Iceland - the Darling Tapes

  • Mekong
  • 14/10/08 31/05/09
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Posted: Fri, 24/10/2008 - 07:30

Could the blow-up that transpired between the UK and Iceland over Kaupthing’s UK-based deposits have come down to a simple misunderstanding in a phone conversation between UK Chancellor Alistair Darling and Icelandic Finance Minister Árni Mathiesen?

The Icelanders seem to think so and have been calling for said transpcript to be made public for the last week. The FT today prints the that conversation and does indeed appear confirm the Icelandic point of view:

Here is a timeline of events leading up to that conversation compiled by Gudni Elisson, a well-respected Icelandic public intellectual and columnist for Morgunbladid, an Icelandic newspaper:

http://ftalphaville.ft.com/blog/2008/10/24/17401/iceland-the-darling-tapes/

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The Darling Tapes - The Smoking Gun!

  • expatfrance1
  • 15/10/08 31/05/09
  • a depositor
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  • Fri, 24/10/2008 - 08:57

Iceland - the Darling Tapes

Could the blow-up that transpired between the UK and Iceland over Kaupthing’s UK-based deposits have come down to a simple misunderstanding in a phone conversation between UK Chancellor Alistair Darling and Icelandic Finance Minister Árni Mathiesen?

The Icelanders seem to think so and have been calling for said transpcript to be made public for the last week. The FT today prints that conversation and does indeed appear to confirm the Icelandic point of view:
Here is a timeline of events leading up to that conversation compiled by Gudni Elisson, a well-respected Icelandic public intellectual and columnist for Morgunbladid, an Icelandic newspaper:

Saturday, October 4
Tryggvi Herbertsson, economic adviser to the Icelandic prime minister, tells BBC Radio 4’s programme, Money Box, that the Icelandic government will honour its part of the compensation limit if Icesave runs into difficulties.. He says: “We are part of the European directive on deposit insurance and we are bound by international law.”

Sunday, October 5
The “Act providing for special powers in exceptional financial Market circumstances“ is passed in the Icelandic Parliament. One of the primary amendments to the Act on Depositors’ and Investors’ Guarantee Fund is to the effect that deposits will „be given priority in the event of insolvency proceedings

Monday, October 6
The Icelandic Prime Minister’s office announces the “Deposit Guarantee“ early in the morning before the banks open saying that “deposits in domestic commercial and savings banks and their branches in Iceland will be fully covered. “Deposit” refers to all deposits by general customers and companies which are covered by the Deposit Division of the Depositors’ and Investors’ Guarantee Fund.” (The homepage of the “Depositors’ and Investors’ Guarantee Fund“ makes it clear that the “Fund’s guarantees extend to all customers of Icelandic banks and their branches, both domestic and foreign, irrespective of legal address“.) The “Deposit Guarantee“ announcement is also sent to Britain concerning deposits at Landsbanki and Kaupþing Edge (the latter being protected through the UK scheme). According to a high-ranking official within one of the Icelandic ministries a letter is sent to the British government. In it the Icelandic government declares that it will honour its obligations in accordance with the directive and will further support the Depositors’ and Investors’ Guarantee Fund.

Tuesday, October 7
Iceland makes use of the new emergency act to nationalize Landsbanki, the country’s second biggest bank. Mr. Darling talks with the finance minister of Iceland, Arni Mathiesen. The next morning he will declare that the Icelandic authorities have no intention of compensating British account holders for what they have lost through their savings accounts in Landsbanki’s Icesave. According to a transcript of that conversation (which has not been released by either of the two governments), Mr. Mathiesen did not make such a declaration. He said the following: “We have the [deposit] insurance fund according to the Directive and how that works is explained in this letter and the pledge of support from the government to the fund.“ (Mathiesen is referring to the letter sent to the British Government the day before.) The Icelandic finance minister in other words pledged that the government will honour its obligations. Nowhere in the transcript can there be found any indication that the UK Chancellor is of the opinion that the Icelandic government is in the process of breaking international law. The two chancellors end the conversation on amicable terms.

Wednesday, October 8
The British Government uses anti-terrorism powers to freeze Icelandic assets in Britain. Referring to his telephone conversation with Arni Mathiesen from the day before Alistair Darling, states on BBC radio that morning: “The Icelandic government, believe it or not, have told me yesterday they have no intention of honouring their obligations here […] But I have decided in these exceptional circumstances that we will stand behind those depositors so they get their money back.” Geir Haarde, the Icelandic Prime Minister, issues a statement responding to Darling’s accusations: “The governments of the two countries will immediately review the matter in detail through official channels with a view to finding a mutually satisfactory solution. It should also be highlighted that on Monday evening changes were made to the Act on the Depositors’ and Investors’ Guarantee Fund strengthening the position of depositors by giving them priority when allocating assets. There is a good probability that the total assets of Landsbankinn will be sufficient to cover the deposits in IceSave. The Icelandic government reiterates that if needed it will support The Depositors’ and Investors’ Guarantee Fund in raising necessary funds.” Later that day Gordon Brown tells members of the press that he and his colleagues “are taking legal action against the Icelandic authorities to recover the money lost to people who deposited in UK branches of its banks“.

Thursday, October 9
Gordon Brown repeatedly claims that the Icelandic government has taken “illegal action.” In an interview on Sky News he says: “The issue is basically this. The Icelandic banks have collapsed, the Icelandic authorities have to take some responsibility for it. They cannot just default and say that they’re going to take on none of the responsibility for what has happened. And we have therefore taken action to seize the assets of the Icelandic banks.”

Friday, October 10
Geir Haarde declares that Iceland is not defaulting on any obligation: “Let me say very clearly that the country as such is not in default, is not abrogating its obligations. […] [T]he government and the treasury will of course do so like always before. […] The Sovereign Republic of Iceland has never defaulted on a loan and will never do.”

Saturday, October 11
A joint declaration is made by the Icelandic and British delegation after less than two days talk expressing the intention to “reach a mutually satisfactory solution on the issues concerned.”
„Believe it or not“ The catalyst in the IceSave conflict is without any doubt the conversation between Darling and Mathiesen on October 7. The morning after his talk with Arni Mathiesen Mr. Darling announced: “The Icelandic government, believe it or not, have told me yesterday they have no intention of honouring their obligations here“. But why settle for belief when we can have the facts? Only last August Mr. Darling insisted that it was his duty to be “straight” with people. Now Mr. Darling should play it straight and request that the transcript of his conversation with Mr. Mathiesen be made public. I am certain that no one would welcome that decision more than Arni Mathiesen.


Times

  • z1000000
  • 16/10/08 31/05/09
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  • Fri, 24/10/2008 - 11:24

This is in the Times Online too.

Three things spring to mind here.

1, The legal case from Iceland over this, it doesn't look good for the UK Government does it?

2, The IMF won't bail out Iceland until the spat between the UK and Iceland is sorted.

3, Me being paranoid, especially as the papers seem to just go on about Icesave and UK savers, I worry this will all be rushed through and we will be forgotten again. After all, it was us, and the offshore savers being forgotten about that got us into this mess!


Mystery

  • expatfrance1
  • 15/10/08 31/05/09
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  • Fri, 24/10/2008 - 10:31

The KSF Administrator has stated that on 6th October other banks were told to stop processing payments to Icelandic ones, this hints that a siezure was imminent under the anti-terrorist laws.

This was a day before his conversation with the Icelandic Finance Minister in which he pledged that Iceland would honour its obligations.


Do you have a source for this?

  • David9J
  • 10/10/08 31/05/09
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  • Sun, 02/11/2008 - 12:30

Please could you direct me to the original source of this information about the administrators statement? I have a particular interest in pursuing this line. Thanks.


Sorry David 9J, I cant

  • expatfrance1
  • 15/10/08 31/05/09
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  • Sun, 02/11/2008 - 12:45

Sorry David 9J, I cant remember where I got this from, hopefully I was not making it up.

I do remember someone else posting on this site and saying they had a friend who worked in a clearing bank and that they had been working the weekend before all this happend re-programming their systems to reject transactions involving Icelandic banks.


Here is the complete transcript.....

  • dawes
  • 24/10/08 31/05/09
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  • Fri, 24/10/2008 - 10:14

The FT misses out quite a lot ..

Icelandreview.com publishes a complete transcript of the October 7 phone conversation between Icelandic Minister of Finance Árni M. Mathiesen and UK Chancellor Alistair Darling.

The day after this conversation British authorities froze the assets of Icelandic banks in the UK by invoking an anti-terrorism legislation. According to Icelandic newspaper Morgunbladid, on October 9 this conversation is what sparked this act, based on information from their sources in the British Chancellery.

Mathiesen: Hello.

Darling: Hello.

Mathiesen: This is Árni Mathiesen, Minister of Finance.

Darling: Hello, we met a few months ago, weeks ago.

Mathiesen: No, we have never met. You met the Minister of Trade.

Darling: Alright, sorry.

Mathiesen: No problem.

Darling: Thank you for taking the call. As you know, we have a huge problem with Landsbanki, we have a branch here, which has got four billion pounds worth of deposits and it has now been shut and I need to know exactly what you are doing in relation to it. Could you explain that to me?

Mathiesen: Yes, this was explained in a letter we sent the night before last from the Trade Ministry. Since then, we have set out a new legislation where we are prioritizing the deposits and where we are giving the FME, the Icelandic FSA authorities, the authority to go into banks, similar legislation to what you have in England, and the Landsbanki is now under the control of the FME, and they are in the process of working out how to do these things, but I think this legislation will help in solving this problem.

Darling: What about the depositors you have got who have got deposits in London branches?

Mathiesen: We have the insurance fund according to the Directive and how that works is explained in this letter and the pledge of support from the government to the fund.

Darling: So the entitlements the people have, which I think is about sixteen thousand pounds, they will be paid that?

Mathiesen: Well, I hope that will be the case. I cannot visibly state that or guarantee that now, but we are certainly working to solve this issue. This is something we really don’t want to have hanging over us.

Darling: People are asking us already, what is happening there? When will you work that through?

Mathiesen: Well, I really can’t say. But I think it is the best thing that the FSA be in close touch with the FME about this to see how the timeline works out in this.

Darling: Do I understand that you guarantee the deposits of Icelandic depositors?

Mathiesen: Yes, we guarantee the deposits in the banks and branches here in Iceland.

Darling: But not the branches outside Iceland?

Mathiesen: No, not outside of what was already in the letter that we sent.

Darling: But is that not in breach of the EEA-treaty?

Mathiesen: No, we don’t think so and think this is actually in line with what other countries have been doing over recent days.

Darling: Well, we didn’t when we had the problem with Northern Rock. It didn’t matter where you saved money, we guaranteed your savings.

Mathiesen: Well, yes, that was actually in the beginning at least debated. I am sure you cleared that up in the end.

Darling: The problem, I do understand your problem, the problem is that you have people who put their money into a bank here and they are finding that you have decided not to look after their interests. This would be extremely damaging to Iceland in the future.

Mathiesen: Yes, we realize that and we will be trying as we possibly can to make this not a problem. We are in a very, very difficult situation ...

Darling: I can see that ...

Mathiesen: ... and just this week, since we can’t cure the domestic situation we can’t really do anything about things that are abroad. So we must first deal with the domestic situation, and then we will certainly try to do what we possibly can, and I am personally optimistic that the legislation that we passed last night will strengthen this part of it. And we, of course, realize what could happen and don’t want to be in ...

Darling: yes ...

Mathiesen: but the point is also, Chancellor, that we have for months been trying to talk to everybody around us and trying to tell them that we were in trouble and ask them for support and we have actually gotten very little support.

Darling: I understand that, but I have to say that when I met your colleague and these others, basically, what we were told turns out not to have been right. I was very concerned about the London banking position and the kept saying there was nothing to worry about. And you know, with the position we are now in, there will be a lot of people in this country who put money in and who stand to lose an awful lot of money and they will find it difficult to understand how that has happened.

Mathiesen: Well, I hope that won’t be the case. I wasn’t at the meeting, so I can’t say ...

Darling: Well, I know that. Can you tell me this, if the insurance fund you refer to, does it have money to pay out?

Mathiesen: They have some money, but as is with most of these funds, it is very limited compared to the exposure.

Darling: Yeah, so you don’t know. See, I need to know this, in terms of what I tell people. It is quite possible that there is not enough money in that fund. Is that right?

Mathiesen: Well, yes, that is quite possible.

Darling: Well, that is a terrible position to be in.

Mathiesen: Yes, we are in a terrible position here and the legislation we were passing through last night is an emergency legislation and, as I say, we are just trying to ensure the domestic situation so that we can then secure other situations.

Darling: What I ... I take it therefore that the promise Landsbanki gave us, that is was going to get 200 million pounds of liquidity back into it, has gone as well.

Mathiesen: Yes, they didn’t get that liquidity.

Darling: Well, you know, I do understand your position. You have to understand that the reputation of your country is going to be terrible.

Mathiesen: Yes, we do understand that. We will try our utmost to avoid that. We need to secure the domestic situation, before I can give you any guarantees for anything else.

Darling: Obviously, I would appreciate any help you can give.

Mathiesen: Obviously ...

Darling: Sure ... We would have to explain to people here what has happened. It will, of course, no doubt, have repercussions for others. It really is a very, very difficult situation where people thought they were covered and then they discover the insurance fund has got no money in it.

Mathiesen: Yes, as we said in the letter ...

Darling: OK, I will appreciate whatever help you can give.

Mathiesen: Yes, we will need for the FSA and FME to be in touch on the ...

Darling: Oh, I know the most certainly will. I know you were not at the meeting and weren’t part of it. We doubted what we were being told then and I am afraid we were right.

Mathiesen: Yes, that can be.

Darling: Anyway, please keep in touch. Whatever you can do to help, that will be very helpful indeed.

Mathiesen: Yes: if there are any areas on your side, please be in touch.

Darling: Alright. I will do that. Thank you very much indeed.

Mathiesen: Thank you.

Darling: Goodbye.

M. Bye.


The transcript was featured on RÚV TV show Kastljós on Thursday night.
http://www.icelandreview.com/icelandreview/rss/?ew_news_onlyarea=&ew_new...


It is quite evident that the big blunder

  • JanLars
  • 13/10/08 31/05/09
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  • Fri, 24/10/2008 - 12:56

on the side of Gordon Brown and Darling is getting swept under the carpet. Brown will not admit to this, and counters with aggression and a lawsuit to make him look like the “protector of the British people”.

Brown does not have the political discernment to foresee the consequents and impact of his actions, on world affairs. And he really does not care about the international British expat, because he does not see them being of any benefit to him.

However, things just started getting a bit more complex than he had anticipated, because suddenly if things don’t pan out right for him, he could well have started another cold war. He is aware of facts now, because I'l bet my last bottom dollar (which I had under my mattress)he got a couple of hotline calls from across the Atlantic and NATO.

He is so predictable, the next step is damage control, and we can expect Iceland getting bailed out soon, very soon.


Well I can certainly see why

  • OurMoneyHasBeen...
  • 24/10/08 31/05/09
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  • Fri, 24/10/2008 - 11:49

Well I can certainly see why Darling came to the conclusion he did from that conversation. Mathiesen seems to be admitting clearly that they are deep in the stinky stuff and unable to say anything for certain. I'm sure the British action didn't help (understatement...), but if I had been Darling I would have feared that British depositors' funds would just disappear in the morass that was clearly engulfing Iceland if action wasn't taken, and quickly. We might not find it ideal for our case, but Iceland should not be surprised at what happened if the transcript is accurate.


Darling on a sticky wicket

  • expatvictim
  • 10/10/08 01/11/10
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  • Fri, 24/10/2008 - 12:37

Although Matheison is cautious, at no time does he say that Iceland "have no intention" of honouring their guarantees - cannot promise to honour their guarantees would be more like it. Although his conclusions may very well have been proven right in the long run, on the basis of the transcript they are speculative. Mr Darling and his advisors appear to be on a sticky wicket.

Unlikley a coincidence that the transcript has been released now, while negotiatons are ongoing/ breaking down between the respective Governments (was it released or leaked??) - all part of the games that politicians play. Unfortunately we are piggy in the middle.


Cannot Promise means No Guarantee

  • dawes
  • 24/10/08 31/05/09
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  • Fri, 24/10/2008 - 14:42

The definition of currency and trust in banking is a guarantee.
Whereas "I cannot promise to guarantee" is exactly the same as "I promise to NOT guarantee" . Its utterly worthless.

This transcript was released by the Icelandic government and it does NOT support their argument at all. It also shows that they have failed in two previous promises (£200Million liquidity injection and unspecified promises in a previous meeting). Lied, lied and now they don't have the money to back your guarantee and don't have any idea what to do.

Darling has done the best for all international depositors because the money would have disappeared into an Icelandic Black Hole - this way there remains the possibility to extract money in the UK courts.


Ignore sorry already posted

  • Jerome.broke-in...
  • 14/10/08 14/07/09
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  • Fri, 24/10/2008 - 09:39

Ignore sorry already posted


Is it worth trying to get a

  • expatfrance1
  • 15/10/08 31/05/09
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  • Fri, 24/10/2008 - 09:19

Is it worth trying to get a press release out based on the content of the FT article?


Transcript of Darling conversation

  • arny
  • 15/10/08 31/05/09
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  • Fri, 24/10/2008 - 07:43

Go to In the News. At the top of your screen.


i am so old that i remember a

  • expat
  • 10/10/08 31/05/09
  • unspecified
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  • Fri, 24/10/2008 - 08:03

i am so old that i remember a very apt somg by doris day called "move over darling"!


i just had breakfast with the FT Guys

  • expat
  • 10/10/08 31/05/09
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  • Fri, 24/10/2008 - 07:59

i just had breakfast with the FT guys and been briefed on this, its very good isn't it. There is no news of negotiations in iceland other than they went to sleep for the night bellyup!

Watch the FT now, they have all the amunition i can feed them and the big story of this is yet to be published, they are leaving the iom today so weekend FT will probably publish

Get at john snow about silly remarks. We must hammer home how difficult it is to even open an account here let alone put money in it
and i can't stop grinning about being in the russian press today about all of this. I expect the ruskie navy to arrive any monuter!!!

Have a good day 'cos i am sure we will


BIG POINT

  • Julienne
  • 16/10/08 31/08/09
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  • Fri, 24/10/2008 - 09:19

Totally agree expat - something that has been on my mind -
I had to send
1, notorisesd copies of our passports (done by the Consulate of our foreign city)
2, Proof of where the funs had originated - salary slips, saving bank abroad , sale of property ,
3. utilities bills - 2 or 3 to proove the address of the foreign country we are living in - since these were in the Chinese language they were reluctant to accept them!!!!

When I deopsited extra funds earlier this Summer a very nice lady at the bank said the original proof of funds sent to open the account weren't enough to cover the new deposit so please could we send more documentation to cover this new deposit.
I don't think the drug barons of Columbia could be bothered with all this - if you wanted to launder money you need to have done it BEFORE you made a deposit with KSF


Same Here

  • Mekong
  • 14/10/08 31/05/09
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  • Fri, 24/10/2008 - 09:24

Same here Julienne and over the years I have remmitances sent from Saudi, Qatar, Oman, UAE, Kuwait etc with contracts notorised by the relevant British Diplomatic Mission


Expat

  • Monkeyface3604
  • 10/10/08 31/05/09
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  • Fri, 24/10/2008 - 08:05

Your an nternational celebrity now lol
Maybe we shoudl do a KSFIOM depositors calendar for Christmas!!!

Keep up the good work mate


calendar of 'stripped' depositors for 2009

  • Lucky Jim
  • 13/10/08 31/05/09
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  • Fri, 24/10/2008 - 10:22

..good idea ... if we had some 'stripped' ladies we might flog it & get all our money back that way!

PS: ladies - don't all rush to the 'Movers & Shakers' Group to offer your fleeced bods (:


A Plaque

  • Mekong
  • 14/10/08 31/05/09
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  • Fri, 24/10/2008 - 08:52

There should be a Plaque erected in Sefton Hotel in honour of the bunkerees


How about a T Shirt? 'EXPAT &

  • IceCrusher
  • 14/10/08 25/10/11
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  • Fri, 24/10/2008 - 08:40

How about a T Shirt? 'EXPAT & THE KEY MUPPATEERS'


http://www.odinews.ru/dayphot

  • expat
  • 10/10/08 31/05/09
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  • Fri, 24/10/2008 - 08:54

http://www.odinews.ru/dayphoto/index.php?ELEMENT_ID=22177

this is in the russian media bothe russians in the picture segei and konstantin are xlose friens of minem, this was at the Adam Smith lectures in moscow last year where i was one of the panel, where the hell is the ruskie navy
can somebody clip this into the news bit i don'tunderstand all this IT!!


I have clipped it into "In The News" Expat

  • steveejeb
  • 10/10/08 31/05/09
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  • Fri, 24/10/2008 - 09:03

I have clipped it into "In The News" Expat


thank you, tis a fine day to

  • expat
  • 10/10/08 31/05/09
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  • Fri, 24/10/2008 - 09:08

thank you, tis a fine day to wake uop to, the sun is shinning and darling is in the cak big time oh yes i like today


Been in today a while now...

  • Anonymous
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  • Fri, 24/10/2008 - 09:20

Yep, been in today for a while now and indeed you are right.

I love the smell of getting our money back in the morning. Its the smell of..... victory.

Court will now be in session - and tender hooks are very tender indeed. Go guys go, we are all behind you


spaseba monkeyface anyway

  • expat
  • 10/10/08 31/05/09
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  • Fri, 24/10/2008 - 08:09

spaseba monkeyface anyway time to go see ajudge i suppose, we'll decide who goes in, dave, elp, ally or me, i am to angry with some people here for (iom) not showing any gumption, keeping their heads down when they are needed and expecting me to give personal briefings. so probably better it is isn't me!!


hear hear

  • Anonymous
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  • Fri, 24/10/2008 - 08:08

Go Expat/Ziggy go!