Darling accused of washing his hands...

2008-11-04 (All day)

Published Date: 04 November 2008
THE UK Chancellor has been accused of 'washing his hands' of British depositors who invested in the Isle of Man.
And Alistair Darling told a Treasury Select Committee investigating the banking crisis that the government would need to have a look at the relationship between the UK and the Isle of Man, which he described as a 'tax haven sitting in the Irish Sea'.

His comments were described as 'astonishing' and 'unprecedented' by Treasury Minister Allan Bell.

And they will come as a bitter blow to the thousands of depositors in Kaupthing Singer & Friedlander who face losing savings and investments totalling hundreds of millions of pounds that were frozen when the UK government put the bank's London subsidiary into liquidation.

Michael Fallon, the committee's deputy chairman, accused the chancellor of 'washing his hands' of the interests of British investors who had put their money in the Isle of Man.

Mr Darling replied that his obligation was to protect the money in the UK bank.

He said go to the next stage of taking responsibility for 'something done in the Isle of Man or Guernsey or another country would be quite a signifcant step to take'.

Mr Darling continued: 'The Isle of Man and Guernsey operate a specific regime, and quite deliberately for tax reasons and others, people choose to go in there.

'They are regulated by the Isle of Man authorities, and I would have to think long and hard before saying, for the first time, the British government would underwrite savings made in another jurisdiction.

'It's not something we would lightly do.'

Shocked Mr Bell said the Chancellor's comments came as a 'complete bolt out of the blue'.

'It's absolutely unprecedented and totally outrageous what he's done'.
There's not been a hint about a problem with our constitutional relationship and if there was this is not the sort of forum to make that sort of announcement.'

Mr Bell said he suspected that the only reason Mr Darling has said those words was to 'deflect attention' from the fact the UK government had slipped up by freezing KSF (IoM) deposits in the UK.

He said the comments were totally inaccurate and the Isle of Man was not a tax haven and had not gone 'cap in hand' to the UK to sort out its problems.

'We don't have banking secrecy, we are fully open and transparent. The key to this is Iceland. This is not a problem of our making.'

Mr Bell said the UK could be looking for a scapegoat for its own financial ills. 'Whether there is a wider agenda - well the situation is so serious that to speculate does not help at all.'

He said the Chancellor had been under considerable pressure during the committee hearing so he didn't know whether the comments were made 'off the cuff' or were pre-planned.

Mr Bell said he wanted urgently to speak to the UK's Ministry of Justice to obtain an explanation for the Chancellor's comments and obtain a full transcript of the hearing.

He added: 'We need to calm down and speak to the UK's Ministry of Justice - I suspect they are just as surprised as us.'

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