IOM Examiner on Select Committee hearing

  • anrigaut
  • 19/10/08 30/10/09
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Posted: Mon, 13/12/2010 - 18:29

Tomorrow's IOM Examiner (out today) contains two articles on Friday's Select Committee hearing; one concerning the evidence of John Coyle of the Bankers' Association and Mike Simpson; the other on my evidence on behalf of DAG.

We have received scanned copies from an IOM-based depositor.

I will attempt to attach the second one here.

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sinking of KSF

  • conned
  • 13/10/08 n/a (free)
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  • Tue, 14/12/2010 - 16:13

It seems to me that the people called to give evidence in the enquiry into the KSF debacle might like to be aware that the men who jumped into the lifeboats when the Titanic sank, subsequently realised that living with the shame was not worth saving their own skin. Conned


Sorry conned - you've lost me

  • anrigaut
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  • Tue, 14/12/2010 - 17:14

Sorry conned - you've lost me a bit there. Which people are you talking about? Of those called to give evidence, I am probably the only one reading this site. I am not aware of having jumped into any lifeboat and am not sure what I should be ashamed of. Or have I missed your point?


APOLOGIES

  • conned
  • 13/10/08 n/a (free)
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  • Wed, 15/12/2010 - 12:07

Well, well, I would never have thought my comments about the enquiry would have caused so much confusion. I was referring to people involved in the demise of KSF who try to save their own skin by shifting the blame to others. I never thought anrigout would have interpreted this as referring to herself. I have previously sent messages to her thanking her for the efforts she has put into promoting our cause. I would have thought you would all know me by now and would not think me capable of negative remarks about hardworking people like anrigout. Apologies, apologies if I have caused anyone offence.


@anrigaut

  • glen07
  • 21/10/08 n/a (free)
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  • Tue, 14/12/2010 - 20:14

I don't think the comment was, at all, aimed at you.


@anrigaut2

  • IceCrusher
  • 14/10/08 25/10/11
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  • Wed, 15/12/2010 - 03:26

I agree with glen07, I really do not believe that 'conned' was directing her comments at you anrigaut, it's just the way she put it!

Anyway, I loved your expression about the SOA: "It didn't fail because it wasn't understood - it nearly passed because it wasn't under understood." Classic! The shortest, most succinct sentence ever stated about the SOA.
Ice


Thanks Ice. Yes, I was rather

  • anrigaut
  • 19/10/08 30/10/09
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  • Wed, 15/12/2010 - 08:28

Thanks Ice.

Yes, I was rather proud of that expression myself and surprised and pleased that the reporter from the Examiner chose to use it to conclude her article.

The exercise of preparing for this hearing and 'reliving' the heady events of the time helped crystallise a lot of things in my head. The Committee's question "Why did the SOA fail to win majority support?" was clearly predicated on the idea that it should have passed - and that its promoters failed in their job of convincing creditors (who therefore got it all wrong). Other questions gave the same impression. That maddened me! So - after saying it failed because in was rubbish (well, I didn't put it quite like that) - I said that a better question would have been "Why did the SOA almost pass?", and concluded with that succinct sentence.

As I see it, it almost passed:
1) because of widespread fear of the word "liquidation" ('anything else must be better');
2) because of the fears, largely fed by IOMT, that the DCS wouldn't deliver (but - guess what - it did, and faster than guaranteed under the SOA, just as our counsel had said it woud have to if triggered - the IOM simply couldn't afford for it to fail, hence the funding package approved by Tynwald within 2 months);
3) because of fears, that there would be quick-fire sales of assets under a liquidation - a spectre repeatedly evoked by Allan Bell right up to the day of the vote, despite being firmly denied by PwC;
4) the complexity of the documentation (even the judge found it "fiendishly complex") and the very short time allowed to digest it; and - perhaps most importantly in view of this,
5) the recommendation of the JLPs - supposedly acting in creditors' best interests - 'on balance' to vote in favour.

How could anyone who had not been following the whole thing closely (via DAG), confronted with that formidable package (53 pages for the scheme and 71 pages of 'explanations'!) and asked to decide in 2 weeks or less (I exclude there the many living abroad who - like me - never received it at all!) do anything other than follow the JLPs' recommendation?

What I failed to react on sufficiently on the spot, and which has clarified in my brain only since, was a comment of the chairman - after I had confirmed that most DAG members believed the SOA was developed primarily to protect the reputation of the IOM - that surely it was in the IOM's own best interests to do their best for depositors (and not have a load of dissatisfied customers). It has since occurred to me, in a sudden flash of clarity, that in fact they didn't need a scheme which was actually any benefit to creditors (which would have been at some cost to them). It would have been enough to implement a scheme which most creditors - and the world at large - believed was of benefit. Once the scheme was in place, no-one would ever have been able to prove that we were in fact no better off (and in some respects no doubt worse off) than under liquidation. Indeed the IOM authorities could have basked in the glory of having saved depositors from a fate worse than death. The more I think about it, the more this seems to fit the facts. What we managed, by a small miracle, to do was to call their bluff. And they are still sore about it.

Unfortunately, having failed to achieve that objective, they managed to put about the story that the creditors had only themselves to blame for having rejected a great and generous offer - an opportunity missed. They are no longer able to do this - given the way things have evolved; as the Manx Herald reported (and is clear from the transcript) even Mr Bell could no longer say he believed that. But in the meantime much damage has been done. Most UK MPs still trot out this standard response - well, you were offered a scheme and refused it (so not deserving of any further help). So we now have to work on dispelling this myth.

They then resort to all this bunkum about not having had the benefit of hindsight. All I can say to that is that some of us had a great deal more foresight than either IOMT or PwC. And it really didn't need much foresight in April/May 2009 (when the low estimate for asset recovery was 74% and we would only gain any real material advantage from the SOA if recovery fell below 70%) to know that this was a bad deal.

What a shower!


SOA

  • D RAM
  • 13/10/08 01/08/14
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  • Wed, 15/12/2010 - 06:21

Thanks Anrigaut for your very impressive performance at the Tynwald Select Committee. Greatly appreciated.

In regard to the SOA, I note that the Manx Herald of 21 November 2010 reports former Treasury Minister Bell in his evidence to the Tynwald Select Committee on 15 November 2010 was "... unable to provide a compelling arguement for the KSF(IOM) SOA ..." and that Bell agreed that the "... attractiveness of the SOA was undermined by the emergence of better information over time .." .

This being the case I wonder how Mike Simpson justifies backing the SOA and, when he had the opportunity in court, failing to seek reimbursement of the very considerable costs incurred by KSF(IOM) in assisting the IOM authorities in pursuing the discredited SOA ? I suggest that as a professional accountant it should have been evident to him that the SOA was not in the depositors' best interest and this view seems reinforced by Bell's latest evidence.

I suppose nothing can be done now? Or could reimbursement be sought from PWC for negligence?


@D RAM

  • anrigaut
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  • Wed, 15/12/2010 - 09:33

Thanks for the appreciation. I did my best. And for once, we got some non-negative - I would almost say sympathetic - coverage in the mainstream IOM press and radio. We now need to build on that to try to get the IOM authorities to seriously consider our proposal for a loan trust. The Committee asked if we could supply them with a skeleton argument for that, and it is being worked on now.

I did come back at Mike Simpson, who gave his evidence just before me, on the issue of PwC's late conversion to the cause of the SOA. In his evidence he stated clearly that they had remained neutral until late March, when "the potential benefits became apparent". Strange, no? Given that, in the SoA documentation, the low and high scenarios considered for asset recovery were respectively 74% and 89%, and that these figures had clearly been provided by PwC themselves. When asked how he felt about that with hindsight, he wriggled somewhat (haven't noted his words). He also confirmed, in answer to another question, that liquidators are by nature cautious when predicting recovery. So the chances at that point of recovery being under 70% were clearly minimal to say the least. And he again said, very firmly, there had never been any question that the assets would be managed any differently under an SOA or liquidation. So where were the "potential benefits"?

It seems PwC remained 'neutral' until the attractiveness of the SOA was undermined (by improving recovery prospects, which they were the best placed to know about) to a point where there was a real chance it might not be accepted by creditors and only then came out to recommend acceptance. Mmmm!

I can only assume they were by this time compromised/conflicted by their association with IOMT. Had they promised to deliver the creditors??

As for the costs issue, the question of a possible dereliction of duty was raised by DAG's counsel Dominique Chambers at the costs hearing in June 2009. In his summing up, the Deputy Deemster said:
"In those circumstances [that the JLPs had chosen not to seek an Order against Treasury] I take the view that this must be a matter for the Liquidators Provisional and perhaps the creditors who may, as Mr Chambers submitted, take the view that the Liquidators Provisional have acted in dereliction of duty in failing to pursue such an Order".

As I understand it, the problem with that was that pursuing them through the court would have incurred further costs for DAG, whose own considerable costs in successfully opposing the SOA had just been awarded, not against Treasury as claimed but against the bank - and thus to be borne by the body of creditors. It seemed prudent therefore to let the matter rest.

Note also that, with regard to DAG's costs, the Deputy Deemster said there was:
"a strong argument that this Order, which is sought by Treasury, runs counter to Treasury's avowed claim ... that their sole motivation is to assist the general body of creditors and ... will inevitably diminish the amount available to the general body of creditors".


@anrigaut

  • D RAM
  • 13/10/08 01/08/14
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  • Wed, 15/12/2010 - 10:43

Thank you so much for your very informative and wise reply.

I suggest you run for parliament ( Westminster) as it clearly needs persons of your insight and integrity. I'd certainly vote for you ( except I'm disenfranchised after 37 years overseas ! ).

Merry Christmas and Happy New Year to you and all the other activists / contributors.


Thanks D RAM! But I am also

  • anrigaut
  • 19/10/08 30/10/09
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  • Wed, 15/12/2010 - 11:17

Thanks D RAM! But I am also disenfranchised in the UK after 26 years in France. I am however fully 'franchised' in France!

Happy Christmas to you too - and to all who continue the fight.


Disenfranchised

  • mikepapa
  • 10/10/08 n/a (free)
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  • Thu, 16/12/2010 - 11:28

Dear Angela,

From one disenfranchised Brit [but still a UK Tax payer!] to another, a very big thank you for your splendid effort and performance!

Happy Christmas,

mikepapa


Titanic

  • Anonymous
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  • Tue, 14/12/2010 - 17:04

Please DO NOT Tarnish the Name and Beauty of such a Ship "TheTitanic" She deserves much more of an Accolade than those arseholes who watched us POOR depositors sink into oblivion in the Icey waters of the financial Ocean.

Aurora
Southampton UK


Angela, just want to give you

  • peter and louise
  • 18/10/08 01/09/09
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  • Tue, 14/12/2010 - 10:54

Angela, just want to give you another big 'thank you.' All that you have done, and continue to do, has helped us all no end and got the attention that was needed. You have been great for us, whatever the eventual outcome. And the outcome does look brighter than ever.