Position Paper

  • allyourbase
  • 12/10/08 31/05/09
  • a depositor
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Posted: Sat, 01/11/2008 - 23:30

Position Paper - by Allyourbase

To view the Word Document, with correct formatting, version click (or right-click and select Save Target As...) the ksmiom.doc attachment below.

Kaupthing Singer and Friedlander (Isle of Man) Depositors’ Action Group - www.ksfiomdepositors.org

Position paper: Last updated: 5th November 2008

Introduction and events so far

1. Kaupthing Singer and Friedlander (KSF) Isle of Man (IOM) is an Isle of Man based subsidiary of Kaupthing hf, based in Iceland. Kaupthing hf gave Isle of Man authorities a reassuring and confidence-building “parental guarantee” in November 2007, which KSF IOM used to reassure depositors right up to the bank’s collapse.

2. KSF IOM has many customers: British expatriates, UK residents, Isle of Man residents and citizens of other countries. These customers are not tax evaders. Many people have banked with KSF IOM only because they cannot open onshore accounts in the UK or their country of citizenship, as they do not have a permanent address in their country of citizenship. Many depositors originally opened an account with Derbyshire Offshore or with Singer and Friedlander before these institutions were taken over by Kaupthing. KSF IOM depositors pay tax on interest as described in “Notes to editors”.

3. On 7th October 2008, the UK government’s Treasury issued a Transfer Order to transfer most deposits from Kaupthing Singer & Friedlander Limited’s (KSF UK, a UK incorporated subsidiary of Kaupthing and an affiliate of KSF IOM) Internet-based “Kaupthing Edge” savings brand to Dutch bank ING’s ING Direct banking operation. KSF UK was then placed into administration.

4. On 8th October 2008, Isle of Man Financial Supervision Commission authorities held a meeting with the board of KSF IOM. Together, they agreed to suspend KSF IOM’s banking licence with immediate effect, and appoint a provisional liquidator (also referred to by Isle of Man authorities as liquidator provisionally), Mike Simpson of PriceWaterhouseCoopers.

5. As a result of the removal of the bank’s licence, the bank was unable to conduct any transactions, leaving depositors unable to access their funds.

This has caused immediate problems for:

  • depositors relying on the bank’s current account facilities for their day-to-day banking needs
  • depositors who had their entire life savings or proceeds of property/business sales deposited with the bank
  • depositors who depend on interest payments as their primary source of income

The extent of the widespread concern, anxiety and despair felt amongst depositors is clearly understandable when it is considered that many depositors are retirees with their entire life savings in KSF IOM. They are now facing a future of poverty and destitution despite lives of sound and prudent financial management and saving.

There is significant concern, coupled with a lack of official information, around so-called “in flight” transactions—requests for withdrawals received by the bank, supposedly actioned but yet to arrive at their destination.

6. On 9th October, frustrated with a complete lack of information from any source concerning KSF IOM’s status, a small number of depositors created the KSF IOM Depositors web site and the Depositors’ Action Group was born. Other web sites were also created, highlighting the sheer level of concern and panic amongst depositors.

7. Initial discussions on the action group’s web site focused on how the bank could have ended up in its present situation.

Subsequent updates from the provisional liquidator have revealed that KSF IOM held deposits of GBP 840 million. Approximately GBP 105 million of this was held on the Isle of Man itself with various other institutions. However, the bulk of this money, some GBP 557.154 million (as stated in a KSF IOM summary balance sheet included as exhibit AA7 in the second sworn affidavit of Aidan Doherty, KSF IOM Managing Director) was held in KSF UK’s London office. This amount, representing the hard-earned savings of many depositors, was effectively frozen by the UK government when they placed KSF UK into administration. The affidavit (page 4, paragraph 13(iv) ) states: “The arrangements in place with KSF [UK] allowed the Company to pay its debts, including its liabilities in respect of depositors, as and when they fell due”.

8. Placing KSF UK into administration directly led to KSF IOM being put into provisional liquidation, as the bank clearly did not have sufficient liquidity to continue operating normally. The UK government’s actions were primarily aimed at protecting the interests of UK onshore depositors, but have had serious consequences for KSF IOM depositors. Had KSF UK not been placed in administration, KSF IOM would have been able to continue normally. Until recently, both Kaupthing and Landsbanki (the two biggest banks in Iceland) enjoyed high credit ratings well above both Bradford and Bingley and Alliance and Leicester. Furthermore, KSF IOM had little if any direct exposure to sub-prime mortgages, hence the bank was in a strong position.

9. Since the start of this crisis, further details have emerged. It is now clear that the UK Financial Services Authority was concerned about the state of the Icelandic economy. Recognising that KSF IOM was directly owned by Kaupthing hf in Iceland, and the possible risk of the bank’s assets being used to guarantee domestic Icelandic deposits, the Financial Services Authority advised the Isle of Man’s Financial Supervision Commission to secure deposits by “upstreaming” them. In this case, KSF IOM sent the majority of customer deposits to KSF UK in London.

10. An administrator from Ernst & Young is now managing KSF UK’s assets. The “court file on proceedings” are “sealed”—that is, they are confidential. Mike Simpson, the KSF IOM provisional liquidator, has described this as “without precedent”. This secrecy has only increased the frustration and concern amongst KSF IOM depositors.

11. A court hearing in Douglas, Isle of Man, on Friday 24th October to decide whether KSF IOM should be wound up has been adjourned until 27th November to allow more time for high-level negotiations between Isle of Man and UK authorities.

Position of the Kaupthing Singer and Friedlander (Isle of Man) Depositors’ Action Group

1. The action group wishes to recover 100% of deposits held within the bank in a timely manner. The action group considers a full return of deposits to protect the interests of KSF IOM depositors essential as:

a) depositors have saved prudently, in some cases over entire working careers. Saving and careful financial planning is clearly behaviour which should be encouraged, incentivised and defended.

b) depositors are not best placed to bear the risk of the bank’s insolvency, as they have no practical access to the bank’s management, no involvement in day-to-day operations and so on.

Depositors must not be allowed to suffer financially from the bank’s failure.

2. The action group considers even the revised Isle of Man Depositors Compensation scheme as largely inadequate as:

a) there is no “standing fund” in the event that payments are required. The Isle of Man government can only impose relatively low levies on other banks on the island, and therefore claims can take many years to get settled.

b) the compensation scheme will not help those with deposits of over GBP 50,000. Many depositors have deposits of well over GBP 50,000.

c) many categories of KSF IOM saver are not covered by the scheme. For example, those who invested in bonds with organisations like Royal Skandia are not directly covered as these organisations are treated as single depositors.

3. The action group believes that poorly thought-out action taken by the UK government contributed significantly to the collapse of KSF IOM.

4. The action group requires the immediate return of KSF IOM assets held within KSF UK.

5. The action group does not expect nor require the UK government to compensate depositors. It simply demands that the UK government returns money rightfully owed to KSF IOM depositors.

The action group further demands that the UK government acknowledges that the vast majority of action group members are UK citizens, many of whom have plans to eventually return to the UK for retirement. Many depositors were saving towards buying a house in the UK for their retirement, and are now unable to do so, causing a significant knock-on effect for the UK economy.

It is also worth restating KSF IOM’s strong position and solvency. It had a very favourable loan to deposit ratio, with little if any exposure to “toxic” sub-prime debt. The bank did not require government intervention.

6. The action group is aware of the “parental guarantee” lodged by Kaupthing hf with Isle of Man authorities, but consider this a “last resort” solution, given the current state of the Icelandic economy. The group views the return of deposits held in KSF UK or at least a clear commitment to do so as crucial to solving the crisis.

7. Due to its strong and secure position, KSF IOM was able to offer small but marginally more competitive rates of interest than other banks. Thus it attracted depositors who naturally sought the best return for their money. There was never any suggestion that their money might be ‘at risk’ solely on account of the mal-administration of the bank.

8. The action group (including the Isle of Man and UK teams and the wider member base) will continue its fight for all depositors to be compensated in full. The group will build on its successes and achievements thus far: meeting held with the Icelandic ambassador to the UK and a petition with ~1,000 signatures submitted.

Press contact:

Isle of Man representative:

Stephen Thomas
Sefton Hotel
Harris Promenade
Douglas
Isle of Man
IM1 2RW
Phone: +441624 645500
(hotel switchboard)
Email: hotstevedata(?)hotmail [dot] com

Notes to editors:

1. The Isle of Man is a United Kingdom Crown Dependency. It is not part of the United Kingdom nor is it part of the European Union.

2. The Isle of Man’s substantial financial services industry (accounting for a large proportion of the island’s economy) is regulated by the Financial Supervision Commission.

3. KSF IOM account holders are overwhelmingly ordinary, hardworking people—not tax evaders. KSF IOM account holders fall into one of four broad tax liability categories:

  • Inline with the European Savings Tax Directive, UK and wider EU resident savers could be taxed at source by the Isle of Man, which then withheld a proportion (income for the island) and remitted the remainder to the relevant jurisdiction. Alternatively, savers could agree to information sharing with their home tax authority.
  • UK expatriate savers outside the EU who have no liability to UK or Isle of Man taxation until they return, and who are prohibited by law from having a UK onshore bank account without a permanent UK address. These savers are taxed in their country of residence.
  • Non-British, non-resident savers who have no liability to UK or Isle of Man taxation.
  • Isle of Man savers who used the bank as their ordinary high street bank and pay tax on interest through annual tax returns (as interest is paid gross).
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Great summary of our situation - a must read

  • Anonymous
  • Offline
  • Mon, 17/11/2008 - 08:26

Thank you allyourbase for this excellent summary.
Please take note of manx-person's note concerning expat.


From Douglas to Russia to his lovely daughter

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Mon, 17/11/2008 - 00:06

Stephen has left the Sefton now to go back to Moscow, these details will need to be changed.


Position Paper- Excellent Summary

  • sgebbett
  • 20/10/08 31/05/09
  • a depositor
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  • Sun, 16/11/2008 - 22:51

This is really an excellent summary- and the best to date- in clear English saying what happened and how we as a group are seeking to resolve matters with a return of rightful funds rather than a "bail-out"

I would recommend it is sent to all interested parties-media, govt/MPs;Iom authorities;Icelandic authorities; E&Y and PWC, etc, highlighting the TOPICALITY of the forthcoming IMF loan clearance to Iceland (Wed 19th) and second liquidation hearing (Mon 24th)


Justifying that Depositors were not foolhardy

  • jayed
  • 15/10/08 31/05/09
  • unspecified
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  • Wed, 12/11/2008 - 20:27

Perhaps the point ought to be stresses that

  • IoM Gov't was investing in KSF IoM
  • That the Water Board was investing in KSF IoM
  • Many Insurance companies had products linked to KSF IoM
  • It was licensed to take depositor money by the IoM FSC

Therefore it is unreasonable to simply dismiss Depositors' losses as carelessness, as is sometimes inferred


Gratitude

  • fish0143
  • 05/11/08 n/a (free)
  • a depositor
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  • Wed, 12/11/2008 - 20:14

It is great to find this group and know that you are not alone with the huge problem of seeing your hard earned savings evaporate into thin air.

Many thanks for organizing this and doing all the hard work that has obviously gone into getting papers written and petitions organized.

Whatever I can do to help, you've got it.


Do what we are all doing.Keep

  • cottesmore
  • 21/10/08 16/07/12
  • a depositor
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  • Wed, 12/11/2008 - 20:29

Do what we are all doing.Keep emailing your MP and MEP. Tell all your friends about our great injustice.
You can use the following web site to write one email and send it to MEP's MP's and all the Lords.
www.writetothem.com Just follow the instructions and it's a doddle!
Regards.


Writing to MPs

  • lorraine
  • 14/10/08 14/07/10
  • unspecified
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  • Wed, 12/11/2008 - 21:18

I've written to my local MP Sarah Teather several times now, so far not even an acknowledgement. In fact the only person who has replied, albeit not personally, is David Cameron.


writing to MPs and others

  • Anonymous
  • Offline
  • Mon, 17/11/2008 - 08:28

You will make more impact if you write with pen and paper: emails are easily ignored.


Keep it up.....oooer!!!

  • Monkeyface3604
  • 10/10/08 31/05/09
  • unspecified
  • Offline
  • Wed, 12/11/2008 - 20:39

Its very easy to feel that we are being forgotten, indeed our story may seem like it is taking a back burner, but we must keep on doing the things we have all been doing. This is just a brief lull, we will have our second wind, indeed if we dont get some sniff of decent news soon i believe we will have to look at unleashing the sh&t storm. We still tools in our box and a time may come where we need to take out the sledge hammer, however for the moment i think we need to carry on with the chisel....tap tap tap, hopefully the crack will appear soon.

It has taken most of us a long long long time to build up the nest eggs we have had stolen, it will take a lot lot lot longer for us to forget and go away...........SO ANYONE WHO ISNT A DEPOSITOR AND IS READING THIS>>>>>WE WILL NOT GIVE UP AND WE WILL COME FOR YOU IF NECESSARY!!!!!


Position paper update - 11:21 GMT - please review

  • allyourbase
  • 12/10/08 31/05/09
  • a depositor
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  • Wed, 05/11/2008 - 11:21

I've updated the position paper again - this is now the latest version. Mat, please update the Word document and PDF (if you produced it) in your post.

Changes:

  • Several typos fixed.
  • Tricky Dicky: you're correct about the European Savings Tax Directive so I've changed point 2 to say "KSF IOM depositors pay tax on interest as described in “Notes to editors”."

Comments:

  • go mann: I've changed the "demands" and "requires" (i.e. slightly more aggressive phrasing) several times now. There doesn't seem to be a consensus on the site about how aggressive we should me. I generally agree that being a bit less aggressive might improve our changes, but I can't help but think that "desires" is perhaps slightly too lenient. Any comments from anyone else?

Position paper updated on site

  • Anonymous
  • Offline
  • Wed, 05/11/2008 - 19:29

The position paper on the site (and downloadable doc/pdf formats) has been updated with allyourbase's latest verion.


Relief

  • fish0143
  • 05/11/08 n/a (free)
  • a depositor
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  • Wed, 05/11/2008 - 02:00

It is incredibly helpful to find this information. I am a retired depositor with the largest part of my assests consumed in this bank failure and have been dealing with this situation on my own for the last four weeks. I just found this web site about 30 minutes ago.

Thank you so much for organizing this action group. Words cannot express how much the support of others in the same position means.

I would be very interested in participating in any effort to bring legal pressure to bear to effect return of deposited funds.

Much thanks.

fish0143


Dear Fish 0143

  • caledonia
  • 14/10/08 30/09/09
  • a depositor
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  • Wed, 05/11/2008 - 11:46

You are not alone - keep loggin on as this website is a life saver and they are doing a fantastic job on behalf of us all.
Keep postive!


Re: position paper paragraph 9

  • Brian FISHER
  • 20/10/08 31/05/09
  • unspecified
  • Offline
  • Tue, 04/11/2008 - 23:08

Re: the last sentence of para 9 - do we know whether KSF IOM sent these 'majority of customer deposits' as individual deposits, or lumped together - lumped similar, for example, to an NU or Derbyshire style bond? Do we know the answer to this? We would agree the answer could be important!

PS - Thanks for producing this paper is clear, excellent, - very very useful!

"9. Since the start of this crisis, further details have emerged. It is now clear that the UK Financial Services Authority was concerned about the state of the Icelandic economy. Recognising that KSF IOM was directly owned by Kaupthing hf in Iceland, and the possible risk of the bank’s assets being used to guarantee domestic Icelandic deposits, the Financial Services Authority advised the Isle of Man’s Financial Supervision Commission to secure deposits by “upstreaming” them. In this case, KSF IOM sent the majority of customer deposits to KSF UK in London."


EUSD

  • Tricky Dicky
  • 24/10/08 30/05/09
  • a depositor
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  • Tue, 04/11/2008 - 22:30

European Union Savings Directive.
Item 2 of the introduction - the EUSD not only works by "withholding tax" but you can also elect to have your information sent to your host countries tax authority - as you have stated in the final notes to editors


"many depositors have well

  • go mann
  • 10/10/08 31/05/09
  • a depositor
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  • Tue, 04/11/2008 - 20:10

"many depositors have well over 50,000 GBP" ... If I remember correctly, there are well over 1000 KNOWN to be in that position. And is there not a number where deposits exceed 500,000? Numbers, rather than generalities, have impact.

Uncomfortable with "demands", "requires" and words like that. A softer approach works better in Whitehall, honestly!
"Requests ..." "Anticipates that .." and "Desires ..." sit better, even though you really want to rip their throats out!


Position paper update - 19:45 GMT - please review

  • allyourbase
  • 12/10/08 31/05/09
  • a depositor
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  • Tue, 04/11/2008 - 19:45

Thanks to everyone for their feedback. I've done another update to the position paper - this is now the latest version.

Changes:

  • As requested by scottr and manx-person, I've removed references to money laundering.

I notice there hasn't been much feedback lately. I'm putting this down mainly to the Treasury Select Committee meeting where people have obviously been focusing their attention, but I'm also hoping that the lower amount of feedback means we're gradually getting to a document that the group agrees with. As I said before, I think it should be up to our spokespeople to approve the paper.

Someone suggested that I include details of the Treasury Select Committee meeting but I'm not sure I fully understand what happened. From what I've read, the chancellor was uncomfortable but mostly stuck to his guns, saying that there's no way he can bail us out, and largely side-stepped the issue of the 557m GBP. But on the subject of the 557m GBP, it seems that there's some confusion over whether ING or the UK government has the money. This is surely now the critical issue. If ING has the money it would surely make sense for them to take over KSF IOM. They already have an offshore operation, ING Luxembourg. Yes, I know ING borrowed money from the Dutch government but I think it's still a reasonable idea. The Isle of Man wins (confidence restored a bit), the UK government wins (less bad publicity, as I hope they realise we are not going away), and depositors win (access to their money). Anyone else think it's worth asking the London team to pursue this idea?


allyourbase-position paper

  • wood
  • 12/10/08 30/05/13
  • a depositor
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  • Wed, 05/11/2008 - 08:39

AYB, I see a few more recent comments that you'll clearly want to take into account but I have a question. Is there any chance your paper could be released today for us to send off? Early enough for any MPs attending tomorrow's adjournment debate to read in advance. I doubt if any MP has anything like the amount of information you've presented here about the sequence of events. It's a position paper - how things stand today. I know each new piece of information needs inclusion but that way it can never be released. All this work needs to be used - out there.


Pos paper - regs

  • Knife Edge
  • 10/10/08 31/05/09
  • a depositor
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  • Tue, 04/11/2008 - 21:36

Allyourbase, this is an excellent piece of work and your efforts are much appreciated. I have a minor comment, which I offer on the basis that we're working towards a bullet-proof paper. There is a statement in the notes that

• UK expatriate savers outside the EU who have no liability to UK or Isle of Man taxation until they return, and who are prohibited by law from having a UK onshore bank account without a permanent UK address. These savers are taxed in their country of residence. [My highlights]

Are we certain that it is a legal requirement and not a practical circumstance that arises on the basis of unwillingness on the part of compliance depts to understand (or implement) the actual KYC regs (as opposed to their own policies)?

It's been a while since I looked at this in detail at the coal face, so I defer to others' better knowledge on this, but my understanding is (and my experience has been) that these italicised words would better be replaced by "who are prevented by the internal rules of most (if not all) mainstream UK-based banks..."


Position paper - regs

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
  • Offline
  • Tue, 04/11/2008 - 22:13

Its a policy decision by some of the banks, not the law.
Barclays Knightsbridge branch for example, will open accounts for non-EU residents


Position paper regs

  • Emabroad
  • 10/10/08 30/08/09
  • a depositor
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  • Wed, 05/11/2008 - 15:58

Manx-person: Yes, you may be right, however, when questioned the banks' response was always 'it's because of the money-laundering regulations'.

It's similar to the answer I got when splitting my funds across several banks, when each bank required DIFFERENT combinations of relevant paperwork to verify one's identity and address. Some wanted the usual certified passport copy plus a utility bill and others wanted these plus a 'phone bill and/or bank statement etc. The variation in the number and type of documents provoked me to ask one bank why there was such a disparity in required information. In this case I was told it was for IOM regulation requirements, which since I was also providing data to three other banks, I knew was not so.

Whatever the actual situation regarding opening a UK bank account as a non-resident, the result and the reason given are the same.


Where is the £550m?

  • annespension
  • 19/10/08 31/05/09
  • a depositor
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  • Tue, 04/11/2008 - 19:57

On the specific point about where is the £550m it is with KSF UK and KSF IOM is one of their creditors. If KSF UK's assets are enough to pay out all their liabilities KSF IOM will get back the £550m and will be able to repay all its depositors. If there are not enough assets then the creditors will get a proportion of their balances back. The administrators of KSF UK could not pay back the balance to KSF IOM ahead of other creditors as that would be preferential treatment which is not allowed unless that preference was established at the time of placing the deposit. The £550m is not with ING or with the Treasury.


557M & KSFUK

  • mikeinfrance
  • 12/10/08 28/09/09
  • a depositor
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  • Tue, 04/11/2008 - 20:35

As annespension says there should not be any confusion over where the £557M is.The treasury (UK taxpayer) funded the transfer of Edge accounts to ING and they are now a creditor of KSFUK.

Furthermore this statement has recently come to light: "The LGA reported on 14 October that, in broad terms, the administrators considered that the value of the book value of the assets of each business appeared to be of the same order of magnitude as the liabilities, but that the recoveries for the local authorities would be dependent on the final level of actual realizations." (referring to KSFUK & heritable.)

I take this to mean that the assets of KSFUK are of the same level as its liabilities which to me, as a complete layperson, suggests that all creditors might expect to receive 100% Including us (£557M)! Am I missing something /or is this just wishful thinking?

Also see the forum LGA Webpage


557M to KSF UK

  • Codpeace
  • 23/10/08 30/11/12
  • unspecified
  • Offline
  • Mon, 17/11/2008 - 01:40

Do we know when this money was transferred from IOM to UK?


Updating what we learned from the TSC meeting

  • columbgc
  • 11/10/08 14/07/10
  • a depositor
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  • Tue, 04/11/2008 - 08:10

Somone less emotional because of the outcome needs to include what we learned (not so good news) from the TSC meeting.


Position paper - latest draft 21:01 GMT - please review

  • allyourbase
  • 12/10/08 31/05/09
  • a depositor
  • Offline
  • Mon, 03/11/2008 - 21:01

Thanks to everyone for their feedback. I've done another update to the position paper - this is now the latest version. Please ignore all previous versions of the document.
Changes:

  • mikeinfrance: I've included the paragraph number, thanks.
  • scottr: I can understand how you could interpret the comments about money laundering as implying that the Isle of Man allows money laundering. I'm not sure how to update the paper. The point I'm trying to make is that the legislation is perhaps too zealous or ill-conceived. Let me know if you can think of a succinct way of adding that to the document.
  • Ally: thanks for clarifying how IOM savers pay tax on interest, I've clarified the last point.
  • anrigaut: you're correct that KSF IOM offered customers a choice of either information exchange or withholding tax. I've tried to explain that now. But just as an aside, not all countries who take part in the European Savings Tax Directive offer this choice. (See Cayman Islands, for example.) Although this section is quite complicated now, I think it's well worth keeping in the light of constant allegations and "smearing" by some politicians and parts of the media.
  • kitm: I've replaced "Derbyshire Building Society" with "Derbyshire Offshore".
  • hkbased: I haven't received many comments about the order of points in the introduction so I'm reluctant to change it. I understand your point, but I want to give a summary of the events in the order that we learned about them in. If there's a general consensus I will consider changing this though. I can't remember where I heard details about this FSA advice, but if you can find out, that would be useful.

hounter:

  • I'm not sure whether the bank has "collapsed", but it didn't have sufficient liquidity to continue and has been forced to suspend banking operations, so I consider that to be a collapse.
  • Mike Simpson, the provisional liquidator, has posted several updates since 8th October: update on 13th October, 15th October, 20th October and 24th October. Although we'd all like more information, we have to accept that progress is slow, and at least we're getting some information. I don't see much value in updating point 6.
  • I don't see how point 9 is at odds with statement 3 in the group's position. Just because part of the UK government advised KSF IOM to send money to the UK, it doesn't mean that other parts of the government or even other parts of the FSA itself were aware of what had been done, and hence the implication of their actions. As I understand it, the fact that the UK government advised KSF IOM to send money, and that the UK government then effectively removed KSF IOM's access to this money is a key complaint of the group.
  • I'm not sure if it's known or generally accepted that the UK government knew it was effectively destroying KSF IOM, so I'm reluctant to include that, at least until we have hard evidence to back it up.
  • I'm reluctant to add more to point 4, firstly as it'll take the paper into 5 pages and it's already quite long. Also, I don't see how we can necessarily ask the government to guarantee deposits 100%, as the Isle of Man isn't part of the UK. The way I see it, asking for the money to be returned makes much more sense, and has a chance of being taken more seriously.
  • As for the Russian use of Iceland as a strategic base in the Atlantic, I find this idea fascinating but it really is just speculation, and I don't think we should include it in the paper.
  • I don't think including a deadline for repayment is sensible. There are complicated issues here, and there's always a possibility that the hearing on 27th November is adjourned again. Including a deadline will make us look foolish, as I think there's very little chance of seeing any of our money before 27th November.
  • I've included your suggestion in position 6.
  • I'd like to include some of your comments about the compensation scheme but I don't fully understand your point (d), nor is there really space (within the 4 page limit).

Position paper

  • Anonymous
  • Offline
  • Mon, 03/11/2008 - 22:05

Manx-person also prefers to not mention money laundering. I agree with the suggestion given in his/her posting.


Suggestion - Para 2

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
  • Offline
  • Mon, 03/11/2008 - 21:27

Paragraph 2 - why mention anti-money laundering legislation?

suggest replace with "often due to the Banks' own policy on opening accounts for non-residents"

I think that this is more indicative of the situation.


position paper

  • mikeinfrance
  • 12/10/08 28/09/09
  • a depositor
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  • Mon, 03/11/2008 - 15:16

Just a minor point;in section 7 you missed out 13 between paragraph & (iv)

Should read: The affidavit (page 4, paragraph 13(iv) states: “The arrangements in place with KSF [UK] allowed the Company to pay its debts, including its liabilities in respect of depositors, as and when they fell due”.


Comment on position paper

  • Anonymous
  • Offline
  • Mon, 03/11/2008 - 07:56

I suggest leaving out "often due to anti-money laundering legislation" in par 2 of the document. This gives the incorrect impression that money laundering is possible on IoM.


comment on position paper - ordering of points

  • hkbased
  • 26/10/08 31/05/09
  • a depositor
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  • Mon, 03/11/2008 - 05:38

I had a thought that in building up the chain of events, is it worth putting point 9 after point 2 (presumably the FSA-FSC advice and subsequent transfer of deposits to the UK happened sometime prior to Oct 7) and moving point 10 up as well?

I think point 9 is a critical point and is at the crux of why the IOM deposits ended up in the UK in the first place.

That way it reads:
- background (points 1 and 2 stay as are)
- FSA advises IOM to transfer deposits to UK to keep them safe (point 9 in existing draft)
- HMG places KSF UK into admin thereby freezing our deposits (point 3 in existing draft)
- FSC no choice but to put KSF IOM into temp liquidation (point 4 in existing draft)
- 'sealing of court files' so info is limited (point 10 in existing draft)
- then old points 5 onwards

Do we know when the FSA gave the advice and the deposits moved - was it in the days before Oct 8/9 or weeks/months (not sure if old balance sheets would have the infor on?) Is it worth adding the source of where we heard that the FSA advice had taken place?


Position paper

  • hounter
  • 02/11/08 31/05/09
  • a depositor
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  • Sun, 02/11/2008 - 23:50

Just joined as an active contributer with the excellent initiative of a common position paper - for this I wish to make the following suggested comments :

Intro 1
Has the bank actually collapsed at this point in time - rather than collapse i would suggest "placing into administation"

Intro 6
There has been no formal letter of any change in situation issued by KSF IOM, or its administrators post 8th October and this continues to be the case to date.

Intro 9 - ( key comment - this becomes at odds with position statement 3)

Postion 3 should read - The action group believes that the advice given by HM UK Government to the IOM Government prior to 8th October was made with the full knowledge of the potential consequences to the KSF IOM, notably to its ability to continue to function as a bank. And then the freezing of KSF UK assets would then force the IOM government to withdraw the banking licence and so freezing movements of any remaining asset, thus putting KSF IOM into charges for provisional administration was an inevitable consequence.

Position 4 to add -> or a Uk government 100% Guarantee of return with interest at depositors rates, at the point of a formal winding up being declared by the IOM government on 27th November.
( I can believe that there are EU security issues at play here with the Iceland Government courting Russian funds and in exchange giving use of Ex Nato airbases - this is probably why the KSF UK assets are sealed in court and one month of delay is asked, while this brinkmanship plays out - it is notable that iceland government statements about the IMF inputs and involvement of the scandavian banks continue to be very vague - and russia is now rarely mentioned - speculation yes but plausable - the IOM government may be under direction from Whitehall and so this possibility should be given due allowance - thus the above suggested text).

Position 5 add - or commits to return money by 27th
November

Position 6 - The action group views the return of depositors money held in KSF UK, or a commitment of its return, as crucial in obtaining a resolution of the placing into administration.

Position 8 - rather than compensated use the word recompensed (so this could ultimately include the adminstrators fees and for lost interest also).

Position 2 pls use text -> The action group considers the revised IOM depositors scheme as certainly welcome, but unfortunately in practical terms it provides inadequate relief for the majority of depositors because......

a) ...... And this pay back would be further extended and even ultimately could become questionable, should any other IOM bank be forced similarly to wind up their affairs, in the medium term.

d) It is stated to be of limited duration and so therefore of not much comfort to those that by necessity or choice are transfering or adding funds to another IOM institution.
( this statement alone should prompt a rethink in the IOM)

ps Keep up the intense work, i hope you can agree to add these comments even if provocative.


Postion paper amendment

  • Ally
  • 13/10/08 31/05/09
  • unspecified
  • Offline
  • Sun, 02/11/2008 - 23:10

Just to correct the very last line of the paper

Notes to Editors 3

Isle of Man residents are NOT taxed at source on bank interest. All bank interest is paid gross to Isle of Man residents and should then be declared on the annual tax return (all residents of the Isle of Man having to complete a tax return no matter what level of earnings)


Position paper- note to editors 3

  • anrigaut
  • 19/10/08 30/10/09
  • a depositor
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  • Mon, 03/11/2008 - 09:13

The first bullet point is also not exactly true.

EU resident savers EITHER agreed to disclosure to the relevant jurisdiction to whom they declared interest on their annual tax return OR were taxed at source by the Isle of Man, which then withheld a proportion (income for the island) and remitted the remainder to the relevant jurisdiction inline with the EU’s European Savings Tax Directive.

These are the options under the European Saving's Tax Directive. Personally I chose the former (which means that all my tax goes to the French authorities - which I feel is only right and proper as that I where I live), so am a KSF IOM account holder who does NOT "fall into one of four broad categories".

Maybe this whole section has got out of hand and it would be better to return to the original broad statement on the lines of "KSF IOM account holders are overwhelmingly ordinary .... who pay tax ... VIA their annual tax returns or via the EU's European .... Directive" and leave it at that?

I hope it's not too late to modify this. Feeding editors with patently untrue statements cannot be good for our cause.


Derbyshire

  • kitm
  • 21/10/08 31/05/09
  • a depositor
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  • Sun, 02/11/2008 - 22:18

In the intro section para 2 "Many depositors originally opened an account with Derbyshire Building Society" should read "... Derbyshire Offshore". Derbyshire Building Society is still trading (and merging).

Keep up the great work.


Position paper - updated draft Sunday 22:09 GMT

  • allyourbase
  • 12/10/08 31/05/09
  • a depositor
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  • Sun, 02/11/2008 - 22:10

Latest version

Includes quotation from Aidan Doherty's 2nd affidavit - thanks to mikeinfrance for pointing me to the relevant bit. Hopefully one of these days courts and other bodies will start releasing text as, well, text ;)

Mat Walker - please update your post again. Thanks.


on it now....

  • Anonymous
  • Offline
  • Sun, 02/11/2008 - 22:45

Oh drupal does funny things with numbering! eeesh.

Working on it now....


done

  • Anonymous
  • Offline
  • Sun, 02/11/2008 - 23:15

Ok done. Formatting is a little shabby but Drupal has a problem with double digits in a list (!). Still, text is there and as you have written. There is your document below it as an attachment if anyone wants to download your word document.

Mat


Position paper - final draft 19:41 GMT - please review

  • allyourbase
  • 12/10/08 31/05/09
  • a depositor
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  • Sun, 02/11/2008 - 19:42

I've done another update to the position paper - this is now the latest version. Please ignore all previous versions of the document.

Changes:

  • mikeinfrance: I've replaced the reference to the Financial Times and replaced it with details about Aidan Doherty's affidavit. Apologies for taking some time to add it, I know this is at least the second time it's been mentioned. I haven't added the quotation though as I wanted to verify it myself but can't find it in the affidavit and can't search for it because the affidavit is scanned in :(
  • Lucky Jim: good suggestion, I've incorporated your suggested text for point 7.
  • mikepapa: I've changed the "many customers" phrasing as you suggest, good point. I've also included a date in the document itself. Not sure if you meant that or a date in the filename or something.
  • anrigaut: I didn't fix one of the typos you reported ("removal the bank's licence" should have been "removal of the bank's licence") - fixed now
  • vikingvictim: I'm removed the reference to lump sum as you're right - I'm sure this could be construed as implying that many depositors are filthy rich and so on. I've left the point intact though as I think it's an important one, and many people on this site (for example tsunamivictim) are in this category.
  • Dave1: I haven't made the changes you suggest (talking about the UK government rescuing Bradford & Bingley's offshore operation) as I don't think it's possible here because KSF IOM was owned directly by Kaupthing hf, not KSF UK.
  • swissloss: improved point 1 as you suggested. Added details about money laundering legislation in point 2. Haven't modified point 3 because I think the attitude of some people on this site towards the repayment for Kaupthing Edge UK and Icesave customers isn't constructive. We can't convincingly say that we deserve payment and they don't. I know most people aren't saying that, but some people are. I've added a point about the group's successes and achievements so far. I disagree with your comment about possibly adding new material at the top or putting new material in bold. I think this would soon make the document unreadable.
  • diver: included your details as discussed by text.
  • Emabroad: I've included the four categories that you mentioned though I've had to alter the margins a bit and decrease the size of the font used in "Notes for editors". I guess I shouldn't be surprised at The Guardian being so misinformed, particularly about Icesave - useless.

DXB:

  • I've removed the quotation about the parental guarantee and I've improved that section based on swissloss' feedback as well.
  • I've introduced KSF UK as you suggest but it makes the paragraph much more complicated.
  • I'm now using the "GBP xxx million" convention.
  • Yes, as far as I'm aware, it was playing KSF UK into administration that caused KSF IOM to be put into provisional liquidation. We know from the bank's balance sheet that KSF UK held the majority of its assets, so I think it's perfectly reasonable to say that KSF UK being placed into administration is the cause of the mess.
  • Again, I'm fairly confident it's a fact that KSF IOM could have continued if KSF UK had not been put into administration (see the balance sheet once again), but I welcome anyone who can clarify this absolutely.
  • As for the FSA and FSC, yes, you're correct - they are separate bodies. But just like separate police forces have communication, they seem to have had communication from time to time. (After all, they're in the same area, and will presumably want to discuss best practices and so on.) I've read so much news about this whole story that I can't remember where I read this from, but I'm fairly confident that the FSA and FSC did have some talks. I do take your point that the FSA didn't necessarily twist the FSC's arm, but should the FSC really have doubted the FSA's advice?
  • I've replaced "irrelevant" with "inadequate". As for the Manx government borrowing money, I think it's quite clear that they cannot borrow anywhere near enough money in a reasonable time frame to repay depositors. I've heard that Tynwald has approved borrowing 150m GBP but that won't be anywhere near enough.
  • I've replaced "directly led to" with "was a significant contributory factor", but I suspect this debate will run and run. Personally I think that it did directly lead to the collapse, but I'm happy to tone it down.
  • As for the money in London and our demand to get it back, I've taken your point that we're not a priority creditor. As for when the money can be given back, my understanding is that money was transferred to KSF UK relatively recently, so I'm hoping a lot of it will still be there, but I don't know the details.

I don't think there's much more I can do for this position paper. I've tried to accommodate everyone's feedback but it's very difficult. I think we need to come to some kind of compromise or agreement. I suggest that if the press contacts are happy with the document, then we should release it. After all, they are the ones who will have to field press questions.

If people don't agree with this, then perhaps it's time for someone else to take over the position paper.


Latest Version

  • Anonymous
  • Offline
  • Sun, 02/11/2008 - 21:35

This latest version is now the one shown in the main top part (and listed in the attachments) with previous versions removed.

Thanks allyoubase, this is indeed an excellent paper!

Mat Walker


Position paper - Mat Walker

  • allyourbase
  • 12/10/08 31/05/09
  • a depositor
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  • Sun, 02/11/2008 - 21:54

When you pasted the position paper in your main post, the numbering seems to have been broken. Please either remove the pasted position paper or try to fix the numbering. Thanks.


position paper allyourbase

  • mikeinfrance
  • 12/10/08 28/09/09
  • a depositor
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  • Sun, 02/11/2008 - 21:27

Thanks for your great work..Just for the record the quote referred to comes from Page 4, para 13 (iv)


Comments on Position Paper

  • DXB
  • 12/10/08 31/05/09
  • unspecified
  • Offline
  • Sun, 02/11/2008 - 17:43

AYB,
Good work. Some further comments/observations (I am being critical here, because the paper will be subject to rigorous scrutiny once we push it out into the public domain):
i) Intro para 1: "The wording of the guarantee is clear and unambiguous..." Is it? I was under the impression that the terms of the guarantee had yet to be made publicly available. The text cited in the paper appears to be a comment on the guarantee, rather than the text of the guarantee itself.
ii) Intro para 3: May be a good place to introduce KSF UK, e.g. "Kaupthing Singer & Friedlander Limited (KSF UK) is a UK-incorporated subsidiary of Kaupthing hf and an affiliate of KSF IOM".
iii) Into para 7: I believe the convention is to cite amounts thus: "GBP XXX million" ("million" should be spelt out in full).
iv) Intro para 8: "Placing KSF UK into administration directly led to KSF IOM being put into provisional liquidation..." Is this factually correct? I had understood that the main trigger for the suspension/revocation of the banking licence was the inability of Kaupthing hf to provide the requisite liquidity for KSF IOM, not the administration of KSF UK. "Had KSF UK not been placed in administration, KSF IOM would have been able to continue normally" - fact or speculation?
v) Intro para 9: "...the Financial Services Authority advised the Isle of Man’s Financial Supervision Commission..." - fact or speculation? I had understood that the FSC is an independent regulatory body, so it is under no duty either to consult with, or to take advice from, the FSA. It might have done so in practice - but that must be regarded as an independent regulatory decision unless the facts prove otherwise. Also not sure that "upstreaming" is the right term for a lateral/sideways transfer of funds between affiliates.
vi) DAG position para 2: The DSC is largely "inadequate" perhaps, rather than "irrelevant". As for para 2a, we might want to recognise that the Manx authorities have borrowing powers which they may choose to exercise to fund the DCS.
vii) DAG position para 3: "...directly led to..." - fact or speculation? "...was a significant contributory factor in..." may be safer?
viii) DAG position paras 4 and 5: These are important statements. It is very difficult for KSF IOM to be treated as a "priority creditor" because, assuming KSF IOM is an unsecured creditor, there is simply no legal basis in English law which allows this. As to the group "...simply demand[ing] that the UK government returns money rightfully owed to KSF IOM depositors..." here's the rub - the KSF IOM account is a liability on KSF UK's books (it's a debt which KSF UK owes KSF IOM). In order for KSF IOM to 'recover' the cash to pay us out, the assets of KSF UK will need to be liquidated (because the cash isn't physically sitting around in a huge vault waiting to be distributed). The full amount owed to KSF IOM may not be recovered when KSF UK is liquidated, so we are in effect asking the UK government to top it up - out of UK taxpayers' money. I'm not sure we've presented a compelling case why they should do so.
Paras 4 and 5 in the DAG position section in my view need re-working, because they HMG cannot hand back the GBP 550 million just like that.


Position paper

  • mikeinfrance
  • 12/10/08 28/09/09
  • a depositor
  • Offline
  • Sun, 02/11/2008 - 15:49

Can you confirm that the latest version is the attachment ksfiom.doc? If not then where exactly is it?

referring to section 7;
"However, the bulk of this money, some £550-600m (or £557m to use a figure recently quoted in the Financial Times)"

Wouldn't it be better to quote the original source of this figure ie Aiden Docherty's affadavit 2 in which he states that KSFIOM had £557.154M in KSFUK (he also states in his affadavit that : (quote)
" The arrangements in place with KSF (UK) allowed the company to pay its debts,including its liabilities in respect of depositors,as and when they fell due"


mikeinfrance - latest version of the paper

  • allyourbase
  • 12/10/08 31/05/09
  • a depositor
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  • Sun, 02/11/2008 - 16:23

Thank you . . .

  • drglowry
  • 14/10/08 31/05/09
  • unspecified
  • Offline
  • Tue, 04/11/2008 - 00:38

Dear All,

I have just read through the original, subsequent comments, and revision of the position paper. I learned a good deal, and am grateful to all of you for your input. I admire your ability to think clearly and work constructively on all our behalf. I am a recent retiree who "did it tough" in the GCC for many years, only to have my life's / retirement savings "frozen" or, effectively, stolen. I regret that my analytical and critical abilities have been so affected by what has been done to us that I am unable to make much contribution. Perhaps the shock, or the anti-depressants, or the tranquilisers, or just the shock of being a victim of a violent crime, just as surely as any person mugged in city streets.

Please accept my thanks, be assured of my continuing and unwavering interest, support, and purposefulness in recovering our money. I am happy to join any class-action suit or other form of advocacy that those closer to the action (my wife and I are in the "Antipodes") can lead.

Is there no appropriate law firm in the UK / IOM that, provided with a complete list of depositor contact details, cannot mount a succeessful court challenge to the violence done to the whole group of us? Perhaps the liquidator provisional, or a helpful and anonymous KSFIOM staffer can provide such a contact list? Surely a percentage of the recovery of the GBP 800 million should provide sufficient incentive for a modern-day firm of Rumpoles?

With my sincerest best wishes . . .


deleted

  • mikepapa
  • 10/10/08 n/a (free)
  • a depositor
  • Offline
  • Sun, 02/11/2008 - 15:42

deleted


thanks allyourbase -- further thoughts on refinement

  • Lucky Jim
  • 13/10/08 31/05/09
  • not a depositor
  • Offline
  • Sun, 02/11/2008 - 14:45

allyourbase - - you have worked hard on this...thanks!

Further thoughts on refinement.....Would you like to consider this as an alternative to what you have in 7. ?

(7). Because of its strong & secure position KSF IOM was able to offer a small but marginally more competitive rate of interest than other banks. Thus it attracted depositors who sought the best return for their money. There was never any suggestion that their money might be 'at risk' solely on account of mal administration of the Bank.


Position paper update 13:25 GMT - need feedback from diver

  • allyourbase
  • 12/10/08 31/05/09
  • a depositor
  • Offline
  • Sun, 02/11/2008 - 13:24

Thanks to everyone for their feedback, I've updated the document again. Unfortunately some people are still looking at old versions of the document. For the complete avoidance of doubt, please consider this version of the document to be the latest version at the time of writing.

Changes / comments:

  • KA: thanks for your encouragement.
  • anrigaut: good point about expatriates. I've changed it to refer to "citizens of other countries". I haven't mentioned your sterling comment though as KSF IOM offered accounts in other currencies too. I've moved the "Many depositors initially..." sentence and deleted sentence 3. I'm not sure about rephrasing the first point in the position completely, but I have taken the last sentence in point b out and used it as a conclusion. I've fixed the typos you've reported - thanks. I'm not sure what the process for updating the document should be. Either people can post updates, have someone review them and then I'll update the document, or someone else can take over maintenance of the document.
  • I've added expat as a press contact after he emailed me his details. He suggested that we really need diver listed as a London contact. Diver, please send me your details if you're prepared to be a press contact.
  • Mat Walker: please update your post as it's causing confusion.

Position paper

  • vikingvictim
  • 11/10/08 31/05/09
  • a depositor
  • Offline
  • Sun, 02/11/2008 - 16:22

Item 5 point 3.
suggest you remove 'large lump sums'
it doesn't add anything and doesn't correspond with the desired image of ordinary savers.