another anonymous letter
I actually received one of those "anonymous e mails " today myself. It was extremely well written by an obviously erudite and well mannered person. In fact, I had to agree with every word he said. Maybe it was sent to me so that everyone can see that it is not the dreadful blackmailing letter the politicians declare it to be.
Here it is:
THE END OF THE ISLE OF MAN’S BANKING REPUTATION?
To: The Manx Electorate 15th March 2009
The Manx Media
The Manx Business Community
From: A Group of Dispossessed Persons
On the 8th October 2008 a previously stable and viable bank in the Isle of Man, Kaupthing Singer & Friedlander
(KSFIOM), collapsed and was placed into provisional liquidation. The main reason for its collapse was that it
could not retrieve a large amount of its own funds which were being held in its sister bank in London (KSFL).
Shortly before KSFIOM’s collapse the Financial Supervision Commission (FSC) authorized and organized the
transfer of these funds and deposited them – UNSECURED – in KSFL. The value of these funds amounted to
over half a billion pounds. The fact that these funds were deposited unsecured enabled the UK government
(UKG), to subsequently freeze them and disallow their return to KSFIOM.
The Isle of Man government (IOMG) has persistently maintained that it is blameless in this matter, and that it is
all the fault of the UKG who refused (and are still refusing) to release the funds. The behaviour of the UKG has
indeed been reprehensible, but the inescapable fact is that the funds should not have been in the UK in the first
place. In the uncertainty and hostility that existed at the time between the UK and Icelandic governments it
seems incredible that the FSC authorized the removal of these funds from the Isle of Man’s jurisdiction to that
of the UK. And the fact that the funds were deposited unsecured beggars belief - if they had been secured they
could have been returned to KSFIOM and the collapse would almost certainly not have happened.
The seven commissioners who constitute the FSC are appointed by the IOMG and approved by the Tynwald. It
is the FSC’s responsibility to independently and impartially regulate and supervise the activities of banks and
other financial institutions operating within the Island. It is difficult to reconcile their impartiality with the fact
that according to the FSC’s website a number of them hold, or held as at 30/01/2009, directorships in the
following banks and/or bank affiliates:
Singer & Friedlander Investment Management (IOM) Ltd
Singer & Friedlander International Ltd
HSBC Securities Services (IOM) Ltd
Standard Bank Offshore Group Ltd
HSBC Custody Services (IOM) Ltd
Kaupthing Holdings (IOM) Ltd
Bank of Bermuda (IOM) Ltd
Standard Bank (IOM) Ltd
Kaupthing Singer & Friedlander (IOM) Ltd *
* the collapsed bank
When KSFIOM’s licence was suspended the IOMG could have faced up to its responsibility and admitted that it
was - through the negligence and irresponsibility of its appointed FSC - instrumental in the bank’s collapse. Had
the IOMG immediately arranged to raise sufficient funding to reopen the bank with other interested parties, the
Island’s reputation would have soared. Larger depositors had already indicated their willingness to help by
pledging to allow the bulk of their deposits to be converted into long term accounts or bonds. But the IOMG did
not have the courage to admit its liability created by the blunders of its FSC and decided on a strategy of
denying any responsibility and placing all blame on the UKG.
Meanwhile the IOMG will probably end up spending more than a million pounds in hiring an American firm
(Alix) and eminent UK legal advisers to formulate a complicated “Scheme of Arrangement” which it is trying to
promote as a most generous payment package. It is nothing of the kind; it is a disgraceful sham. If it wanted
to, the IOMG could resolve this debacle very quickly, and without cost to the Isle of Man taxpayer. KSFIOM has
many millions of pounds in assets such as the loan book, bonds etc., which in time will mature and become
recoverable. There will also eventually be the return from London of a proportion of the half billion pounds
frozen there. The IOMG could borrow the amount necessary to pay all depositors in full from the UKG (there
could not be a better time for low interest rates) and then recover the money as the assets and the funds from
London became available. It has been estimated that in time the government would probably recover the bulk,
or possibly all, of the borrowed amount.
But the ministers of the IOMG will not do this: it would be admitting to the electorate and business community
that it was a terrible blunder by their appointed FSC that caused a viable bank to collapse. They have instead
chosen the cowardly path of closing their eyes to the FSC’s action and are now boasting that their Scheme of
Arrangement will pay out the bulk of depositors in full quite soon. This is true; those with savings up to £50K
will be paid in full relatively quickly; and for the extremely wealthy it probably doesn’t matter too much.
However for us this “scheme” is catastrophic; it will pay us in dribs and drabs perhaps 65% of our money over
a period of about seven years. Liquidation appears no better.
Our group consists mainly of people who have had their life savings taken from them; some of us have lost our
homes and most are too old or infirm to find employment. In the last five months while the IOMG has dithered
and given us nothing but platitudes, our lives have been irretrievably shattered. We fully support the KSF Direct
Action Group in its objective of fully recovering the money due to all depositors in a reasonable time. We are
not seeking charity or compensation; neither are we asking the Isle of Man taxpayer to bail out a failed bank.
What we are demanding is that the government makes amends for destroying the perfectly viable bank which
held our savings. The Island’s prestige as a world banking centre has already suffered as a result of this
debacle, but even at this late stage if the government had the courage and honesty to acknowledge its
responsibility and paid depositors in full within a reasonable time (weeks, not years), then we believe the
Island’s reputation would be considerably enhanced.
We have asked the IOMG to make a public statement on or before the 9th April 2009 that they are prepared to
rectify the blunder committed by their FSC and undertake to pay all depositors in full by 31st August 2009.
Should the IOMG choose not to do so then we are determined to ensure that never again will savers feel
secure depositing their savings in the Isle of Man. Newspapers, radio and TV channels will be contacted
wherever our members live and asked to publish/broadcast our warning based on personal experience. Chains
of E-mails will start simultaneously in various parts of the world requesting all recipients to forward, as a public
service, the message that the Isle of Man is not a safe place to invest in or deposit savings. The message will
be short and to the point:
•If you are thinking of investing or depositing funds in the Isle of Man: DON’T.
•If your financial adviser has recommended you to save or invest in the Isle of Man: DON’T.
•If you already have investments or savings deposited in the Isle of Man, GET THEM OUT AS
SOON AS POSSIBLE.
•If your pension/insurance fund has investments/deposits in the Isle of Man: EXPRESS
YOUR CONCERN TO THE FUND MANAGER.
This message originates from a group of persons who have lost their life savings, and in some
cases their homes because they deposited their money in the Isle of Man.
It will take a while to gather momentum, but gradually the effect of such a concerted and continuous onslaught
on the Island’s reputation will start to be felt. Banks, financial services and insurance companies will begin to
close and depart the Island resulting in much unemployment and a general deterioration of services such as
health and education.
We have twice informed all the IOMG ministers of our intentions, but it appears from past performance that
they are quite likely to take a political decision to maintain their image and that of the FSC at any price – even
at risk of destroying the Island. It seems they are prepared to gamble that we are bluffing – we are not. In
addition we have also contacted members of the House of Keys and the Legislative Council; but with the
notable exception of the Bishop of Sodor and Man, all remained silent. We are deeply grateful to the Right
Reverend Robert Paterson for his efforts in publicising this matter.
We must emphasize that we have no wish to proceed with this action which will cause irreparable harm to the
Isle of Man – we just want the government to do the right thing, own up to its mistake and return our savings
in full; now. The last opportunity to change the government’s mind and prevent the described scenario lies with
you, the electorate, the media and business community to whom this circular is being despatched in the hope
that you will exert pressure on your government to reconsider its proposed action.
Anyone who doubts the facts given in this document has only to ask a member of the House of Keys –
preferably a minister – for a straight, unambiguous answer to the question: “Why did the FSC authorize and
arrange the transfer of over half a billion pounds’ worth of KSFIOM’s assets to be deposited with KSF in London– UNSECURED – at the height of friction between the UK and Icelandic governments?”
The other question we would ask you to consider is this: If you had placed your life savings in a bank on the Isle of Man and later discovered that the government’s regulatory authority had made a blunder which resulted
in the bank’s collapse, would you not consider that the government owed you an obligation to act honourably
and ensure that your savings were immediately returned to you in full?
Thank you for taking the time to read this circular.