Aidan Doherty promised deposits were ring-fenced

  • chd
  • 13/10/08 30/09/09
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Posted: Tue, 09/12/2008 - 16:37

Just spoke to my dad about this entire debacle (as we do on a daily basis), and he mentioned that he had called the bank 2 days before its collapse and actually spoke to Aidan Doherty. Doherty reassured dad that there was no need for concern as all assets were RING-FENCED.

Dad just sent me an article from one of his money magazines that explains the idea of Ringfencing:

"One of the most important lessons learnt after the fall of Baring Bank was that "ring-fenced" money was safe. In plain English, this means that any funds held within a designated client or custody account are safe and cannot be used by the bank. Ordinary current accounts are not ring-fenced and can't be safe guarded...."

So, here's my question.... In order for Doherty to make that statement about assets being ring-fenced, mustn't he have some proof that they were, otherwise why would he say that? Was he just telling a blatant lie so that dad wouldn't run off with his money?

I wonder if we can get a recording of the conversation for the Swiss telephone company??

Are these bank managers being questioned about the ring-fencing, or is this another sealed document?

The plot thickens.. With all these intricate secret conspiracies, this would make great material for a feature film. Maybe we could get our money back through the royalties!

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Docherty comments

  • mikeinfrance
  • 12/10/08 28/09/09
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  • Tue, 09/12/2008 - 19:30

Swiss.. Your comment is very interesting and a recording of such a phone call would be extremely interesting.Just for the record here is what Aiden Docherty , managing director of KSFIOM, had to say in his 2nd Affidavit para iv): (note the last sentence......arrangements in place)

"The freezing of the Company's assets held by KSF (UK) created a serious liquidity problem for the Company. In the normal course of its busines the Company maintaind liquidity by managing from day to day its deposits held with KSF(UK) in London. The arrangements in place with KSF allowed the company to pay its debts, including its liabilities in respect of depositors, as and when they fell due"

In its report dated 14 Nov., the KSF UK Administrators Ernst & Young stated:

"KSFIOM held funds at KSF on deposit. At present investigations and discussions are underway to determine and agree the exact nature of the transactional exposures between the two entities."

Both these statements suggest to me that there remains doubt about the exact status of our money. If the status was clear then s27 of the treasury's KSFUK transfer order makes it crystal clear that, ringfenced or not, the funds could not be repatriated to KSFIOM without the approval of the treasury.


S27. i believe I am right in

  • thesunnysouth
  • 10/10/08 31/05/09
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  • Wed, 10/12/2008 - 11:09

S27.
i believe I am right in saying that s27 only applies if the IoM branch is a subsiduary of kaupthing. If the IoM govt or someone else re financed the bank and took it out of Administration it would no longer be a subsiduary and therefore S27 no longer applies.
The reason it was put there i would suggest is to stop the money beng syphoned back to Iceland.


sunnysouth s27

  • mikeinfrance
  • 12/10/08 28/09/09
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  • Wed, 10/12/2008 - 16:18

sunnysouth... s27 (3) says: In this article "related party" means any member of the same group as Kaupthing (UK) that IS NOT a subsidiary undertaking of Kaupthing (UK).
Since KSFIOM is not a subsidiary of KSFUK then it is a related party,and therefore cannot receive any payments from KSFUK without the treasury's authorisation. You may well be right as regards the intent (stopping any transfers back to Iceland) but the effect is still the same, unless the treasury is persuaded that it should authorise the return of our money.


Mikeinfrance, i think you

  • thesunnysouth
  • 10/10/08 31/05/09
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  • Wed, 10/12/2008 - 17:04

Mikeinfrance,
i think you misunderstood my post. I was asserting that if the bank was re structured it would no longer be related in any way other than being a depositor with KSF UK. New name, new company, no relations with Kaupthing kf. If that is the case then the clause should no longer apply.


The only problem surely is

  • expatfrance1
  • 15/10/08 31/05/09
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  • Wed, 10/12/2008 - 17:36

The only problem surely is that it would need the funds returned before it could be re-structured. A bit of a chicken and egg senario.

Worth considering though.


s27 & restructuring

  • mikeinfrance
  • 12/10/08 28/09/09
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  • Wed, 10/12/2008 - 19:08

I too find it difficult to understand how a restructuring could take place without those funds from KSFUK.

Re sunnysouth My comment was mainly addresssed at your statement that KSFIOM is a subsidiary of KSFUK which it isn't, and that affects whether s27 applies or not.
If KSFUK is restructured without the £600M,such that it is no longer related to the Kaupthing group then s27 would presumably no longer apply, as you say.


Mike, Again I do not suggst

  • thesunnysouth
  • 10/10/08 31/05/09
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  • Wed, 10/12/2008 - 23:13

Mike,
Again I do not suggst that they forego the £557m. The bank has in excess of £100m already with a loan book of £450 and a possible input of £150 from IoM makes circa £700m and with the probability of getting most of the £557 back it is feasible that the bank could be re structured without immediate access to the £557 but knowing it will arrive at some point. That arrival would be made easier if Clause 27 no longer applied as it was a new bank, new company, new name.


s27 and restructuring

  • Ally
  • 13/10/08 31/05/09
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  • Wed, 10/12/2008 - 21:45

Well they could proceed with a restrucutre / run down without the funds from UK and payout X% in the £ (obviously 100% to <£50k). They could then make further payouts as and when funds are recovered from the UK.

More a run down than a restructure. But could be called a restructure as it could be that a new company could be set up to make the payouts and run down the loan book.

I think KSFIoM can be seen as a related party of KSF UK as they are sister companies, i.e. they both have the same parent, Kaupthing hf.


Ring fencing of funds

  • alrod7
  • 12/10/08 31/05/09
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  • Tue, 09/12/2008 - 17:10

I am not sure who Aidan Doherty is in the Bank organisation. If you relied on this information, I am sure that you can make a case/issue of it. Should you not write to KSFIOM provisional liquidator, the IOM FSA and any other IOM authorities asking for an explanation?
It is definitely worth persuing the point.
Good Luck and will be interested to know the outcome.


Aiden Doherty

  • bellyup
  • 10/10/08 09/01/10
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  • Tue, 09/12/2008 - 23:01

Aiden Doherty is /was the MD of KSF IOM.


This stuff just gets worse and worse

  • bellyup
  • 10/10/08 09/01/10
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  • Tue, 09/12/2008 - 16:48

Aiden Doherty has said a lot of stuff I hope that this is true and there is some proof somewhere.
However if it were ring fenced we would not be classed as unsecured creditors trailing for some inexplicable reason somewhat behind the cats home.