongst the depositors. However all the smaller savers voted for it so it must have had some merit in fact it was only one or two votes that swung it in the end. I think if IOMG had put its name behind the SOA as 'guarantor' or whatever (as it effectively does with the DCS) everyone would have gone for it no questions asked.

[bellyup]

The SOA was scheme so complicated and flawed that as you say no one had a clear understanding of what was what . ( how did they think some poor OAP without access to lawyers or computers was expected to get it)

 

It was presented badly and the mere fact that an alternative to the DCS was presented created an atmosphere of mis trust amongst the depositors. However all the smaller savers voted for it so it must have had some merit in fact it was only one or two votes that swung it in the end. I think if IOMG had put its name behind the SOA as 'guarantor' or whatever (as it effectively does with the DCS) everyone would have gone for it no questions asked.

 

It did have some apparent merit in timing for the smaller savers ie those under 50k or more realistically for those under 35k.For most small depositors there is little to choose between the SOA and the DCS ( if the latter is correctly actioned)

 

What put people off was the SOA was that the fact that depositors had to resign their rights to further legal action against those responsible.

Unfortunately how can there be trust when all is weighted against the depositor?

It even seems that the IOM legal system is deliberately delaying the process as much as it can.

By deferring hearing of the costs involved in preparing the SOA the Deputy Deemster causes further financial hardship and emotional stress to the depositors.

 

Depositors have now been denied access to their life savings and retirement provision for 8 months. In that time, all that the endless discussion and prevarication by the Isle of Man authorities has achieved is a reduction in the net amount available to them from the collapsed bank.

 

The SOA has apparently cost the Isle of Man taxpayer almost a million pounds in fees and costs directly incurred by the IOMT and its advisers. If the IOMT gets its way, this debacle will also cost depositors dear as they will have to meet both their own considerable legal costs and also to pay indirectly for the time PwC spent on their behalf on the SoA, which will ultimately come out of any potential return they may receive from the bank.

 

The depositors told IOMT back in January that the scheme was not appropriate and that anything that prevented future legal actions against the parties involved in this debacle would never be accepted by depositors. But IOMT decided to ignore this advice and pursued their scheme at all and any cost with little regard for the destitution further delay would cause to the depositors

 

Yet unbelievably the IOMT has the audacity to go to court and argue that despite all the advice it received to the contrary and despite the fact that it always knew that just a single vote in one of the three classes of creditors that had to approve the SoA had the power to defeat the scheme (as it did), the risk was worth taking and now should be paid for heavily by depositors themselves.

 

It is clear that the Isle of Man operates a parochial and incestuous culture in all its political, legal and business activities and dont give a monkeys for the suffering of innocent depositors who trusted them

 

All the depositors want is fair and just treatment the IOMG should be fighting their case with HMG asking them to return the funds to the IOM not messing around with futile and devious SOAs and then handing them, the innocent depositors the bill!

[007Pimpernel]

I am back. In my absence see that great play is being made of myself being labeled as a liar. I understand that this sort of accusation is not uncommon in forums where the truth of a matter is so unacceptable that it is easier to shoot the messenger than accept the unpalatable message.

 

Being called a liar does not phase me because I am not lying. I don't expect Tugger to accept anything I say because when it comes to the Kaupthing fiasco his mind is narrow & his view blinkered. But for those here who have an open mind & are prepared to look at the facts, I would like to clarify this matter of regulatory failure.

 

1. The KSFIOM directors know how much was transferred to KSFUK because they authorised it. They have kept their mouths shut tight about exactly what sum they authorised, but the figure given by HM Treasury & passed to me by the Ministry of Justice is £532million.

 

2. There was serious regulatory failure involved because such a large sum was transferred totally unsecured to a bank within the Kaupthing group, with the directors & the FSC knowing that if the parent bank in Iceland were to collapse then the sister banks were at serious risk of doing the same. That is exactly what happened to ALL of the banks.

 

In October 2008 Kaupthing hf became insolvent and it was nationalised. KaupthingUK then went into administration. This meant that the KSFIOM assets were in the KaupthingUK 'pot' leaving KSFIOM as an unsecured creditor. The secured creditors had first claim on the assets of KSFUK. This has resulted in approximately 50% of the KSFIOM money being lost in the administration of KSFUK.

 

3. Who is to blame for this disaster? Iceland? Alistair Darling? UK Treasury? the FSA? the FSC?

In the final analysis the responsibility for the loss of KSFIOM assets rests four square with the IoM FSC & the bank's directors.

 

The FSC has tried to blame the FSA for not following the Memorandum of Understanding between them by advising it of the deteriorating situation & hence the need to move the assets before the plug was pulled on KSF UK. Whatever the reason for the FSA failing to do this the fact remains that the FSA was only ever in an advisory role, so the ultimate responsibility for safeguarding the KSFIOM assets rested with the bank & the FSC.

 

The directors put all the £532million into one basket. Why did they not do the logical thing and spread the risk by putting the money into a number of other banks ? That is what the FSC regulations call for. In backing the transfer the FSC ignored its own regulations.

 

4. Jonathan Smalley (IoM solicitor) publically called for the immediate dismissal of the FSC as he was left in no doubt that they had failed in their duty of care to protect the depositors' savings with KSFIOM. When challenged by him John Aspden refused to comment.

 

4. As a result of what happened the FSC has carried out a review & published a long document. The heart of this document is the whole issue of 'risk management'. In this report every 't' has been crossed & every 'i' dotted so as to absolve the FSC of any future blame in the event of another bank going to the wall.

[manshimajin]

Depositors have now been denied access to their life savings and retirement provision for 8 months.

The directors put all the £532million into one basket. Why did they not do the logical thing and spread the risk by putting the money into a number of other banks ?

It sounds like a sad an sorry mess all round. I am concerned if both depositors and Directors 'put all their eggs in one basket' as clearly this is poor financial management by both parties.

 

Is there any information on the distribution of accounts by size of account? i.e. what percentage of depositors have accounts <£10,000, <£20,000 etc..? are there many depositors with sums >£50,000? How many depositors did what Pimpernel suggests the Directors also did - fail to do the logical thing and put all their money into one bank?

 

On the issue of resigning rights to further legal action raised by Bellyup - isn't this fairly standard practice in case of 'settlements'.

[bellyup]

Depositors have now been denied access to their life savings and retirement provision for 8 months.

The directors put all the £532million into one basket. Why did they not do the logical thing and spread the risk by putting the money into a number of other banks ?

It sounds like a sad an sorry mess all round. I am concerned if both depositors and Directors 'put all their eggs in one basket' as clearly this is poor financial management by both parties.

 

Is there any information on the distribution of accounts by size of account? i.e. what percentage of depositors have accounts <£10,000, <£20,000 etc..? are there many depositors with sums >£50,000? How many depositors did what Pimpernel suggests the Directors also did - fail to do the logical thing and put all their money into one bank?

 

On the issue of resigning rights to further legal action raised by Bellyup - isn't this fairly standard practice in case of 'settlements'.

 

Directors and are paid large sums of money to look after peoples money they are not doing out of the goodness of their hearts.

 

John Aspden is paid 250k pa as regulator to ensure fiduciary diligence.

 

Aiden Doherty is ( still being paid ) 11k per month and no doubt as is the way of bank managers gets/got a substantial bonus on top of this for looking after peoples money .

 

Kaupthing Singer and Friedman was the combination of two well known institutions. The Derbyshire Building Society and Singer and Friedman Bank.

 

The majority of depositors had banked for years with these two well known banks who had always given a satisfactory service.

Some other depositors had only put their money there for a short time ie sale of house whilst they were in the process of moving.-people who dont have a UK address cannot open a UK bank account.

 

 

KSF was widely promoted as being a safe secure bank with not only the guarantee from the IOMs (DSC) which supposedly protects the first 50k but a 100% guarantee from the parent bank. This is a very attractive deal to people and ironically most of the depositors are very cautious careful people who have saved prudently for their future . Many are retired or near retirement they are people who believe - and it is a widely held belief that money in a bank is safe. There was no way that they could have foreseen this disaster.

 

Yet those who should have known, who were being paid to know were negligent.

 

Yes Mr Aspden this means you . You as regulator should have known better!

 

The Bank staff from Mr Doherty down to the telephone operators all reassured depositors that all was safe. Many depositors DID try to transfer their funds these were NOT actioned by the KSF staff or frozen in flight by HMG.

 

Re Settlements

 

This is my first experience of so called settlements.

 

But they are I understand a matter of give and take . You give up SOME rights in order to get some concessions. But in this case the depositors were not offered a good deal at all. They had to give up ALL rights in exchange for very little advantage and that advantage applied only to one sector of the depositors .

( the under 50k class)

 

In the same way the much vaunted DCS is asking for ALL voting rights if you claim it.

 

Ie if you claim 50k ( and you dont know when you will get it) you have to lose ALL voting rights on the rest of your deposit.

 

This is unfair to say the least.

 

Re deposits

 

I believe that 70% of depositors ( the under 50k) will recover all their savings under the DSC eventually in this it is almost exactly the same as the SOA .

 

 

It will be interesting to see how the IOM uses it DSC ( that has always served them well in the words of Mr Bell) the question is will it pay them 50k within 3 months or will it pay them a trifling amount over years?

 

The rest of the depositors are faced with a choice of taking the DCS ( and losing legal rights to the rest of their deposit) or taking their chances with liquidation which is exactly the position of 8 months ago.

 

Except in these 8 months the depositors have been subject to silence slander and insults - just for being depositors -they have had to pay hundreds of thousands of pounds in legal fees to defend themselves from the SOA ( money they dont have .) those who still have funds have contributed what they can.

 

Some depositors have lost their homes their jobs and their families , their have been some attempted suicides, peoples lives have been devastated.

 

So its not quite the same as the Regulator and the Directors 'putting all their eggs in one basket' they werent their eggs, they were paid large salaries for looking after the eggs and they were supposed to be people of financial knowledge and integrity who knew all about eggs

 

 

and moreover they have lost nothing.

[manxman8180]

all this talk of eggs is making me hungry........