Letter to MPs'

Dear .................(MP)

People in power can always manipulate an outcome, and if there was political will to do so, it would not be difficult for Her Majesty’s Government to find a way of justifying the means of returning the asset belonging to KSFIoM presently on loan to the Kaupthing UK bank and retained under Administration. Extraordinary times demand extraordinary actions and extenuating circumstances demand alternative routes to find justice and satisfy a fair conclusion for all.

KSFIoM depositors expected their money to be properly administered by professionals exercising due diligence. The KSFIoM directors, acting on the advice of the FSC, moved assets totalling £555M into the UK KSF bank in the belief that it would be safe there. The FSC gained their insight from the FSA who suspected that Iceland might move upon its parent banks to contain assets within that country for domestic benefit, but to the detriment of their international obligations. The intentions of the FSA, FSC and directors of KSFIoM are seen to be honourable, though the depositors were not privy to the discussions and actions that were taken on their behalf. The directors having put the asset into the KSF sister bank evidently considered any other safe-guarding (ringfencing) to be superfluous; they could not reasonably have envisaged the UK Government putting the bank into Administration in the manner that it did. At this juncture, the UK Government’s intentions to safe-guard UK depositor’s monies from being upstreamed to Iceland also appear honourable.

The purported reason for HMG carrying out these actions was to safeguard British retail deposits. Landsbanki IceSave, an Icelandic subsidiary bank, operated in the UK jurisdiction without direct FSA regulation; hence the reason why the FSA could not bring IceSave under Administration or Liquidation (only the Icelandic FME can do that). The only option left to HMG was to use a power within the Anti Terror Crime and Security Act 2001 to ‘freeze’ the movement of all assets of Landsbanki IceSave until they achieved accommodation with the Icelandic Government regarding the depositors’ guarantees. This process took several weeks and much diplomatic activity using the IMF loans as leverage. The UK Government’s stated intention to safe-guard UK IceSave depositors appears admirable, but these were savers in a foreign bank not regulated by the FSA and in many cases held their monies in tax-free ISA accounts. The concern of HMG was not so much to protect the individual depositor, but to consider the effect upon the UK banking sector as a whole; the impact of 300,000 people losing their money would have been a disastrous loss of confidence in the financial sector, the economy and the Government.

During the time taken to coerce support from the Icelandic Government, HMG underwrote all UK depositors’ savings to the full extent of their value. The Kaupthing UK bank continues under Administration with the Treasury expecting further reimbursement from its eventual winding up. The bank still holds £555,000,000 on loan from KSFIoM placed there to safe-guard depositor’s money from being clawed back to Iceland. These funds represent some 60% of retail depositor’s money; the declared intention of its placement was to prevent it returning to the parent, Kaupthing hf. The KSFIoM directors considered no foreseeable need to safeguard monies placed within a fellow bank; any suspicious action of the sister bank reneging on its obligation would be a pointless contradiction within the Kaupthing group.

The asset is clearly identified as belonging to KSFIoM and would plainly and justly bring huge benefits and relief to the retail depositors for whom it was allegedly put into sake-keeping. It is equally clear that the depositors who collectively saved for years to amass this sum had no say in where it was placed – and now have no power or representation to enforce its proper return. The UK Government is acting in direct contradiction of its stated aims to protect retail depositors and is vindictively discriminating against British savers using an Isle of Man bank by withholding their monies which represent the life-savings of many, if not most of the depositors.

For this Government, it is enough that the assets have been prevented from returning to Iceland thereby denying benefit to those who brought about this financial calamity. This Government also sees a huge pecuniary advantage to keeping the assets within the UK bank for later distribution amongst UK creditors of which it will be the largest, but this perverse situation exists only because the bank was placed under Administration, brought about specifically by a run on Edge deposits. Under normal practises, the asset on loan would be rightfully returned to its owners.

Perhaps the directors of KSFIoM should have taken extra precautions with this huge sum, but their actions were not charged with malice aforethought; their oversight might constitute negligence, but even so, their intentions were sound and based on information gained from the UK’s FSA. The same cannot be said of the UK Government, it knows full well who amassed this asset; it knows full well the circumstances of how it came to be in the UK bank; and it wll also know that conniving to keep it within the UK jurisdiction is cold-hearted, callous and contrived. It will bring hardship and heartache to thousands of British subjects who don’t deserve it. It is grossly unfair to deny retail depositors of their proper rights based upon a happenstance of the Governments own creation – clumping individual savers together as wholesale depositors when it is known by all that this was not the intended outcome and not of the depositors direction or control. Retail depositors are protected in law because they are not expected to be financially astute, whereas public bodies and similar ilk are so professionally advised and take their chances with a wholesale deposit.

Had the Government stepped in to underwrite the deposits of the KSFIoM savers then it would only be fair and proper that it retain control of their assets by way of reimbursement, but it did not assist the depositors, not by one penny, yet has taken £555,000,000 from them in return. The Government has the power to turn this around, it just needs the will – and that will comes from effective MPs, those who resolve to have their voices heard, those who have the gumption to stand up and say this is not the British way of justice, it is not right for the Government to benefit from contrived theft at immense personal cost to several thousand British subjects; it is not right, it is not fair and will not be done in their name. KSFIoM savers call upon the sense of fair play endowed in all British people and most especially now call upon British MPs to do the right thing.

Yours sincerely,