My reply to the Treasury Propaganda put out by Sara McCarthy-Fry

Posted 28/09/2009 - 13:58 by tonycBrisbaneOz

Dear Mr Smith,

Thank you for your recent letter forwarding the reply received from Sara McCarthy-Fry. Another attempt by HM Treasury to make the patently unjust look perfectly reasonable. The contents may be considered self explanatory by some, but are by no means complete or helpful and in some cases contradicts information in the public domain and the actions taken by the government. Some answers provided would be laughable had the UK government action in closing KSFUK (and its knock on effects on KSFIOM) not had such a devastating effect on thousands of ordinary Britons' lives. I will not attempt to address all of Ms McCarthy-Fry's points, just the ones that made my blood boil the most.

Q: What is happening to KSF IOM?
The Treasury mentions the Scheme of Arrangement that the IOM tried to impose on creditors. This would have left depositors with no legal recourse and did not promise anything above what could have been achieved via liquidation. In fact the scheme was so badly thought out that it was shot down by a single depositor. The IOM government have managed to foist the cost of developing the scheme, believed to be hundreds of thousands of pounds, on depositors.

Q: What are the arrangements for depositors with KSF IOM?
Those who claimed through the liquidation process received approximately 24% of their deposit long before the Depositors Compensation Scheme paid a penny. We've had to wait 11 months to get this far. In fact the Depositors Compensation Scheme is an utter shambles.

Q: What did the Treasury Select Committee say about KSF IOM?
This answer provided flies in the face of tax payer funded bail out of Landsbanki, an Internet bank, regulated by the FME in Iceland. The British Government not only bailed out those who had deposits in a foreign bank but also imposed the the cost of doing so on the Icelandic Tax Payer through the IMF. This was an action that interfered in the affairs of a sovereign state, was it not? Surely this was a matter for the Icelandic Government not the UK government, as well as an inappropriate use of UK Tax Payers money if the criteria of the Treasure Select Committee were to be applied?

Q: What action did the Treasury take in respect to KSFUK
As far as I can tell this was the only FSA regulated bank that was allowed to fail and have such a devastating affect on its indirect depositors as well as those in the UK who had Edge deposits. They had to wait 6 months to get access to their money.

Q: Did this transfer order have an effect on KSFIOM's assets.
How can the Treasury assert that SI 2674 has had no effect on KSFIOM's assets? This action had the effect of closing the IOM branch. If the treasury can assert that cash deposited in bank and then subsequently transferred without the permission of the deposits owners has no affect on a banks assets then returning it can have no affect on KSF UK assets either. I can assure you that having made a deposit (my asset) in a bank that was subsequently forced out of business has had a devastating affect on one's finances.

Q: Why won't KSF UK return the funds that KSF IoM had deposited with it?
The Treasury tries to pretend that the forced closure of KSFUK was a normal business failure. The bank and it assets were wound up using SI 2674. The vast majority of businesses that fail do so without Statutory Instruments. To assert that creditors rank equally flies in the face of ministerial intervention that has already been used to return monies to influential depositors. Not every creditor has been treated equally. Retail depositors were bailed out months ago in a process that does not resemble the administration process experienced by KSFIOM depositors who have stake in the administration of KSFUK.

In March a deposit of approximately 50 million pounds owned by Mr David Whelan was reportedly returned within 2 hours of his MP contacting the Chancellor. Mr Whelan could not have been KSF Edge depositor otherwise he would have had access to his funds in February. A quick survey of retail savings accounts reveals that these are generally limited to 1-2 million pounds so I don't see how he could have been a retail depositor either. As KSF UK was also regulated by the FSA I presume similar limits would have been imposed on it for retail deposits. How many other business liquidations has the Chancellor intervened in?

I get the impression the Ms McCarthy-Fry is trying to blame depositors for the failings of the FSC, KSFIOM (over which we had no direct control) and the action of the UK government. Does the Treasury seriously expect me to believe that deposit takers should act as store fronts for their rivals? I doubt that Lloyds TSB collects deposits for Barclays.

You may recall that in previous letters I pondered how long it would take for a depositor with KSFIOM to be driven to suicide. I can now provide an answer. The wife of a depositor reported in late June that her husband had committed suicide. I would also remind you once again that some depositors have been made destitute, many are with out money that they had saved for their twilight years, others were using their savings to educate children with special needs and in other cases to look after elderly relatives. For most of us this will affect us for the rest of our lives.

I would also like to remind you that on the 8th of October 2008 Alistair Darling made the statement “The Icelandic Government, believe it or not, have told me yesterday that they have no intention of honouring their obligations here.” This statement has no basis in fact. The transcript of his telephone conversation with the Icelandic Finance Minister shows that the minister said no such thing. A freedom of information request I made reveals Mr Darling had no other correspondence with the Icelandic Finance Minister on the 7th of October. What am I supposed to believe other than that it was a lie that has had a devastating affect on the lives of thousands on innocent Britons? As far as I can tell Mr Darling has never been asked to account for this statement and I think he should be.

The depositors in KSFIOM are not asking for a bail out we are simply petitioning for the full and prompt return of our funds. The amount owed to depositors in KSFIOM is insignificant compared to the hundreds of billions of pounds spent bailing out UK banks. The Chancellor has already set a precedent by intervening in the administration of KSFUK to return monies to at least 2 influential depositors, an action that is not a part of normal business liquidations.

Yours sincerely


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