Letter to Danny Alexander, Chief Secretary to the Treasury

Here follows a copy of the letter that I posted by courier to Danny Alexander two days ago. To add weight to this letter I enclosed a written copy of a letter sent to me by David Cameron when he was in Opposition. My letter is long, but I am hopeful that DC's letter will oblige Mr Alexander to read it though to the end. There is a solution, but it will take a huge step by the UK Coalition Government to overcome the 'serf/master' intransigence that has prevailed in the corridors of ancient governance and still afflicts the relationship today.

Rt Hon. Danny Alexander
Chief Secretary to the Treasury

Dear Danny Alexander,

Despite the length of this letter, I desperately crave your indulgence for this tale is not for shortening.

My name is ************* and I was a depositor in Kaupthing Singer and Friedlander Isle of Man (KSFIoM), now a creditor to the tune of £395,000. This sum grew over the sixteen years that passed since I opened an account with the Leeds Offshore Building Society in 1992. The Leeds OBS was taken over by the Derbyshire until they sold out to Kaupthing in late 2007.

Kaupthing Singer & Friedlander (Isle of Man) (KSFIoM) lasted just one year before being forced into provisional liquidation on the 9th October 2008 by virtue of its sister bank in the UK being placed under Administration. Before this debacle I took little interest in big finance – far too risk averse for dabbling in investments. I took it for granted that one's money was safe in a bank. A bank is reliable and the more you save the more interest you earn - without risk or worry (after 16 years of uneventful saving, I naively believed this to be true).

So Danny, why am I telling you this? Because former Chancellor Alistair Darling instigated proceedings in October 2008 that resulted in the KSF UK bank being placed under administration which consequently ensconced some £550,000,000 of KSFIoM assets there; that very action brought KSFIoM into provisional liquidation causing my three hundred and ninety five thousand pounds to be lost to me and cumulative millions to be lost by my fellow retail savers.

Can you imagine Danny, what it would be like to have £395,000 taken from you and not being able to do a thing about it? The security of a triple ‘A’ rated bank and a 100% guarantee of last resort just melted away without contention or care and all you get is patronising platitudes? That’s all that New Labour offered the retail depositors of KSFIoM – despite HMG having been found implicated in the whole sorry business by the Treasury Select Committee chaired by the Rt Hon John McFall at the time.

It is inconceivable that one can diligently save one's money in an ordinary deposit-taking account for sixteen years and lose it in a single day without forewarning and then discover that its loss was instigated by the actions of one's own Government. When one is resident 3,500 miles from home (and somewhat detached from life there) things can quickly get very difficult. I am fortunate to retain my job, but many others caught up in this secret scandal are retired and have no other income.

The former Prime Minister and his Chancellor squirmed their way around this issue by trying to lay responsibility on the Government of the Isle of Man, but the truth was plain to see: Messrs Darling and Brown instigated a run on Icelandic banks with self-posturing claims, stirring up fervour using jingoistic language, and employing excessive force under inappropriate legislation. They foresaw a failure of the Icelandic banking system and planned their response beforehand. It is otherwise implausible that 170,000 Kaupthing Edge accounts worth some £2.6 billion could be transferred to the Dutch bank ING within hours of KSF UK coming under administration without pre-planning this eventuality.

Supporting evidence materialised many weeks later when information was finally released confirming that the FSA (under instruction from the Treasury) obliged KSF UK to open accounts in the Bank of England for new deposits several days before the former was placed under administration – demonstrating that a turn of events was expected even before Darling’s telephone call with Árni Mathieson. HM Treasury went on to win their appeal against the payment of KSFIoM’s share of monies accounted for in the BoE, making it clear that Alistair Darling had intended to sequester KSFIOM monies from the outset. Unless the coalition Government exposes this abuse of position he will have proven his unsavoury action to have been acceptable.

Mr Darling paid KSF UK Edge depositors from UK taxpayer funds, and the Treasury and the FSCS now ‘stands in those depositor’s shoes’ to recover as much money as possible from the Administration of KSF UK. On the other side, KSFIoM depositors did not get a penny, no tax-payer ‘bail-out’ and their monies still remain under control of the UK Administrators doling out little by little over the next seven years or more.

The former UK Government directed its stooges to issue unverified statements declaring that these problems were for the Government of the Isle of Man to deal with, and the Isle of Man Government found it too difficult to fight its own corner and say otherwise – as evidenced by the Chief Minister's lamentable performance before the Treasury Select Committee (TSC). From his office in the Isle of Man Tony Brown bluntly blamed the former UK Government on public television; what possessed the man to turn from this strong stance and comport himself like a fool before UK MPs at the TSC? Who got to Chief Minister Tony Brown?

Politicians and others on the Isle of Man declare the UK to be a 'big brother bully', but are imperilled to do anything about it. This puts KSFIoM creditors in the invidious and unenviable position of having no influence over those who would steal our money under the guise of political expediency; many savers have no representation with either the UK Government or the IoM Government. Long term expatriates have no right to vote or even access to an MP who would represent them - we are UK citizens without the fundamental rights normally accorded this status. The Labour Government’s position was 'tough, that'll teach you to bank on the Isle of Man' as though the dependency wasn't part of the British Islands but some foreign interloper. The Isle of Man is British, not directly and politically of the UK, but British nonetheless – and where else did Brown and Darling expect Isle of Man residents to keep their money?

The majority of ex-pat Brits simply cannot open a UK bank account no matter what the former Government's stooges declared, and the latter’s denial of this actuality was simply out of touch with reality; what chance for ordinary citizens when simple rights are dashed by people such as these? If a UK subsidiary bank located a few miles offshore can hold accounts for British ex-pats, posting statements, cards and other documents to addresses all over the world, what stops UK mainland banks from doing likewise? There has been such utter trumpery talked about this matter, such as appearing personally at a UK bank to open an account – who would open an account using their parent's or a friend's address? Would anyone feel truly comfortable with personal financial details (including credit/debit cards) delivered to an address thousands of miles from one's own?

These claims and counter-claims over details diminish the enormity of the crime and provide cover for the perpetrators to skulk behind. The truth is that the Isle of Man's regulator went along with the notion of upstreaming KSFIoM assets to its sister bank in the UK (in preference to the parent bank in Iceland) and it is evident that the parent bank found no objection to this procedure given that it had been on-going since early spring 2008. This very fact lends credence to disproving Chancellor Darling's assertion that the Icelandics had no intention of guaranteeing foreign depositors; if his suppositious claim were true, the parent bank would indubitably have raised objection to the change of upstreaming assets to London instead of Reykjavik, yet this was not the case. No Icelandic official has ever owned to Alistair Darling's claim and it certainly wasn’t manifest during the Mathieson telephone call. This claim was conjecture of Darling’s own construction meted out to suit his plan for dealing with the impending Icelandic banking disaster with 300,000 UK Ice Savers and 170,000 UK Edge savers to contend with.

The Isle of Man's Financial Supervision Commission believed the bank's assets to be safely under the auspices of the UK regulator within a fellow bank of the Kaupthing group. It had no reason to suspect that the UK FSA would go against their conjoint Memorandum of Understanding and work behind its back – leaving it completely in the dark with KSFIoM assets at maximum risk - not from the Icelandics, but from the furtive dealings of the UK Treasury working covertly with the FSA to secure the maximum sum of monies from all Icelandic banks operating within the UK (extra funds appropriated from the Dependencies were clearly a bonus). This assertion is evidenced by the occasion of every event in this dreadful debacle irrespective of those contrary claims espoused by Mr Pearson and his stooges uttered for the specific purpose of gratifying passing (waning) public interest.

I have written hundreds of letters to scores of politicians, the banks, Icelandic Prime Minister, Chief Minister, former UK Prime Minister, Chancellor, Queen of England, David Cameron and many others, but there is a predilection that works against those who went poorly advised and saved their monies in the Isle of Man. The Treasury underwrote £2.6 billion of taxpayer's money to move Kaupthing Edge accounts and provided assurance to 170,000 UK Edge depositors that they would all see their money returned - but it would not concede the repatriation of a half-billion pounds to the Isle of Man and KSFIoM's 11,000 retail depositors. This was not even a request for compensation, but for returning monies that were known and audited to be in that UK bank belonging to KSFIoM and by extension, it's retail depositors.

These people, 70% of whom are senior citizens in or near retirement, are woefully weakened with no access to their savings and no salary to pay their way. The former UK Government was seen to be taking such obscene advantage of their impoverished position that it verged on spiteful discrimination. What other civilised country would behave in such a vindictive way towards senior citizens who are still the consequential victims of an orchestrated plot?

Having received several half-hearted replies from a number of UK MPs and other officials, I petitioned (No 0393/2009) the European Committee on Petitions to look into this dreadful state of affairs and received notice that the subject matter falls within the sphere of activities of the European Union and is admissible in accordance with the Rules of the European Parliament. The Committee has examined my petition and asked the European Commission to conduct an investigation into the aspects of this situation. Perhaps the Europeans can better see the matter from afar, our own politicians being too close to bring themselves to believe that such a transgression could be perpetrated against a sector of British citizens. The Commission has already commenced this examination. I am delighted that our fellow Europeans have chosen to pursue this matter and given that they receive in excess of 100,000 petitions per year I am gratified that the plight of KSFIoM depositors is now being investigated. Perhaps the former UK Government will come to find that it was not the final arbiter in its desertion of 11,000 retail depositors - of which the majority are also citizens of the European Union.

The cross-party Treasury Select Committee found that the movement of 170,000 Edge accounts to ING was instrumental in causing KSFIoM to fall into provisional liquidation and called upon both the UK and Isle of Man Governments to work together to find a satisfactory resolution for the depositors caught up in this scandalous affair - yet neither will approach the other to do so. This incongruous stand-off and the particulars of other wrongdoings wrought upon ordinary decent citizens has been brought to the attention of the European Committee and I am hopeful that their influence will strongly encourage a suitable resolution to be enacted so that IoM depositors are not the only ones in Great Britain and Europe to be denied remuneration due to the intransigence of two British Governments who cannot - or will not - work together, but would rather see their citizens in penury than in providence.

I call upon you Danny Alexander in your position as Chief Secretary to the Treasury to take such action as required to assist in bringing justice to the depositors of KSFIoM for the spiteful wrongs inflicted upon them by the former Chancellor of the Exchequer and for the intransigence exhibited by the former UK Government in conjunction with the Government of the Isle of Man in failing to abide by the TSC's recommendation to resolve issues for the benefit of island savers. KSFIoM depositors should not be excluded from common British justice and ignored because our numbers are small and many live far from home; we may be far-flung, but we are united in our stand against Government exploitation of unrepresented citizens left abandoned in callous disregard.

KSF UK has now repaid depositors 45% of unsecured deposits – this would indicate that the UK Treasury has received almost £1.2 billion from the administration. In comparison, KSFIoM depositors just recently learned that a claim for £250m has been agreed with the administrators of KSF UK. This situation provides a perfect opportunity for the Coalition Government to put things right for KSFIoM depositors whilst mending bridges with the Crown Dependencies. With much money back in the Treasury coffers already – and a high rate of return expected from KSF UK – the coalition could make a magnanimous gesture to those remaining KSFIoM depositors by standing in their shoes to the tune of £250m instead of making them wait until 2018 to get a percentage of their monies back. Some may not even live that long – Governments can repay loans over consecutive lifetimes but individuals don’t have that choice, we have only finite lives. It is unfortunate that it falls to the coalition to right wrongs, but so it is with every new Government – Obama has had to take on the mess left to him by the master of incompetence.

David Cameron wrote to me when in Opposition saying that he was working hard to oblige the Government to hold an inquiry into this affair; he is now the Prime Minister of a new Government and you can help him by providing an easy solution to this issue – do the right thing by island savers – underwrite the money for KSF UK and repay KSFIoM this year, do not keep hapless and innocent Senior Citizens hanging on forever. Darling provided £2.6 billion to ‘UK British’ and snubbed ‘Isle of Man British’ – he pitted brother against brother and has left a very bitter taste for everyone to savour. You could be instrumental in turning this around and bringing about a new relationship with all the Crown Dependencies which must be a redeeming factor for the future.



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