H.M Treasury

  • peecee9031
  • 26/11/08 31/05/09
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Posted: Fri, 28/11/2008 - 15:14

I applied for information under the freedom of Information act to H.M.Treasuy and found the answer rather interesting , are the treasury the only ones who believe that Kaupthing , Singer & Friedlander were not a subsidery of Kaupthing Singer &Friedlander UK ? I attach the answer in full and await your comments fellow victims .

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treasury reply peecee

  • mikeinfrance
  • 12/10/08 28/09/09
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  • Fri, 28/11/2008 - 20:57

Peecee ..unfortunately the question you asked was based on a misconception of what actually happened,a misconception which for some reason continues to be perpetuated long after the event. Its well known that the treasury froze (seized)only Landsbankii assets and it was a knock-on effect which caused KSFUK to be taken into administration, a further knock on effect causing KSFIOMs demise.They certainly didn't seize any assets of KSFIOM even though the eventual outcome is the same as if they had done.
The answer you received from the treasury is quite accurate; KSFIOM is a subsidiary of Kaupthing Hf Iceland.

The basic problem of the treasury's actions causing the problems with both KSFUK and KSFIOM has not been addressed by the treasury reply but if you were to word your question to include those specific points they might find it harder to give you a meaningful reply.


HM Treasury etc

  • Tricky Dicky
  • 24/10/08 30/05/09
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  • Fri, 28/11/2008 - 19:28

Can someone produce a blog, just stating basic simple facts covering what anyone has called KSFIOM, ie
HM Treasury Wholly owned ???
A. Doherty Sister company??????

you get the idea

etc etc, then we will see it all in one place, ratyher than have to keep looking through various forum topics, there is alot of info on this site and we need to start pulling it together and easier to find

Thanks a million or two


HM Treasury etc

  • poppytwo
  • 06/11/08 31/05/09
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  • Fri, 28/11/2008 - 19:49

If when replying to a topic we put the same title in the subject bar it will pull everything together. Pertetra


KSF Administration Order

  • romasanta
  • 16/10/08 02/10/10
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  • Fri, 28/11/2008 - 17:21

FYI:
Quote from Aidan Doherty's 2nd affidavit, Para 13 (i)
Kaupthing, Singer & Friedlander Limited, a sister company in London, was made the subject of an administration order made by the High Court of Justice of England & Wales on the 8th October 2008.
see: http://www.ksfiomdepositors.org/members-page/2nd-affidavit-michael-simps...


Status of KSF IoM

  • Expat13
  • 19/10/08 31/05/09
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  • Fri, 28/11/2008 - 17:11

Responding to peecee9031

According to information from the IoM Financial Supervision Commission Kaufthing Singer & Friedlander IoM is a wholly owned subsiduary of Kaufthing Bank hf in Iceland with a holding company in IoM and not a subsiduary of the Kaufthing Bank in the UK. Assuming this information is correct why in God's name were KSF IoM stupid enough to transfer its depositors assets to the UK instead of keeping them in the IoM. As far as the UK is concerned IoM is a foreign country.


transfer of £557M

  • mikeinfrance
  • 12/10/08 28/09/09
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  • Fri, 28/11/2008 - 21:12

The money (£557M) wasn't in the IOM, it was in Iceland. Last spring the FSC, following discussions with the FSA, decided that it would be prudent to move the funds from Iceland to UK for "safe keeping". The FSC after 9th Oct said that "in hindsight" it hadn't been such a prudent move. This is now well documented and based on the FSCs John Aspden interview on Manx Radio several weeks ago. It seems that the question of whether those funds were safeguarded in any way is open... even the KSFUK administrators are not sure, according to their recent report


Expat13 - Sending funds to KSFUK?

  • steveejeb
  • 10/10/08 31/05/09
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  • Fri, 28/11/2008 - 18:00

I must admit this has always puzzled me too. Unless the bank in the IoM felt that they could be pressured into having to send funds back to Iceland or that Iceland could somehow freeze the funds held in KSFIoM? However if Iceland was powerless in this respect then yes, why on earth was money not kept safe where it was?

A theory that went around shortly after this all happened was, that the UK had recommended the IoM take this action (to send funds over), in the same way as (Landsbanki?) Guernsey did. Conjecture and conspiracy theory I know but until full access to the wretched sealed papers are gained it is all speculation. Should it be found that the UK, in anyway recommended that KSFIoM and Landsbanki funds be sent to London, and then expropriated them, well, the cat would be right out of the bag.

Nevertheless in the clear light of hindsight, it appears to have been a monumental error, made unforgivable by the funds not being ring-fenced and is a secondary cause of the dire state we are all in now. What we need is a good investigative journalist to get their teeth into this......

PS Is anybody yet any the wiser as to why exactly the sealed papers have remain sealed (2 months on!) after all, that particular "terrorist crisis" is now over and why (apparently) there is a problem getting sight of the parental guarantee?


That's a question for the

  • Bill
  • 13/10/08 n/a (free)
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  • Fri, 28/11/2008 - 17:23

That's a question for the bank's directors and the banks regulators - the FSC - isn't it?


KSFIoM Director & FSC - same bloke

  • smlitalia
  • 19/10/08 31/05/09
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  • Fri, 28/11/2008 - 20:52

I can't remember his name but there's one of the Directors of KSFIoM who was sitting on the FSC - we can just ask him and save a bit of time! I don't think he's been mentioned for a few weeks but I've always thought it fishy (cod, mostly) that he was regulating his own bank...


This is well known - This is

  • frog
  • 10/10/08 13/09/09
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  • Fri, 28/11/2008 - 16:06

This is well known - This is why there has been a lot of discussion about the parental guarentee from Khf.

It was a rather complete answer considering they could have just stopped at the first para notheless....


FSC and Parental Guarantee

  • Bill
  • 13/10/08 n/a (free)
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  • Fri, 28/11/2008 - 16:46

Yes and it reminds me again that it was the FSC that had responsibilities in overseeing the situation knowing that the Icelandic banking crisis was on its way back in the Spring. I have said before they should be under the spotlight - a lot to answer here.

And why is the parental guarantee still a secret - isn't it high time we do something to get to see that because I can't think why they would want to hide it if it is 100% legitimate?


I've wondered

  • sandman
  • 23/10/08 31/05/09
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  • Fri, 28/11/2008 - 17:08

for some time why there has been such reluctance on behalf of the FSC to make the parental guarantee public. If everything is completely above board then I can see no reason why it should not be published, even if it's currently not worth the paper it's written on. I have to say that it seems highly suspicious.

It's also rather odd that the FSC allowed such a massive percentage of KSF IOM's deposits to be placed in London when they were well aware of the dangers surrounding the Icelandic banks as it was obvious that KSF UK would fail immediately there were any problems with the parent bank. Pulling the money back to the Isle of Man would have seemed a safer bet. Probably something for the lawyers to get their teeth into in due course if all other options fail.


Not defending FSC or the

  • Ally
  • 13/10/08 31/05/09
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  • Fri, 28/11/2008 - 17:37

Not defending FSC or the bank. But that is how the offshore subsidiaries work. The economies of the Isle of Man, Jersey etc are not big enough to use up all the deposits (i.e. lent them out in the form of mortages, loans etc) so they send them back to head office in the UK to use.

KSF IoM was not unusual in this

Look at the Nationwide International in the IoM financial statements available at the link below

http://www.nationwideinternational.com/home_files/financial_statement.htm

Virtually 100% of its assets are held by the parnet company in the UK. Compared to this KSF IoM was well diversified.

Funds of KSF IoM did go back to the parent in Iceland up until spring of this year when the FSC asked for them to be sent to London instead.


Right, but knowing the

  • Bill
  • 13/10/08 n/a (free)
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  • Fri, 28/11/2008 - 17:46

Right, but knowing the potential problems that existed in Icelandic banks, shouldn't the FSC had recommended some form of ringfencing effectively making KSF IOM a preferential creditor?


ringfencing

  • mikeinfrance
  • 12/10/08 28/09/09
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  • Fri, 28/11/2008 - 21:01

There have been some noises coming from the IOM that they "thought" they had been ringfenced..The recent E & Y report on the KSFUK administration states that they are still not sure of the actual status of the £557M..if they don't know then who does? maybe the answer is in the sealed court papers... who knows...Then there's the further complication in that the KSFUK transfer order (para 27) forbids KSFUK from repatriating funds to KSFIOM without the authority of the treasury!


Ringfencing

  • Ally
  • 13/10/08 31/05/09
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  • Fri, 28/11/2008 - 22:19

It does seem strange that there are now noises that these funds were held "in trust". The Isle of Man Attorney General said as much in Court yeterday, there were a few looks of astonishment. Immediatley after the advocate for Mike Simpson (PWC) stated that E&Y disputed this and saw it as an unsecured creditor.

However, hopefully there will be more to come on this, as expat stated on this forum there has always been the odd rumour or two on the Isle of Man that the monies were held in trust but for it to actually make it in to the public domain via the Court hopefully means there could be more to come.

But as you say s.27 of the administration is still a sticking point even if the funds were secured nothing can be relased without the authority of the UK treasury


"The Isle of Man Attorney

  • dawes
  • 24/10/08 31/05/09
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  • Sun, 30/11/2008 - 11:38

"The Isle of Man Attorney General said as much in Court yeterday, there were a few looks of astonishment. Immediatley after the advocate for Mike Simpson (PWC) stated that E&Y disputed this and saw it as an unsecured creditor."

I can't understand why any Icelandic bank, who were desperate for funds from any source, would have ring-fenced nearly a billion euro's from one of their subsidiary banks. Given the news of corruption and mass fraud that is being reported (share ramping, theft of depositors funds, defrauding customers with 'bonds') in Iceland I find it impossible to believe that the £557m still exists.


Re: The Isle of Man Attorney

  • Ally
  • 13/10/08 31/05/09
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  • Sun, 30/11/2008 - 11:55

Personally I don't think the "in trust" will come to anything but it is strange that 7 weeks in to this there is some sort of acknowledgment on the IoM that that they were "in trust".

As for the Icelandic bank ring fencing them. Well the asstes would still have been useable by the bank, they would have still formed part of the banks liquid assets. The funds could have been placed there with some form of security. It doesn't mean the KSF UK could not have used them to loan out in the form of mortgages, loans etc. It is possible to place in a bank as a secured creditor and for the bank to still use those assets.

From a group point of view Kaupthing hf only produced group consolidated assets, never individual company accounts. So as far as the group was concerned whether the funds were in IoM or London made no difference, as the balance sheet affect would be the same. Also whether they were secured or not would make no difference to the group as on consolidation the inter-company debits and credits would be cancelled out.


Poor regulation?

  • user1123
  • 14/10/08 31/05/09
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  • Sun, 30/11/2008 - 12:12

So, are saying that the Directors of the Isle of Man concern are potentially negligent and the regulators (FSC) have not been doing their job?
Moving forward do we need to take a personal action against the CEO of the FSC and a personal action against the Directors of KFS, IoM?


s.27 sticking point

  • Alastair
  • 10/10/08 30/09/09
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  • Fri, 28/11/2008 - 23:31

Ally althogh s.27 may well be a sticking point if it could be demonstrated that the KSFIOM funds were held in trust and as such secured I don't think E&Y could do anything else with these funds in the meantime. So the Treasury could block their transfer back but short of an Act of Parliament they couldn't sequestrate them.

Even the Treasury can't just rewrite trust law. For good reason under english law the law of trusts was developed under the Court of Equity which for those interested stems from the equitable powers of the Lord Chancellor - so in that case would be back to Mr Straw.


Re: s.27 sticking point

  • Ally
  • 13/10/08 31/05/09
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  • Fri, 28/11/2008 - 23:40

BC

You are right. If they are "in trust" then even if we don't know the timing of their return we know they will return and that makes any sort of restructure so much easier as you are not guessing at how much will be missing.

However as was said in Court yesterday E&Y do not believe it is the case and that KSF IoM is an unsecured creditor. If they were in Trust and PWC / IOM govt want to pursue this point then sooner or later any evidence will have to be produced.


Icelandic knowledge

  • 9-10
  • 12/10/08 31/05/09
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  • Fri, 28/11/2008 - 22:50

Ally
"Funds of KSF IoM did go back to the parent in Iceland up until spring of this year when the FSC asked for them to be sent to London instead."

The parent probably knows more about the status of the transfered funds than IOM or UK.
Iceland must have played more of a role than just sending the cheque ( the parental guarantee may have been compromised after the transfer.)
Regarding this question of ring fencing, i'm not aware of DAG making contact with anyone in iceland .
Amid all this secrecy, the icelandics may prove to be more receptive.

Expat13
"As far as the UK is concerned IoM is a foreign country."
The inverse also ?


May have it the nail on the head?

  • dclf1947
  • 10/10/08 31/08/09
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  • Sat, 29/11/2008 - 03:47

Expat, that is a great possibility that the actions by the FSC have compromised the guarantee and as such they are extremely reluctant (or refuse) to allow it to be seen or discuss it. Worth following up.


Status of IoM with respect to UK

  • Expat13
  • 19/10/08 31/05/09
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  • Sat, 29/11/2008 - 01:46

Response to Ally

So why would IoM FSC ask the Kaufthing Bank in Iceland to transfer assets to London instead of IoM? Now we are at the mercy of HMG.


HM Treasury

  • sandman
  • 23/10/08 31/05/09
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  • Sat, 29/11/2008 - 06:02

While on the subject of HMT, the deal with ING was obviously negotiated well before the 8th/9th Oct, and for a deal of that size and complexity discussions with the Dutch probably started several weeks before. I seem to remember either Darling or the FSA Chairman stating in answer to a question (maybe in front of the TSC?) that they couldn't have warned KSF IOM to take it's money from KSF UK once it was aware that serious problems were in the wind as that would have advantaged one set of investors over others.

The fact that HMT apparently used their own 'insider' knowledge to give Edge retail investors preferential treatment over and above other investors strikes me as rather hypocritical but more importantly does anyone have any idea if this is legal under English insolvency law?


sandman ING transfer

  • mikeinfrance
  • 12/10/08 28/09/09
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  • Sat, 29/11/2008 - 22:40

sandman re your comments about the ING transfer I have posted the following elsewhere and repeat it here:

This was the order of events on 8th Oct. ( 2hrs 5 min between freezing Landsbanki assets and transferring Kaupthing UK Edge accounts to ING. Who can say that this wasn't all planned beforehand ?

Landsbanki freezing order
Made at 10.00 a.m. on 8th October 2008
Laid before Parliament at 12.00 noon. on 8th October 2008
Coming into force at 10.10 a.m. on 8th October 2008

KSFUK transfer order ..(Kaupthing Edge accounts to ING,KSFUK into admin, KSFIOM assets effectively frozen)
Made at 12.05 p.m. on 8th October 2008
Laid before Parliament at 4.00 p.m. on 8th October 2008
Coming into force at 12.15 p.m. on 8th October 2008

The KSF transfer order included this which effectively froze our £557M:
Moratorium on payment to related companies
27.—(1) Kaupthing shall not make any payment, dispose of any property or modify or release any right or liability to or for the benefit of a related party without the prior consent of the Treasury, and any such purported payment, disposal, modification or release shall be void.

It's very clear that this whole episode was planned.Clearly KSFUK Edge depositors received priority treatment, although they didn't know at the time, whereas KSFIOM depositors had their £557M effectively frozen by virtue of the transfer order and that was made absolutely certain by the treasury's inclusion of para 27. How can the british government possibly continue to maintain that they only froze Landsbanki assets, and that what happened to KSFUK was nothing to do with them ?


Sandman HM Treasury

  • steveejeb
  • 10/10/08 31/05/09
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  • Sat, 29/11/2008 - 06:53

Yes a very good point Sandman.


Preferential Treatment of Edge Customers

  • Alastair
  • 10/10/08 30/09/09
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  • Sat, 29/11/2008 - 10:51

Provided other creditors are not disadvantaged there is nothing to prevent the Treasury stepping into the position of one set of creditors and not another. They no more forewarned the Edge customers than KSFIOM.