Discussion of call with Mike Simpson on the 23rd February 2009

  • frog
  • 10/10/08 13/09/09
  • a depositor
  • Offline
Posted: Wed, 25/02/2009 - 06:24

Sorry for the delay in posting this - I have been travelling.

General Questions

  1. What is the current cash balance for the bank?
    A: Cash balance has increased to £145M (Sterling equivalent) increase mainly due to capital repayments and interest.
  2. How much interest has been earned so far?
    A: £470K

  3. Any news about the KSFUK deposit from E&Y?
    A: Nothing yet. Mike Simpson doesn’t expect any movement just yet. It’s noted that the ING transfer is mostly completed.

  4. What is the latest status on the sale of the loan book and any other interest in the purchase of the bank?
    A: No new developments. There are no offers for buying the bank open – though once the KSFUK position becomes clear, this may change and Mike Simpson would hope that if the UK return was a big percentage then that would flush out some interest.

Open Questions

  1. Can we have a breakdown of the type and quantity of individual depositors/entities?
    A: Mike Simpson has a reasonable split, but the time needed to prepare for the court has delayed the publishing of the new information. Information is avaibale and will be published in the next couple of days on the website as promised

  2. Can we have a breakdown of the balance sheet in multicurrency (£, $ and Euro)
    A: Next couple of days. With regard to the lack of comment in the LP’s affidavit on the loss of legal rights, Mike Simpson has noted this fact and commented that the point has been made at the court anyway. With regard to the lack of clarity on the powers that would be available to the LP within the SoA, the opinion of Gabriel Moss QC was that the issues could be solved by leaving the powers of the LP in place during the life of the scheme. It is not clear on whether the powers would be equivalent under SoA as opposed to Liquidation. Mike Simpson cannot comment on the difference between the SoA and liquidation as there is insufficient detail on the SoA. When available, he will be commenting on this. The legal opinion of the depositors would be taken into account – either directly or through their lawyers.
    The exchange rate is noted as being an emotive area.
    This Week’s Questions

  3. In his judgment after the court hearing on 19 Feb the Deputy Deemster said “there is no doubt that claims against third parties in this particular case will assume significant importance. It is likely that there may well be claims against regulators, other governmental bodies, possibly directors” The LP is an officer of the court with powers of investigation under section 206 and 207. Indeed he can go back to the court to ask for more powers if necessary There seems to be prima facie evidence that (for example) the FSC and the bank directors failed to take due care when allowing KSFIOM funds to be upstreamed to KSFUK.
    My question is: what plans does the LP have to investigate this with a view to bringing legal action for redress?
    A: His powers under section 207 can only be used after the winding-up order has been issued. Nonetheless, Section 206 powers are for use in case of the concealing of assets and not for chasing claims of negligence in the case of the above parties. Upon liquidation, the other avenues are open if the evidence suggests that legal action should be persued.

Later in his judgment, the DD said “ this does, as currently advised, appear to be one of those cases where fraud is unlikely to be an issue”.
Does the LP know who has advised him of this?
A: No – he would have read the affadavits since October, and none of them have given any indication of fraud – and Mike Simpson believes that it is this fact which is guiding him.
Does he know if an investigation has been carried out? If so could he share the results of the investigation with depositors? If not could he make enquiries?
A: No – and in relation to the initial answer to this question, it isn’t within his powers to begin this.
Has the LP considered asking the IOM constabulary to rule out any criminal activity?
A: No – as above
2. I understand that it is the intention of LP/MS to discontinue online access to our [frozen] accounts at the end of this month - February 2009.
In view of the recent decision of the IoM Deemster, could you please ask MS to leave this service in place until SoA or Liquidation is decided by the Court?
A: The accounts will be maintained for the time being.
3. Did KSFIOM have a Directors and Officers Policy. Please can we have a copy and can you tell us whom the policy is with. I believe as a depositor they are obliged to give this information if requested.
A: Mike Simpson did not want to either confirm or deny the existence of this policy due to the risk that this could void the policy. IF there were a insurance, the policy could be acted on at any time if there were any evidence that it could be called on.
4. Can you confirm that one of the four eyes was present on the island at all times in the 6 months prior to October 8th? Were they ever both off the island at the same time?
A: While Mike Simpson can’t confirm that both were always on the island at the same time, he can confirm that there were some individual days when neither were in the office during banking hours.
5. You have spoken to the Kaupthing Resolution committee and stated that there is little chance of a payout under the parental guarantee. It now seems that German depositors are going to receive at least a substantial proportion of their money and the Dutch are getting it all back. What are the differences between the German situation and ours? Do all creditors not rank equally with regard to any distribution from Kaupthing Resolution committee?
A: The German and Dutch operations were branches of Khf rather than subsidiaries. It seems that the money to pay out the depositors in these countries was loaned to the Kaupthing Resolution Committee by the respective governments. The IOM government has not done this, so the KSFIOM depositors cannot expect to share the same benefit as the German and Dutch depositors.
6. What on average does liquidation costs the creditors in percentage terms and how long it will take to pay out £50k compared to SOA. I know they will be averages but the depositors can then see exactly when we will get our money back and how much will be received over and above £50k
A: There is no industry data giving an average liquidation cost. There has been some speculation that the liquidator would take say 10% of the recoveries, but that is nonsense. The costs of liquidation have to be approved in court and a % number would not be acceptable. This is not possible to estimate due to the un-known factors that will change the amount of effort needed in a liquidation – notably the status of assets (such as the loan book) and whether any legal action needs to be taken, including for the recovery of cash where disputed such as what is happening in March with the UK Building Societies and the CDs.
With regard to timetables of payouts, the liquidation will pay out pari passu, while the SoA will pay out from the ground up, favouring the smaller depositors first. If the DSC is activated, there can be other factors, such as if another bank fails etc.
7. There has been mention of a provisional liquidation creditors’ committee – do you have any more details about this such as the rules and composition etc? How members of DAG can be assured a spot on the creditors' committee. After reading Skandia's latest release, it seems as though they already have their spot.
A: This is something that Mike Simpson will be acting on quite soon. The informal creditor committee will comprise of one representative from the Life Companies, one fully protected depositor (under the DCS), one partially protected (a >£50K depositor) and an unprotected creditor (such as a non-depositor). The group would have no statutory powers. Mike Simpson’s view was that he would almost have to choose randomly as to who these people are (apart from the Life Companies who will suggest their own) but is open to suggestion. He felt that whoever took the role would need to be based on the island for accessibility reasons. (My personal take on this is that the DAG can suggest a make-up of the informal committee which would be considered – he is talinking already to the DAG Lawyer for instance)
8. Who were the auditors of KSF? This business was contingent upon a parental guarantee being in place. The auditors must have signed off the accounts on the basis that this guarantee was valid and legally enforceable otherwise it might not have been a going concern. or did the auditors place reliance on the FSC's opinion as to guarantees? Were any of KSF accounts qualified by the auditors or were they all "clean"?
A: The auditors of KSF are/were KPMG and Mike Simpson has received no information from them of concern about KSF’s business. He is not aware whether the parental guarantee was a factor in their approval of the KSF accounts.
9. Assuming EPS2 goes ahead based on exchange rates at 8Oct08 as EPS1, foreign currency depositors who are in the fortunate position of having less than the equivalent of GBP10k owing, will be paid-up. However if the DCS or SOA is subsequently based on a later date for exchange rates, would they be entitled to a balancing payment from the Liquidator/Scheme Manager?
A: Both the scheme information and the EPS2 rules are unclear and so it is impossible to comment on what would happen regarding this situation. He confirmed that the foreign currency issue is still not clarified.
10. Could the LP please give one or preferably both of the following:
11. Ignoring all risk of bad debt what is the current basic Net Present Value (NPV) of the Loan Book (i.e. the sum of all the cash flows due back to KSFIOM from borrowers until the loan book has been fully run down)? What discounting curve (i.e. Libor) does the LP use for said estimation?
A: There could be a range of NPVs depending on which discount rate is applied. Based on current rates, total cash receipts would be around £460M.
12. Please summarise the cash flows due by month and year (rather than just by year) on the Loan Book until it is run-down.
A: Mike Simpson says that it is pretty difficult to get down to the monthly level as it may expose individual borrowers.
13. As we have with our personal current accounts, etc, would it be possible to have a 'Statement of Account' for KSFIOM, at each of these discussions, to give us an idea of the ongoing state of affairs.
A: This would be a time consuming enterprise.The metrics provided at the beginning of these calls provide generally the same information, so there is no plan to publish a bi-weekly statement.
14. In your affidavit re PWC/KSFIOM costs incurred for 'assistance' to IOMG and Alix Partners in preparation of their revised SoA. How much and when does MS expect to 'bill' them for 'PWC/KSFIOM' work that was associated with the S0A preparation. IOMG said that they would bear all costs involved in this
A: The whole question of the Liquidator Provisionally’s costs has yet to be heard, but with regard to this specific point, there has not been any clarity on who would pay these fees. Mike Simpson says that in the court, there was no indication that the costs were to be paid by the IOM Government. The IOM Government said it would pay its own costs and that of its advisors (such as Alix) the LP doesn’t fall into this.
15. What is the nature of the alleged "set-off" against the debt of KSFUK to KSFIOM shown against "Balances with KSFUK" under intergroup business?
A: This is predominantly the Sub-participation agreements in respect of some of the loans done through KSFUK, but the risk was transferred to KSFUK of around £155M. The repo agreement is a separate item.
16. Could you tell us to whom you speaks (or e-mails) in the UK Financial Services Authority? How senior is this person? Do you know if this person is the one who spoke to the IOM FSC regarding the transfer of £550,000,000? If you don't know this, could you contact the person and ask him? If the person says "not me" could you ask for the name of the person involved? If the person says he can not disclose the name, would you please ask "and why not?"
A: PWC are speaking to the UK FSA at various levels, Mike Simpson is not aware of who was involved in the recommendation in the FSC or FSA. Who did this isn’t relevant to the discussions he is having with them.
17. How many depositors and how many accounts have balances of less than 10k. What percentage of depositors will have been paid in full having taken the revised EPS?
A:This payment will take about 2,000 depositors out at that point. The vote is transferred to the IOM Government – but only as one vote (but not sure 100%).
18. As HMG has targeted E&Y with working exclusively on the transfer of depositors accounts to ING for the first 6 months of the administration process does the LP know if HMG will be paying all the costs of administration for this 6 month period?
A: Don’t Know.
19. With regard to suing the FSC, have you taken advice on this? 
 Can they be directly sued?
A: Under section 33 of the FSA they have a powerful indemnity – they can only be sued if they acted in bad faith. There is no culpability due to incompetence.
20. The issue of in-flight court action was raised again recently. If I understand the cases correctly if they were successful then the money would effectively come from funds KSFUK owes to KSFIOM (but as secured creditor). This would reduce the total deposits in KSFIOM whilst reducing our exposure to KSFUK. This would mean that it is in all our interests for the in-flight case to win. If this is the case can Mike Simpson confirm if he would reconsider his earlier decisions on the issue of in-flight and even support the case against KSFUK and RBS? As the legal opinion you received on this will be paid out of the depositors’ funds, it is reasonable to ask you to share that advice with us.
A: The hearing has been adjourned until sometime in April. If the action was successful, the LP would have to go along with the judgment of the court.
21. We understand that you, as Liquidator provisionally are still not allowed to see the sealed Orders of the Court on 8 October. Can you still not tell us why your hands are being tied? Can you tell us whether you have asked WHY it was considered necessary to seal the orders and WHO in the Treasury asked for them to be sealed?
A: The information as to who wanted them sealed and why is likely to be contained in the sealed documents. It has been indicated to Mike Simpson that this will not affect payments back to KSFIOM.
22. Multipart question:
a) KSFIOM is a company wholly owned by Kaupthing Holdings (IOM) Limited, situated at the same address Yes/No
A: Yes
b) K Holdings is a company wholly owned by Kaupthing Bank hf, Borgatun 19, 105 Reykjavik, Iceland, Yes/No
A: Yes
c) Kaupthing Bank hf is therefore a creditor of KSFIOM to the tune of £10,000,000 Yes/No
A: Yes
d) If c is the case, then will this amount be offset against the Kaupthing hf Parental Guarantee, making K hf just a debtor to KSFIOM
A: The legal aspects of this haven’t been researched yet but if it is legally possible, then this would be done.
23. Is it legally possible to swap our frozen deposit for part of KSFUK loan book, and if so, is there any benefit of doing so?
A: The liquidators have an obligation to treat all creditors equally and doing such a thing could be regarded as providing a preference to a group of creditors. As to the benefit for KSFIOM, that depends on the level of distributions coming out for which there is no indications as yet.

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SOA as opposed to liquidation

  • two time loser
  • 10/10/08 21/06/09
  • a depositor
  • Offline
  • Mon, 02/03/2009 - 18:17

I am attaching an exchange of corresponence with Paul De Weerd of the IOM FSC. I have removed my name and email details and substituted my DAG pseudonym. It is encouraging that he replied.

I had been led to believe that it was proposed that the FSC manage the SOA and yet he denies this. Can anyone put me wise please?

Two Time Loser

From: De Weerd, Paul [mailto:Paul [dot] DeWeerd(?)fsc [dot] gov [dot] im]
Sent: 20 February 2009 16:39
To:
Subject: RE: KSF IOM

Dear Mr

Thank you for your e-mail.

The budget speech was delivered in Tynwald (our parliament) by the Treasury Minister and the extract is from the speech as it is published. The version that you have does not have the font and layout differences that were in the original of my message and a line break is missing. These made it easier to see where the quotation begins and ends. The relevant part looked like this:

It includes:

“International issues

I will now turn to international issues

[etc]

The Court decides on the relative merits of a scheme of arrangement versus winding-up. The judgement of the Court after its 29 January hearing illustrates the considerations that the Deemster (judge) took into account. Here is a link to the judgement:

http://www.kaupthingsingers.co.uk/lisalib/getfile.aspx?itemid=20054

I am not aware of any proposals for the FSC to manage the proposed Scheme of Arrangement which is being put forward by the Treasury.

Regards

Paul de Weerd

Senior Manager

Financial Supervision Commission

PO Box 58, Finch Hill House, Bucks Road,

Douglas, Isle of Man, IM99 1DT British Isles

Tel: (+44) or (0) 1624 689337

Fax: (+44) or (0) 1624 689398

Email: paul [dot] deweerd(?)fsc [dot] gov [dot] im


From:
Sent: 20 February 2009 14:49
To: De Weerd, Paul
Subject: KSF IOM

Attention : Paul de Weerd, Senior Manager, Financial Supervision Commission

Dear Sir,

I have read extracts from your budget speech which I repeat below for your convenience. I write to you as a depositor of over €400,000 with KSF IOM who, at retirement age of 64 has just had to sell his home at a distressed price to provide funds to survive.

Firstly, your statement that "71% of eligible depositors will receive 100% recovery within two years" is misleading as the majority of depositors are small amounts and under £50,000 so they would be entitled to compensation under DCS anyway. Try expressing it as the proportion of funds that will be repaid out of the total that has been deposited and you'll see the point. At a guess it is only about 20% of the funds deposited that will be repaid within 2 years.

I think it is outrageous that FSC should seek to manage the proposed Scheme of Arrangement and I will vote against it for that reason if no other. There's many questions that need to be asked of the FSC about their handling of the affair and to now expect us beleaguered depositors to put our trust in you again is going too far.

If you really mean what you say "The Chief Minister and myself have held a number of meetings with key figures in the United Kingdom and Iceland in an attempt to find a satisfactory resolution to facilitate the return of the depositors’ stranded funds, without success to date." here's a suggestion. Do what the Swedes have done as you can see below or what every other country caught up in the Icelandic Banking fiasco has done and that is ensure depositors are paid out 100%. Don't try to get control on the cheap and make heroic claims like £1,000 per inhabitant on the island.

Get a loan from the UK and pay us 100% of our money and then you can run the bank down as you like. Your authority oversaw the loan of £550 million from KSF IOM to its sister UK bank. Take responsibility for it. You have the leverage to come to an arrangement with UK Govt over this. Don't leave us poor depositors out to dry.

If you are genuinely concerned about press comment and want to develop an international personality so you can represent the Island’s interests and build relationships to ensure that the reality and not the rhetoric is heard, then you'll see that the army of critics represented by the depositors and their action group could be turned to a force for goodwill if you pay them 100% and match your actions to your words.

Regards

Two Time Loser


IceNews - Daily News

Kaupthing Sweden sold to Finns
Feb 16, 2009 in Finance and Business, Finland, Iceland, MBL, Sweden

A binding agreement was signed earlier today on the purchase of Kaupthing in Sweden by Finnish Alandsbanken, based on the Aland Islands. Alandsbanken purchased Kaupthing Bank Sverige AB, Kaupthing Fonder AB and Alpha Asset Management Company. The purchase price is SEK 414 million (ISK 5.7 billion, USD 48,611,000) and was paid up front. This purchase price amounts to roughly half of Kaupthing Sverige’s assets, according to mbl.is.

The Aland Islands are a Swedish-speaking archipelago in the Baltic Sea. They are a partly autonomous and totally demilitarised province of Finland; and the smallest Finnish province, with 0.5 percent of the country’s population.

It is expected that the name Kaupthing Sverige will be changed to Alandsbanken Sverige. The bank’s director, Peter Wiklof said in a statement that Alandsbanken has long wanted to start operating in the Swedish market. With the purchase the bank gets around 20,000 new customers and around 20 percent extra turnover.

The bank’s statement says that the majority of Kaupthing Sverige business loans will be excluded from the purchase, along with selected other assets, including bonds linked to Lehman Brothers. These loans and assets will be transferred to the Icelandic mother company Kaupthing hf. The loan extended to Kaupthing Sverige in the autumn to pay account credit after the Icelandic bank collapse will then be paid back in full. This means that Kaupthing Bank’s balance sheet will reduce from SEK 9 billion at New Year’s, to SEK 5 billion.

In a statement from Kaupthing Sverige, Christer Villard, Chairman of the Board said that the situation is a good one for Iceland, for the Aland Islands and hopefully for the staff of Kaupthing Sverige too. The purchase price can be considered good by both the buyer and the seller, given the current market conditions, the statement says.

Alandsbanken did not have any offices or staff in Sweden, although its shares are listed on the stock exchanges in both Helsinki and Stockholm. Among Alandsbanken investors is Ingvar Kamprad, founder of the Swedish retail giant IKEA, who has a 1 percent stake. But the biggest shareholders are fishing vessel owners and other businesspeople from the Aland Islands.

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From:
Sent: 18 February 2009 10:52
To:
Subject: IOM Treasury Bugdet speech y'day

Dear xxxx

Thank you for your e-mail.

The Isle of Man authorities have made extensive efforts including representations to the UK on the need for this matter to be resolved. The Treasury Minister’s budget speech today illustrates the significance of this issue locally. You can find the speech at:

http://www.gov.im/lib/docs/treasury/budget/2009/budgetspeechfinal.pdf

It includes: “International issues

I will now turn to international issues

The last year has seen a number of key challenges in respect of our international profile. The events of last October should be a salutary reminder of the constant need to be proactive in communicating to wider audiences worldwide. The collapse of Kaupthing Singer and Friedlander Isle of Man dominated events. We all recognise the financial and emotional strain this has caused, and are committed to finding the best solution in difficult circumstances. The Chief Minister and myself have held a number of meetings with key figures in the United Kingdom and Iceland in an attempt to find a satisfactory resolution to facilitate the return of the depositors’ stranded funds, without success to date.

At the same time the banking crisis, and the international response was forcing a faster reconsideration of the depositors compensation scheme, and ultimately, a Government guarantee to provide up to £150 million of financial support was put in place, should this be required.

It has now been over four months since the problems with Kaupthing Singer and Friedlander emerged. During this time we have not stood by waiting for events to unfold, but have constantly striven to construct a solution in the best interests of all depositors. This includes continued dialogue with all interested parties. The continued lack of certainty regarding meaningful information from the UK administrator has frustrated our ability to reach satisfactory conclusions to these discussions.

Having secured the support of this honourable Court to the introduction of an early payment scheme in December, I can inform honourable Members that some 6,000 applications have been made, a significant proportion already paid. An enhanced early payment scheme is to be put to Tynwald this month, providing for reimbursement of deposits up to £10,000.

The two early payment schemes will together cost up to £105 million, equivalent to more than a thousand pounds for every man, woman and child resident on the Isle of Man. In my opinion it cannot be said by any person that we do not take seriously the situation the depositors find themselves in.

Later this week the court will meet again to determine whether the scheme of arrangement should be allowed to proceed as an alternative to liquidation. We remain convinced that this will provide a better outcome to that of liquidation for the creditors of Kaupthing Singer and Friedlander, ensuring 71% of eligible depositors will receive 100% recovery within two years.

I am aware that many depositors may be watching or listening to the budget debate today. I therefore want to reiterate my commitment to continue to work to meet both any short term financial difficulties experienced by getting as many early payments out as soon as possible, and at the same time to implement the courts wishes in respect of an overall solution as swiftly as we can.

The stresses caused by the banking crises put our closest relationship, that with the United Kingdom, under considerable pressure. Much of the press comment at the time was inaccurate, and showed little understanding for the Island’s status or economy. I am therefore more determined than ever to ensure that we actively get our message across.

This is more than just marketing; it is about developing and sustaining an international
personality so we can represent the Island’s interests and build relationships to ensure that the reality and not the rhetoric is heard.”

Regards

Paul de Weerd

Senior Manager

Financial Supervision Commission

PO Box 58, Finch Hill House, Bucks Road,

Douglas, Isle of Man, IM99 1DT British Isles

Tel: (+44) or (0) 1624 689337

Fax: (+44) or (0) 1624 689398

Email: paul [dot] deweerd(?)fsc [dot] gov [dot] im


Simpson didn't answer Q16 or Q21

  • Lucky Jim
  • 13/10/08 31/05/09
  • not a depositor
  • Offline
  • Thu, 26/02/2009 - 07:25

Well done! frog

Simpson didn't answer Questions 16 & 21:

Q16. Could you tell us to whom you speaks (or e-mails) in the UK Financial Services Authority? How senior is this person? Do you know if this person is the one who spoke to the IOM FSC regarding the transfer of £550,000,000? If you don't know this, could you contact the person and ask him? If the person says "not me" could you ask for the name of the person involved? If the person says he can not disclose the name, would you please ask "and why not?"
A: PWC are speaking to the UK FSA at various levels, Mike Simpson is not aware of who was involved in the recommendation in the FSC or FSA. Who did this isn’t relevant to the discussions he is having with them.

BUT it is relevant to us -- that's why we asked the question!

Q 21. We understand that you, as Liquidator provisionally are still not allowed to see the sealed Orders of the Court on 8 October. Can you still not tell us why your hands are being tied? Can you tell us whether you have asked WHY it was considered necessary to seal the orders and WHO in the Treasury asked for them to be sealed?
A: The information as to who wanted them sealed and why is likely to be contained in the sealed documents. It has been indicated to Mike Simpson that this will not affect payments back to KSFIOM.

He didn't answer the question! We are entitled to know at least WHO asked for the Order to be sealed and the reason WHY the request was made


question 21

  • Anne Patrick
  • 27/10/08 15/07/09
  • a depositor
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  • Thu, 26/02/2009 - 07:49

He didn't answer the question and is always dismissive /evasive on this topic of sealed papers.I wonder why ? Does he along with the I.O.M. gov. know what is in the sealed papers and have done so for sometime.


In his bulletin on the KSFIoM

  • Minotaur
  • 15/10/08 31/05/09
  • a depositor
  • Offline
  • Thu, 26/02/2009 - 17:37

In his bulletin on the KSFIoM website of 20th October, Simpson said:

' Meanwhile, it is interesting to note that the Court papers relating to their appointment are sealed, which means we cannot examine them to determine the reasons for their appointment or any other related matters.'

In his 5th December bulletin he said:

'The Administrators [of KSFUK] had applied to Court for dispensation to release a list of creditors on the grounds it would be prejudicial to the interests of creditors for list of creditors names, addresses and amounts due to be released. The Court had duly granted an order on 13 November 2008. It was also confirmed that by Court order the documents on the Court file relating to the appointment of the Administrators were sealed and not open for inspection.'

As I recall it, fairly early on Simpson also said that the sealed court orders were unprecedented and baffling, as well as a hindrance to his work. But I can't now find this in any of his bulletins, and he may have been reported as saying it elsewhere. This certainly happened before the series of minuted telephone calls. Does anyone have chapter and verse on this?


Unseal the court papers

  • uksmashandgrab
  • 23/12/08 31/05/09
  • not prepared to answer
  • Offline
  • Thu, 26/02/2009 - 18:07

Not been a legal person, what would it take in the judicial hierarchy to get the papers unsealed, with whats going on with Santas FSC/FSA this thing does not pass the smell test.

Is there a John Deed HC Judge who would stick their neck out, or would it need to go above that.


THere is a petition

  • bellyup
  • 10/10/08 09/01/10
  • a depositor
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  • Thu, 26/02/2009 - 18:20

There is a email petition on this that anyone who feels strongly about these papers should sign
I remember MS saying it would not necessarily help our case if they were unsealed.


I agree - the opinion he has

  • frog
  • 10/10/08 13/09/09
  • a depositor
  • Offline
  • Thu, 26/02/2009 - 18:39

I agree - the opinion he has received was that the restrictions do not apply to us - and i suggested to him that if they were unsealed, it could be bad for us (it may affect the level of recovery from the UK badly perhaps). Who knows, but I for one am happy to let sleeping dogs lie on this one for the moment.


What has the FSC/FSA to hide

  • uksmashandgrab
  • 23/12/08 31/05/09
  • not prepared to answer
  • Offline
  • Thu, 26/02/2009 - 18:52

Hmm, not so sure, if its points to either regulatatory agencies knowingly trap the 550 million in the UK it could show negilance at best fraud at worst on their behalf. If either agency was less then forthright was it on the orders of their political masters that this came about.

It may make them more willing to repatriate the funds before it get's to high up the tree.

So not sure the downside outweigts this, maybe you can comment further.


RE: 4 eyes question 4

  • tsunamivictim
  • 11/10/08 n/a (free)
  • a depositor
  • Offline
  • Wed, 25/02/2009 - 10:40

"4. Can you confirm that one of the four eyes was present on the island at all times in the 6 months prior to October 8th? Were they ever both off the island at the same time?
A: While Mike Simpson can’t confirm that both were always on the island at the same time, he can confirm that there were some individual days when neither were in the office during banking hours."

Please can someone suggest a reason why Mike Simpson ducked answering this question? He is really hedging his bets here.....I took the time to check some of the FSC Rules and Regulations which explain very clearly that one of the 4 eyes has to be present on the island at all times. His fudge that he could only confirm that were days when neither was in the office during office hours is a cop out.
If the truth is that there were days when both 4 eyes were not on the island, then it suggests the FSC may have a problem as this is a legal requirement?
Can we ask him to clarify this exactly and not avoid the question.


4 Eyes Q4

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
  • Offline
  • Thu, 26/02/2009 - 08:59

If either (or both) had left the Island it's likely to have been by air or ferry - so there would be a record somewhere.


But was it "bad faith"? If not ....

  • columbgc
  • 11/10/08 14/07/10
  • a depositor
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  • Wed, 25/02/2009 - 11:18

From MS conference call:

Q18. With regard to suing the FSC, have you taken advice on this? 
 Can they be directly sued?
A: Under section 33 of the FSA they have a powerful indemnity – they can only be sued if they acted in bad faith. There is no culpability due to incompetence.


columbgc: Please read the FSA

  • Anonymous
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  • Wed, 25/02/2009 - 11:54

columbgc: Please read the FSA 2008 again, having particular regard to exclusions from indemnity.


Thanks ...

  • columbgc
  • 11/10/08 14/07/10
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  • Wed, 25/02/2009 - 12:01

Do you have a link?


FSA 2008 (IM)

  • Anonymous
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  • Thu, 26/02/2009 - 10:20

FSA 2008 (IM):

Sure,

Royal Assent June 2008, in force August 2008

http://www.gov.im/lib/docs/infocentre/acts/financialservicesact2008.pdf

You may also want to take a look at the FSC rule book derived from the FSA 2008:

http://www.fsc.gov.im/lib/docs/fsc/rulebooks/FinancialServicesRuleBook_J...


FSA 2008 IM

  • manx-person
  • 17/10/08 31/05/09
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  • Fri, 27/02/2009 - 00:12

Elgee,
I get your point totally about the date, but as a further point, the implementation of the FSA2008 wasnt on the date of RA. See S53 and the appropriate appointed day orders. The implementation of the provisions of the act was phased, with the last of the ADO's having an effective date of 1 jan 09 from memory


FSA 2008 IM

  • Anonymous
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  • Fri, 27/02/2009 - 09:20

Manx-person: I thought the act came into force August 2008 (that is what I have noted above), RA being June 2008, but I will check when each section brought into force if I can.


FSA 2008 IM

  • manx-person
  • 17/10/08 31/05/09
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  • Fri, 27/02/2009 - 10:32

here is a link to a draft copy of the ADO that was used for consultation purposes www.gov.im/lib/docs/fsc/Consultative/ado180408.pdf

You can obtain a copy of the actual ADO from the Tynwald Library which fulfills some of the functions of the UK OPSI.

Their telephone number is +44 (0)1624 685500, and I have always found them knowledgeable and helpful.

I know perhaps that some of the phased implementation may not be immediately relevant to the point of the date at which the statutory immunity came into affect.

Another point is that the FSA2008 did replace certain other legislation (namely the Fiduciary Services Act 2005) which contained inter alia a statutory immunity at s19, but this only related to Fiduciary activities (i.e. not Banking). I don't know if there was an equivalent statutory immunity in the Banking Act 1998, or other legislation.


I guess this is it

  • frog
  • 10/10/08 13/09/09
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  • Thu, 26/02/2009 - 18:44
  1. (1) This section applies in respect of any act or matter done
    or omitted to be done —
    (a) in the exercise, or purported exercise, of the functions
    conferred by or under a specified enactment; or
    (b) in the implementation, or purported implementation, of
    a mutual assistance agreement under section 34.
    (2) A designated body shall not, nor shall —
    (a) any officer, member or employee of a designated body; or
    (b) any other person acting on behalf of a designated body;
    or
    (c) any person acting pursuant to any authority conferred
    by a designated body,
    be liable in damages for, or in respect of, any act or matter done or
    omitted to be done unless the act or matter done or omitted to be
    done is shown to have been in bad faith.
    (3) Subsection (2) does not apply so as to prevent the award
    of damages made in respect of an act or omission on the ground
    that the act or omission was unlawful as a result of section 6(1) of
    the Human Rights Act 2001 (acts of public authorities).
    (4) In this section —
    “designated body” means —
    (a) the Treasury;
    (b) the Commission;
    (c) a body administering a scheme under section 25;
    (d) a regulatory authority which is designated by

regulations made by the Commission;
(e) the Isle of Man Office of Fair Trading or an adjudicator to
whom a dispute has been referred to under Schedule 4;
“specified enactment” means —
(a) this Act;
(b) the Companies Acts 1931 to 2004;
(c) the Industrial and Building Societies Acts 1892 to 1993;
(d) the Financial Supervision Act 1988;
(e) the Companies Act 2006.
(5) This section shall not have effect in relation to any
action, suit or proceedings, whether commenced before or after
the date on which this section comes into operation, in respect of
any act or matter done or omitted to be done before that date.
(6) This section does not prejudice the generality of paragraph
6 of Schedule 1 to the Government Departments Act 1987 nor
paragraph 11 of Schedule 2 to the Statutory Boards Act 1987.


Not limited too :- FSC - failure to act

  • skintagainnow
  • 10/10/08 31/05/09
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  • Fri, 27/02/2009 - 10:35

Here's the relevant bits from the 2 pieces of legislation ;-

(3) Subsection (2) does not apply so as to prevent the award of damages made in respect of an act or omission on the ground that the act or omission was unlawful as a result of section 6(1) of the Human Rights Act 2001 (acts of public authorities).

6(1) of the Human Rights Act 2001 (acts of public authorities).

(5) In this section, "an act" includes a failure to act but does not include a failure to —
(a) introduce in, or lay before, Tynwald, the Legislative Council or the House of Keys a proposal for legislation; or
(b) pass any Act.

As regulators they failed to act on a number of points, & not just with KSF,

1) did not adequately liaise with regulatory bodies in the UK - Icelandic banks, RBOS, HSBC - all of which were under intense scrutiny, with RBOS & HSBC under even more pressure than Kauphing, however Kaupthing IoM was over exposed to UK - under their directions.

2) did not act in the best interest of depositors to insist IoM funds were secured or in this uncertain time repatriated back to the Island and under their control.

3) did not act to remove Khf parental guarantee, when clearly they knew (or suspected, to wit the removal of funds from Khf some six months earlier), the bank and therefore the guarantee was unreliable.

4) did not act or intercede on depositors behalf when discrepancies in banking practices were brought to their attention.

5) bound to be more???

That's a just quick lot of the top of my head.


Personal claim or Claim by KSFIOM?

  • steveservaes
  • 13/10/08 31/05/09
  • unspecified
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  • Fri, 27/02/2009 - 10:31

Does the Act give us as individuals the right to sue the FSC?
Or only as creditors of KSFIOM?
Or only allows the Bank the right to sue?
I am assuming it is the first one - in which case if we are suing as individuals on the basis that we have suffered a "negligence" loss, then the SoA should have no effect on our right to sue FSC, since the SOA only deals with our rights against the Bank or in our capacity as depositors of the Bank, and should not affect our rights outside the relationship with the Bank.


Bad faith

  • steveservaes
  • 13/10/08 31/05/09
  • unspecified
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  • Fri, 27/02/2009 - 09:16

I think we can assume that IOM FSC noted the disparity between (a) their decision not to allow funds to go to Iceland (Khf) [i.e. Khf very bad!] and (b) their decision to allow KSFIOM to suck in funds from depositors on faith of a parental guarantee from Khf (ie Khf very good!).
At that point they should have insisted on removal of references in advertising to Parental Guarantee.
They may have failed to do so out of a desire to let the bank keep running and not to prejudice the existing depositors.
However - this does not alter the fact that in respect of New depositors they basically participated in a misrepresentation by KSFIOM.
That must be as close to bad faith as anyone can get.
On that basis anyone depositing since March should have the makings of a claim against the FSC for what they wouldn't have lost had the FSC banned the PG add.


Interesting point and one

  • Done like a Kipper
  • 10/10/08 n/a (free)
  • a depositor
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  • Fri, 27/02/2009 - 12:50

Interesting point and one that I have already taken up with the FSC and met with the usual excuses and general stonewalling. I did make a substantial deposit on the last day of July and it was the Parental Guarantee (not the IOM DCS) which tipped the balance in favour of a KSFIOM deposit.


Advertising of parental guarantee

  • DonaldC
  • 25/11/08 31/05/09
  • not a depositor
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  • Fri, 27/02/2009 - 10:53

How could the FSC have got KSFIOM to remove the comment about the parental guarantee? It was, and remains, perfectly true that the parental guarantee existed.

The problem, of course, is that the parent went bust, not that the guarantee was invalid.

I could be wrong, but to demonstrate a misrepresentation, there would have to be a false statement (such as over the credit ratings of the parent), or a misleading emphasis, implying that the existence of the guarantee meant deposits were 100% secure.


You have a point

  • steveservaes
  • 13/10/08 31/05/09
  • unspecified
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  • Fri, 27/02/2009 - 11:15

.. in that of course it was true that a PG existed and to that extent the FSC did not misrepresent anything

However .. the FSC is not an ordinary entity. Its very role is to make sure that people don't offer regulated financial services without complying with certain rules .. and if I went to FSC now suggesting I open a bank with a parental guarantee from some dodgy parent bank (which they had already decided was dodgy) they would tell me to get lost, as they would if I was setting up any other kind of financial institution. That is their very role.

What I am saying is that FSC failed in their obligation to ensure that ongoing promotional activities met the standards that would be applied in a new entity with the consequences that depositors lost their cash. Effectively they endorsed the representation that the PG was a valuable resource that would meet the criteria of a reasonably competent regulatory body. That was a false representation as far as we are aware since FSC had already decided Khf were dodgy.

I think they should compo us on that basis. However first we have to carry on this endless process of establishing what in fact we have lost - which KSFUk and Khf seem determined to drag on until we are all mouldering in the grave.


Bad faith

  • dclf1947
  • 10/10/08 31/08/09
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  • Fri, 27/02/2009 - 10:10

Steve I have to agree. I was an existing depositor and in July 2008 transferred some cash from my account to open a KSK IOM one year bond. At the time I discussed with my wife the situation and remember showing her the guarantee which I used as my main reason for doing the transfer. I considered my deposits to be 100% safe. I feel very let down by the IOM FSC, even more so because from the TSC meetings it seems blatantly clear that the FSC were very unprofessional and incompetent regarding the allowing of the 550K(?) transfer to the UK without anything (that we know of) in writing to support that this was safe. I believe this is the reason the IOM wants the SoA to take away our legal rights.


Same boat

  • steveservaes
  • 13/10/08 31/05/09
  • unspecified
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  • Fri, 27/02/2009 - 10:22

My position is same as yours but my fateful decision to put into 1-year bond was in September. In terms of progressing the claim, isn't Mr Wright supposed to be doing this for the DAG?


Mr Wright

  • bellyup
  • 10/10/08 09/01/10
  • a depositor
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  • Fri, 27/02/2009 - 10:55

I dont know what Mr Wright is doing other than being our legal rep on the IOM
I understand that Edwin Coe is directing operations
Is this the case London Team?


FSC liability

  • Anonymous
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  • Fri, 27/02/2009 - 10:03

steveservaes
Wow! On the button! But how to progress it?
I've always thought the parental guarantee was dodgy. How come the FSC didn't think so? Or maybe they did, but couldn't be bothered to act. The IoM banks are still advertising the DCS as part of the security of deposits! Annoying.


I think that you have made an

  • SgKZ
  • 10/10/08 31/05/09
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  • Fri, 27/02/2009 - 09:58

I think that you have made an excellent point.


I think that you have made an

  • SgKZ
  • 10/10/08 31/05/09
  • a depositor
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  • Fri, 27/02/2009 - 09:56

I think that you have made an excellent point.


Section 6 Human Rights Act 2001

  • skintagainnow
  • 10/10/08 31/05/09
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  • Thu, 26/02/2009 - 18:55

Public authorities
6. Acts of public authorities
(1) It is unlawful for a public authority to act in a way which is incompatible with a Convention right.
(2) Subsection (1) does not apply to an act if —
(a) as the result of one or more provisions of an Act, the authority could not have acted differently; or
(b) in the case of one or more provisions of, or made under, an Act which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions.
(3) In this section, "public authority" includes —
(a) a court or tribunal, and
(b) any person certain of whose functions are functions of a public
nature,
but, subject to subsection (4), does not include —
(i) Tynwald;
(ii) the Legislative Council;
(iii) the House of Keys; or
(iv) a person exercising functions in connection with
proceedings in Tynwald, the Legislative Council or the
House of Keys.
(4) In relation to a particular act, a person is not a public authority
by virtue only of subsection (3)(b) if the nature of the act is private.
(5) In this section, "an act" includes a failure to act but does not
include a failure to —
(a) introduce in, or lay before, Tynwald, the Legislative Council or
the House of Keys a proposal for legislation; or
(b) pass any Act.


Tel Con Notes confirmation to LP

  • sgebbett
  • 20/10/08 31/05/09
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  • Wed, 25/02/2009 - 09:37

frog.. excellent summary and thanks. Can I naturally assume that you send a copy of these tel con notes to the LP so evertyhing discussed is recorded?

sgebbett


The call itself is recorded

  • frog
  • 10/10/08 13/09/09
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  • Thu, 26/02/2009 - 06:35

The call itself is recorded and placed on the bank site - the notes are my summary (and recollection of the call). The recording should be used as the definitive comment.

Having said that, normally I send a copy a few hours to Mike Simpson before publishing on the site - this week I didn't as my schedule has been a bit mixed up.