Once again the myth of the IoM Gov borrowing surfaces

  • IoM-neveragain
  • 12/10/08 30/03/10
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Posted: Sat, 13/06/2009 - 17:54

Once again the myth of the IoM Gov borrowing to meet the DCS requirements or even for 100% payout surfaces.
Lucky Jim in his blog entry of the 13th June includes in the fourth paragraph:
"To implement the DCS the government is having to borrow the money to meet its statutory obligations. "
I can find no evidence of this! (I have a lot of time for Lucky Jim, and Elgee, who seem very wise and knowledgeable but I believe that the IoM Gov is dripping in surplus money.

My evidence?
Look at the IoM Gov's own budget book - http://www.gov.im/lib/docs/treasury/budget/2009/budget0910.pdf
It identifies the following:
£11M has been earmarked in the 2008/9 budget for the EPS (scheme 1 I believe) with a further sum of £94M for the same year for the EPS (scheme 2 I suggest) These sums come from the "Reserve Fund" - see page 9 of the 2009 IoM budget book.

Goto page 37 to see more details of the "Reserve Fund":
Balance at April 2008 £349M, yes £349 million pounds in reserve!!
The estimate for April 2010 will be seen to be a sum in the Reserve Fund of £247M!!!

We know that other governments have very significant borrowings (UK more than 50% of GDP) and have borrowed more to repay depositors in the failed banks inorder to ensure confidence in their banking system.
The IoM with hundreds of millions of pounds surplus to requirements......

What am I missing (apart from my money that is)?

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Voluntad!

  • follow_the_tao
  • 11/10/08 31/05/09
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  • Mon, 15/06/2009 - 03:05

This is the situation as I see it.
KSFIoM arrived in the IoM. They bought legitimacy through Cashen and Gelling. Dear old Adrian Doherty sat as CEO paying for his properties in the IoM whilst a fellow traveller with the aggressive mgt., in the UK in using the IoM branch as a feeder to the leveraged debacle that the UK and Iceland branches were becoming.
When the situation looked likely to explode and the IoM had the chance to retrace a step in order to protect it's independent status then AD bowed his head and sold us out, along with Cashen and Gelling, and the FSC.
How else can you interpret their actions, a challenge for you/them (notice that they still have not said anything (apart from AD liquidating his assets in the IoM)).

I want their heads.

The captive judiciary, in my opinion, in the IoM is going to be a problem, but not a insurmountable problem.
I don't expect manna to rain from heaven but I expect that that the establishment will be appropriately embarrassed. Exactly how corrupt this little 'tax haven in the Irish Sea' is remains to be seen. But I ask you all,
what else can we do?


@@IOM-neveragain - Jim's response

  • Lucky Jim
  • 13/10/08 31/05/09
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  • Sun, 14/06/2009 - 17:42

Hi IOM-neveragain...... thank you for your kind comments!
Under the DCS the government is statutorily committed to putting up-front £150million with the remainder coming from a levy on the banks. As a condition of being licenced the banks were required to sign up to the DCS (ie: to accept that they could be called upon to be subject to a levy). I hope this clarifies the position.


Non the wiser

  • IoM-neveragain
  • 12/10/08 30/03/10
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  • Sun, 14/06/2009 - 20:46

(Lucky) Jim

You're not in (UK) Government are you??
As I am none the wiser!!
I feel a little like Gordon the idiot questioning Mandy but...
You had included in your blog:
""To implement the DCS the government is having to borrow the money to meet its statutory obligations. ""

The IoM Gov is not, I suggest, "borrowing" any monies from anyone; why would it need to with so much dosh sloshing around??
A "levy" is not, I respectfully suggest, any form of borrowing. It's a charge, a condition of doing business.

PS Sorry to be pedantic but it's not licenced but licensed!


Levy versus borrowing

  • Lucky Jim
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  • Mon, 15/06/2009 - 05:40

Don't let's split hairs over this! The statutory levy provision is indeed intended to be a charge on the banks in the event of a bank having a shortfall in assets in liquidation. In the case of KSFIOM the levy will be de facto a loan as the object of the exercise will be to reimburse the banks from the assets. I would not be surprised if the banks were to earn some interest in this!


Not hair splitting

  • IoM-neveragain
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  • Mon, 15/06/2009 - 09:48

Lucky Jim
Not hair splitting I suggest but fundamental.
I can find no evidence that the IoM Gov is borrowing.
To suggest that it is alludes to the Gov having honesty and decency with respect to our plight. It hasn't.

Are you suggesting that the levy on the ogther banks will be repaid to those banks later in the piece?
I cannot find provision for this in the DCS Regs.

Remember thge IoM Gov is awash with money it has hundreds of millions of pounds in savings in its "Reserve Account". It has no need to borrow. It could top up, to 100%, the suggested 20-30% shortfall in our recoveries from its reserves and still have money left.


Not hair splitting

  • manx-person
  • 17/10/08 31/05/09
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  • Mon, 15/06/2009 - 10:18

I dont agree with your comments that the IOMG is awash with money, but thats a topic in itself.
I think you are correct in that the levy on the banks is just that, a levy not a loan.
It is a problem (as you have identified) on this site that people make authoritative posts incorrectly.


Levy

  • bellyup
  • 10/10/08 09/01/10
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  • Mon, 15/06/2009 - 17:30

If it is a levy why are they going to reclaim it from the Bank?


Levy

  • manx-person
  • 17/10/08 31/05/09
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  • Mon, 15/06/2009 - 18:50

I think there are 2 aspects/sources to the funding to the DCS
(i) A levy on the banks
(ii) Funding from the IOMT
I think that (i) isn't recovered from the liquidation proceeds but (ii) is; maybe someone else could clarify/check.


AWASH with money and sources of DCS funding

  • IoM-neveragain
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  • Mon, 15/06/2009 - 20:59

I believe that there are 5 sources of DCS funds:
(a) money obtained by levying contributions from participants;
(b) money borrowed by the Scheme Manager for the purposes of the Scheme;
(c) money received as income from investments;
(d) money received under any policy of insurance taken out for the purposes of
the Scheme; and
(e) any other money required by these Regulations to be paid into the Fund or
received by the Scheme Manager and determined by it to be so paid.

and 5 destinations for the funds:
(a) money required by the Scheme Manager for the payment of compensation
sums to depositors;
(b) money required for the arrangement, service and repayment of loans
obtained by the Scheme Manager, or for the discharge of other
indebtedness incurred for the purposes of the Scheme;
(c) premiums of policies of insurance taken out by the Scheme Manager for
the purposes of the Scheme;
(d) the compensation costs incurred by the Scheme Manager; and
(e) such other sums as these Regulations permit.

see Arts 6(3) and 6(7) of the DCS (http://www.gov.im/lib/docs/fsc/PressReleases/compensationofdepositorsreg...)

Monies "borrowed" from IoM treasury by the scheme manager i.e. paras (b) above would be repaid back to treasury any levy on banks (i.e. para (a) above) would seem to be just that a levy, i.e. non-repayable.
Please note that "borrowings" by the scheme manager from Treasury cannot be construed as borrowings by the IoM government; the IoM government as an entity are not borrowing from any external party
THEY ARE AWASH WITH MONEY!


awash??

  • IoM-neveragain
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  • Mon, 15/06/2009 - 12:31

My conclusion that the IoM Gov is "awash" with money was reached following inspection of the IoM treasury budget book which reveals surpluses in a "Reserve Account" of more than £200M and that after taking out over £100M to pay towards KSF requirements (which I have interpreted as EPS 1 and 2 and those monies are likely to be returned to treasury).
Contrast this surplus with the debts which most western countries; it's only countries such as China which have "cash-in-hand" apart from the the IoM and possibly a few other off-shore jurisdictions.


None the wsier

  • manx-person
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  • Sun, 14/06/2009 - 21:08

Also "as a condition of being licensed" is a bit misleading. The DCS regulations were made by a statutory order, but are just a "law" that needs to be complied with.

The current DCS arrangements were changed recently, and therefore in no way can be seen to be agreed by any of the Banks.

In fact there is speculation that as the revised DCS arrangements have not been consulted on, as required by the FSA 2008, and as such are subject to challenge should they be asked to contribute.


Scare mongering!!

  • Hampnew
  • 22/01/09 31/05/09
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  • Sun, 14/06/2009 - 22:00

Unfortunately manx-person (and I assure you they are not) is as usual viewing rumour as fact. This person seems intent on bringing real manx people and their culture into disrepute. Why do these non depositors continue to dilute the real issues? Surely the educated minds on this sight have something more productive to discuss.
Please avoid the Government "plants".


@hampnew: My assistance....

  • follow_the_tao
  • 11/10/08 31/05/09
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  • Mon, 15/06/2009 - 03:34

The losers, ourselves, in this 'fracaso, and we seem to be quiescient.

We were robbed by the incompetence of the directors, FSC, IoMG, of our saving. And as far as I can see we are rolling over and agreeing that it was indeed our fault and the situation was such that where no-one could have forseen the outcome. This is obviously ridiculous ( there are references by the thousand saying otherwise in this moment).

There are lines of attack that offer results for us. Why are not we taking them?


@follow_the_tao

  • icdbrazil
  • 10/10/08 30/11/09
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  • Mon, 15/06/2009 - 19:46

I have been travelling & hence may not be up to date. Can we talk tomorrow - I forwarded my number by email. Interested to know more about the lines of attack you refer to, and keen to do whatever I can on any initiative to get our funds back.


manx-person valid

  • Anonymous
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  • Mon, 15/06/2009 - 01:38

Hampnew, manx-person's comments are valid, as always, and do not scare me.

Funding of the DCS is a valid topic for discussion.