Status of in-flight transactions from KSF IoM

  • Anonymous
  • unspecified
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Posted: Fri, 10/10/2008 - 01:13

Moderator: All those interested in legal action regarding in-flight CHAPS, BACS, & SWIFT transfers, see here:
http://chat.ksfiomdepositors.netgenius.co.uk/?q=node/224
Moderator ends

Can anyone provide information as to the status of transactions initiated from KSF IoM in the days leading up to October 9th?
Personally, I was last able to access the KSF Internet Banking website intermittently at the start of business October 9th and was able to initiate CHAPS transfers however am doubtful these will have been actioned.
Anyone have any experiences to share?

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Short Response from Mike Simpson

  • IanAbroad
  • 11/10/08 13/08/09
  • a depositor
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  • Sat, 01/11/2008 - 18:30

I sent him an e-mail and fax basically saying I want my 'in-flight' transaction to be allowed to continue.
He has responeded at 16:30 GMT today:

"Thank you for your emails. I am currently investigating the large number of frozen claims and taking legal advice on the appropriate treatments depending on the individual circumstances. I am intending to write to the relevant depositors next week with an update."

Regards
Mike Simpson | Partner | PwC| Sixty Circular Road, Douglas, Isle of Man, IM1 1SA

I hope he's not on double-time for working a Saturday!
I do have to say though, at least he does respond , Harbinger of Doom or not.


Hi ian, Indeed... sincerely

  • mikepapa
  • 10/10/08 n/a (free)
  • a depositor
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  • Sat, 01/11/2008 - 18:49

Hi ian,

Indeed... sincerely hope MS is not on 2 x Time if his fees are anything like legal fees! :-)

Being a synic....Possilby one of his staff??

Any idea if aikom's Jack Straw was THE Jack Straw... I did ask but no reply.

Cheers


Double Time

  • IanAbroad
  • 11/10/08 13/08/09
  • a depositor
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  • Sat, 01/11/2008 - 19:43

Hello mike,
I reckon on this being Mike himself. You have to be a lot further up the ladder to get someone to anyswer your mails for you, that's if you want someone reading all your correspondence.
I am sure up until 8/9th Oct he was a happy auditor/accountant on IoM, the next thing he is lumbered with this fiasco, insolvency, terrorist act, rival accountancy groups, siezed funds, KSFIOMDEPOSITORS rotweillers at his ankles, staff being made redundant etc etc. This isn't an Ice cream business going under, it's a branch of an international bank.
He's under the micorsocpe, so he'll be doing everything by the book, for better or for worse as far as we are concerned.


The Jack Straw

  • cold-dose
  • 11/10/08 31/05/09
  • unspecified
  • Offline
  • Sat, 01/11/2008 - 19:05

Aikom did say that Jack Straw was his/her MP and the advice was given at a constituency surgery.


G'Evening - cold-dose

  • mikepapa
  • 10/10/08 n/a (free)
  • a depositor
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  • Sat, 01/11/2008 - 19:17

Thanks....

You caught me being a little mischievious there....... I stand admonished :-(

Actually, I would be more than pleased to get an opportunity to chat to Jack Straw - so perhaps it was envy!


Jack Straw on in-flights

  • aikom
  • 16/10/08 21/06/09
  • unspecified
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  • Fri, 31/10/2008 - 23:46

Urgent info for in-flights

Had a meeting with Jack Straw today. I think what he said should be taken seriously. I myself will be taking his advice and putting it into action tomorrow morning Sat' 1st and first thing Monday. This is what he advised me for in-flights held at KSF UK and the only way he saw that has any chance in these circumstances:

1,Badger IOM to give you screen printout of transfer details
2,Insist your UK bank traces the transfer "back up the pipe" to confirm returned to KSF UK
3,Immediately send a recorded delivery detailed letter to E&Y to included; prove of transfer & details, amount of funds claimed + interest, including all costs up to date, not exhaustive if further cost incurred.
4,Back this letter up with a letter from a legal representative asap
5,Do not assume a president will be set if someone else is successful in getting their money. A president being set is highly unlikely to make a difference
6,Speed is of the essence

Mr Straw said he is fully aware of what is going on in the IOM. Many legal issues are being dealt with, until the outcome of these, funds wont be released. Once they are your claim must be in.
He also said forget asking liquidators for answers, if they know they wont tell anyway, and they ignore requests that are not recorded or by legal rep' (as I've found out), so legal representation is a must to officially stake a claim

I'm sending my claim Sat 1st

Monday I will seek legal representation, either in Manchester or Leeds. I will find a way of paying myself, but I invite anyone to join me, but I'm not hanging around, I will initiate asap. I will only pay legal fees that are quantifiable and with a price up front for the letter to E&Y. I estimate a letter will cost about £1000 as long as you have done the initial leg work first - numbers 1+2+3.

I got my screen print from IOM , be a pain in the ass every day. Your bank will do a trace if you plead with the right person. Tell them your lawyer needs the info.

This is what I'm doing, so that's it for me for now. I'll open my e-mail for those who are ready to go with legal rep


In flight

  • Hilbert
  • 25/10/08 31/08/09
  • unspecified
  • Offline
  • Sat, 01/11/2008 - 18:05

I am interested in joining you in seeking legal representation.

I may find difficulties in getting the information in your 1 and 2 (see the remark by mikepapa below yours). The best perhaps that I can expect is to try and get it and record the refusals. These themselves could form a part of the case put to E&Y. Surely depositors should not be ruled out in their efforts to recover their money, by a refusal of PWC, KSF and my bank to provide relevant facts.

How do you suggest I join in with your scheme?
Hilbert


Reply to Hilbert

  • aikom
  • 16/10/08 21/06/09
  • unspecified
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  • Sun, 02/11/2008 - 15:40

Hi Hilbert,
I see IOM is being more resolute in not giving screen prints. If you want to join me in legal action send me an e-mail with contact details by using my contact form (not sure how you do it, as I've never contacted someone on this site, if you have difficulty let me know).
If you can't get any more info towards 1+2, and you're not sure of the status of your transfer, you need to put the claim to E&Y and PWC. You can then try and get prove later. Eventually you will need prove who has your money if they deny knowledge of what your claiming.
I'm trying to find a post form someone who mentioned a QC in London with knowledge of this type of legal claim. Tomorrow I need to find a suitable legal team.


Screen Print

  • jeffh.cruncher
  • 11/10/08 31/05/09
  • unspecified
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  • Sat, 01/11/2008 - 17:50

Thanks for the information when exactly, time date, did you get a screen print?? I have tried several times on thurs & fri last week; the official line seems to have changed. Many of the more recent responses on this site seem to support my recent experience?


In flight

  • Ormus
  • 19/10/08 31/05/09
  • unspecified
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  • Sat, 01/11/2008 - 09:56

Aikom - can you give us the email address to be used to ask for screen printouts, and also that for sending in the claim?


reply to screen printout

  • aikom
  • 16/10/08 21/06/09
  • unspecified
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  • Sat, 01/11/2008 - 15:27

I called and spoke to various staff at the bank day after day after day, eventually after a particular conversation that lasted along time I managed to persuade them to e-mail me a print out of my account. I think the member of staff I talked with was happy to have a "nice conversation" that kept them occupied not having to answer the phone to irate callers!
Just lucky I guess! I don't know if things have changed since last week, but keep trying.


E&Y address

  • aikom
  • 16/10/08 21/06/09
  • unspecified
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  • Sat, 01/11/2008 - 15:20

The E&Y address to write to is:

Administrators (Ernst & Young)
Kaupthing Singer Freidlander UK
1 Hanover St
London
W1F 1AX

Remember if your letter isn't backed up with a solicitors copy E&Y are unlikely to answer, I never got an answer, and they asked me to write in! I have sent a recorded letter today, to be followed by a solicitor copy early next week.

Send everything recorded and keep copies. Keep copies of any evidence you can get, continually search for anything that appertains to your cause and copy that too.


KSF IoM - Information Shut Tight

  • mikepapa
  • 10/10/08 n/a (free)
  • a depositor
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  • Sat, 01/11/2008 - 12:28

On Thursay 29th I made one final efffort by telephone call to KSF IoM to get e-mail confirmation of in-flight funds status, having received no reply to 3 detailed e-mails requests to KSF IOM over the previous 10 days.

I was told on Thursday, that in accordance with Miks Simpson instructions, KSF IOM staff are now only able to access, and therefore provide, account balances for 30th September 2008.
No other information is currently available, depite reports of some lucky leaks over the past couple of weeks.


The forum should know a few

  • Stakeknife
  • 13/10/08 31/05/09
  • unspecified
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  • Sat, 01/11/2008 - 12:51

The forum should know a few things about the administrative side of things from within KSFIOM.

  1. Its pointless writing to PWC unless it is about something of the highest order. Queries here are handled initially by much more junior staff who simply pass them on to KSFIOM staff who are instructed to respond with the usual bland script. Separate the name PWC from the staff handling their queries. The in-joking that has started amongst them about the dire situation we are in is further evidence of the standard of people we are dealing with.

  2. KSFIOM staff have been offered very attractive temporary contracts to help Simpson and his staff over the next few months. Moral however is extremely low and many are ready to move. The PWC team care nothing for the KSFIOM staff and are telling them very little. Don't therefore expect too much from the KSFIOM staff. They are keen to help but are being given very little information to work with.

Not particularly good news but it might help to balance out some expectations


KSF IOM - TODAY

  • mikepapa
  • 10/10/08 n/a (free)
  • a depositor
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  • Sat, 01/11/2008 - 14:01

Stakeknife,

Thanks for your insight........it would appear that you are very well informed!

Your comments pretty well refect my experience with KSF IoM on Thursday last.

Cheers


PWC Obligations

  • Alastair
  • 10/10/08 30/09/09
  • a depositor
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  • Sat, 01/11/2008 - 13:50

Stakeknife, thanks for the inside view. Simpson and PWC will need to be very careful. Their obligations to us as creditors is clear and in the event of evidence arising of any failure in this both Simpson personally and PWC will find themselves facing very damaging litigation. With good evidence a no-win no fee firms will be available. Please keep records of any such activity and lets keep PWC on their toes.


PWC

  • Monkeyface3604
  • 10/10/08 31/05/09
  • unspecified
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  • Sat, 01/11/2008 - 14:03

Just because PWC are temporary liquidators doesnt mean we have to keep them on if it goes into liquidation. That is one thing we need to sort out if the 27th does go ahead as liquidation day. Also taking the FSC of as joint petitioners.


PWC Obligations

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Sat, 01/11/2008 - 14:07

Well I think that if thats the idea you had better get organised. If it is dealt with as a creditor committee matter then you will need £10M plus of votes; I would imagine the Treasury will want a professional firm involved.

I would have thought you as a creditors would want someone with experience in this area, sufficient resources, and also sufficient PI cover.

You should start looking now for someone who can meet these criteroa


PWC Obligations

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Sat, 01/11/2008 - 13:59

Advocates in the Isle of Man are not permitted to conduct litigation on a no-win no fee basis.
I wouldn't take everything you read on here as fact.
I am sure that Mr Simpson and PWC are well aware of their responsibilities, I suspect those working at the bank are perhaps not.

What is wrong with employing key staff on temporary contracts? The issue was actually referred to at the court hearing by the Advocates acting for both the bank and the liquidator as a consequence of the postponement.


Why IOM Litigation

  • Alastair
  • 10/10/08 30/09/09
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  • Sat, 01/11/2008 - 14:30

Manx-person - who said anything about litigating in the IOM there are more favourable places to challange PWC should they not fullfill their obligations to us.


Why IOM Litigation - KandA

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Sat, 01/11/2008 - 14:40

So in respect of a Manx resident person appointed as a provisional liquidator by a Manx court on the petition of the Manx regulator and the Manx Bank, operating in the Isle of Man, and licensed by the Isle of Man FSC with the staff of the liquidator conducting their activity in the Isle of Man you think that it would be possible to convince a court of another country that it was within their jurisdiction?


NY Resident Account Holder

  • Alastair
  • 10/10/08 30/09/09
  • a depositor
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  • Sat, 01/11/2008 - 14:53

PWC Global partnership,
Account holders all over the world,
Assets held in the UK and Iceland,
Loans to entities all over the world,

Several jurisdictions would be happy deal with clear evidence of a failure to fullfill obligations to international credit.

All I ask is we keep our options open and keep reminding all those involved that they must do their jobs. Which reminds me has anyone had a letter from KSF IOM or PWC informing them that their bank is in provisional liquidation?


Ny Resident account holder

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Sat, 01/11/2008 - 16:44

PWC isn't a global partnership at all - whatever gave you that idea?

PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

If there was any litigation regarding the conduct of Mike Simpson/PWC in this matter I would be astonished if there was any jurisdiction other then the IoM which would be an appropriate forum.

Also remember he is an officer of the court of the Isle of Man.

"Failure to fulfill obligations to international credit" - what does this mean.

There are lots of lawyers ready to take money from anyone with money, thats how they make a living.

How does revving people up for legal action help when there is no evidence at all of any wrongdoing, and then advising them incorrectly regarding the status of PWC and raising irrelevant matters.


Mr Simpson Wrong Doing??

  • jeffh.cruncher
  • 11/10/08 31/05/09
  • unspecified
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  • Sat, 01/11/2008 - 17:44

I guess it's difficult to say whether or not Mr Simpson has done or is doing anything wrong. Someone however is trying to withhold information. Now as I understand it KSF IOM is not liquidated as yet & although the bank is not able to function fully, I can see no reason why when requested many times by phone & e-ml KSF IOM, as it stands today, can not provide me with information about my account balance on the 8th Oct or on the afternoon of the 7th before the bank's licence was revoked . This was after the funds had left my acct on the 7th according to me checking on the web in the afternoon on that day. I authorised a CHAPS transfer on the 6th which I have a screen print of.

The Bank's behaviour is now obstructive & I am not a lawyer but I would have thought this is yet another breach of contract. They will now not even give info after the 30th Sep verbally so that I can make a voice recording. Does the Banks current behaviour leave the provisional liquidator ie PWC open to legal action? Can one of the banks staff anonymously give us a response? does anyone else have an opinion? I am now even more pissed off!


jeffh.cruncher - trying to understand

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Sat, 01/11/2008 - 17:50

I think this is a point well made.
I would send him a letter by recorded delivery, explaining that you want this information.

The thing is, even if you were to show him negligent, you would need to show a loss. Since you can't withdraw your money yet, and the DCS isn't activate its hard to see what loss his inaction could be causing you.

I agree its bad form.

My guess is that they don't want to provide more information on this until they have resolved the inflight issue to see whether the Money has gone out or is coming back.

I appreciate that this isnt what you want to hear; I just hope this gets resolved soon.


Picky

  • Alastair
  • 10/10/08 30/09/09
  • a depositor
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  • Sat, 01/11/2008 - 17:14

Should have read "Failure to fullfill obligations to international creditors" - missed off the "ors" very early here and little picky on your part. You seem to be taking critism of PWC a little personally. As for PWC's status you are clear better placed to comment on this.

The thread started as a result of comments from Stakeknife suggesting that they are not taking us depositors seriously . There would be no problem for a NY judge to take jurisidiction this is something you can rely on.

As for revving people up I believe in hoping for the best and preparing for the worst.

Fact is PWC are not communicating and I am keen that they know that we will hold them to a high standard. They are reading this and need to know that.


Picky - maybe but details matter KandA

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Sat, 01/11/2008 - 17:34

I didnt understand the comments you made, I wasn't being picky.

Maybe I am being picky about PWC's status, but so would the courts be when they read through the arguments about the "international partnership" before they reject it.

If you look at the PWC web site, you will see their structure/legal arrangement clearly explained.

I recently saw that a US court dismissed a petition against God because it had not been served correctly.

Following a US decision on this (presumably they will also need to obtain counsel as to all of the Isle of Man legal matters, adding to the cost) this will then have to come to the IoM for judgement to be executed for the massive damages for the alleged unspecified misfeasances suspected.

I think you may at this stage, run into one or two difficulties.

If PWC are reading this, no doubt they are charging for it, and will be adding it to their costs bill - I hope they arent, it is a waste of everyones money should the bank go into liquidation.

I have never worked for PWC, and have no connection with KSF, Iceland etc

I don't think submitting a claim in the US courts will help anyone - oh and the costs of defending such a claim will come out the assets of the bank, in all likelihood unless there is the proof of misfeasance


re - NY Resident Account Holder

  • skintagainnow
  • 10/10/08 31/05/09
  • a depositor
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  • Sat, 01/11/2008 - 14:59

This thread - as much as anyone has at the moment,

http://www.ksfiomdepositors.org/node/1061


Stakeknife - yours is an interesting last comment......

  • Brian FISHER
  • 20/10/08 31/05/09
  • unspecified
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  • Sat, 01/11/2008 - 13:13

Stakeknife - yours is an interesting last comment timed Sat, 01/11/2008, 12.51GMT.

I believe totally what you write and I think everyone should thank you for it.

Your comment convinces me even more that short of a fairly rapid top-level international financial/political settlement of our matter, the only plausible way forward is the hiring of an absolutely top-level firm of City solicitors, who, using little more than their reputation and headed-paper, will promptly gets us a place at the top table.

Short of this, we will waste a lot of time, achieving little in the places where we need to achieve the most, and with the people with whom we need to achieve the most.

We will risk simply p.ss..g in the wind.

BF


Strategy

  • Tank
  • 10/10/08 31/05/09
  • a depositor
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  • Sat, 01/11/2008 - 18:00

Despite the excellent work being done by the many contibutors to this forum, we are still operating very much in an information vacuum.

Hopefully, we will all become better informed over the next couple of weeks (TSC on 3/11/08; confirmation, as I understand it, by PWC on 7/11/08 of account balances at 30/09/09).

However, I believe that the time has now come to assume that KSFIOM will go into liquidation on 27/11/08. We therefore need to prepare ourselves accordingly by identifying high profile, London based representation, as suggested by Brian Fisher, briefing them and establishing a plan of action on behalf of the group for that eventuality.

As by far the largest creditor group, we have an obligation to be prepared. We can influence the outcome. And if another solution is found beforehand, little will have been lost.


Check old threads

  • Kaupthing Over ...
  • 10/10/08 31/05/09
  • a depositor
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  • Sat, 01/11/2008 - 12:05

If you see some old comments on the Hopper thread it is clear that bank staff are not able (under PWC orders) and no longer want to (as they've said it will be breaking the law-no bank license) co-operate on this since weds I believe,but if you have any luck be sure and post it on that thread.


Aikom

  • IanAbroad
  • 11/10/08 13/08/09
  • a depositor
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  • Sat, 01/11/2008 - 10:20

hello Aikom,
do you have the adress to contact the Ernst&Young administrators?
I do not know if it should be the Kaupthing office or the E&Y office in London.
rgds


In-Flight Dollars

  • Blades
  • 19/10/08 n/a (free)
  • a depositor
  • Offline
  • Sat, 01/11/2008 - 05:53

Do you know if the same theory applies to those of us with US Dollars In-Flight?

I have a screen print out showing that US Dollars were debited from my account (I was able to do this before the website stopped working). My bank in the USA contacted Deutsche Bank in New York who told them the monies weren't there. So all I know for sure is that the monies left my bank account. Has your receiving bank been able to establish where your monies are?


USD to USA

  • Jas III
  • 14/10/08 31/05/09
  • unspecified
  • Offline
  • Sat, 01/11/2008 - 22:38

Hey Blades, I lost my transfers to the UK on 6 Oct, but after these went out, I had 2 USDs transfers sent sucessfully one 6th and the other 7th, one as paid to a USD investment account in Singapore via Hong Kong, and the other to my $USD account with Bank of America inthe USA. Both of these cleared without a problem via Deutsch NY. Remember because someone has a screen print from KSF(IoM) from the online account it does not mean it went out of the bank. YOu would need access to the payments system that sends the payments messages. That is locked down at KSF IoM now since 9 Oct. They only way this could be verified is talking to someone in the payments department with KSF at the time. Better yet having got a screen print of the MT103 message to the clearing bank, in your case Deutsch Bank, NA, NY. You might see if you can ask someone in your bank and Deutsch to check with a payments system programing dept. to see if your transfer might have been trapped in the sanctions programs, they had running at the time. If you can find this swift message and FED ID and sequencing and get a hard copy with that you have proprietary equitable rights to the those funds, because you have evidence that establishes it was yours while the bank was solvent. You're first in line then to bang on Mr Simpsons door with your hand out. You might also might have some claim towards Deutsch Bank for holding and delaying payment unknowingly until the bank was insolvent, but I am only speculating. In my case I know KSF London has my Sterling frozen, but nobody admits it yet.


USD to USA

  • Blades
  • 19/10/08 n/a (free)
  • a depositor
  • Offline
  • Sun, 02/11/2008 - 05:07

Thanks JAS III

I'll see how far I get with your suggestions. Much appreciated.


Question to TSC over withheld 'in-flight'-transfers.

  • Jas III
  • 14/10/08 31/05/09
  • unspecified
  • Offline
  • Tue, 28/10/2008 - 14:29

(as posted in the Treasury Meeting Nov3 section.)
http://www.ksfiomdepositors.org/node/867

I have just received an email from the TSC Clerk with instructions for submitting a question for the meeting.

The question needs to be 100 words or less. Its more so I am working on it and trimming down from the information below we sent to MPs.

Basically I think the agenda will be bombed with well written questions confrontatiing them with taking 60% KSF (IoM) £550M assets and giving it to the adminstrators of KSF (UK) to shore up UK compensation that excludes us and as shown by afidavit forced KSF (IoM) and KSF (hf) into liquidation.

For our part it is very important to address the withheld 'in-flight' transfers that were stopped before action was offical. The fact that FSA action allowed E&Y to do this is clearly out line, unjust and hopefully can be shown to be illegal. This issue seens to sidelined or missed most press printed so far because we are minority of the losers. So I feel it also needs to be presented to the public by the committee, under the noteful eye of the media.

For respondents (and even media like Jon Snow who appear to help us, ) to hightlight an dodge this issue by bringing up the agenda that UK tax avoiders get the risk deserved from banking offshore, and perhaps should not be bailed out like UK banks are, does not hide cover up these facts of how this money was allowed to be expropriated from us by sealed orders as it was and remains witheld, with many factions fighting over it that do not have the depositors interests in their motives and methods.


Question for the Rt. Hon. Alistair Darling MP, Chancellor of the Exchequer, and Lord Adair Turner, Chairman, Financial Services Authority:

I am a USA citizen who recently relocated to the UK. My Norwegian wife and I are now UK resident taxpayers our children are UK citizens. We also pay tax on worldwide income to the USA and Norway. On Monday 6 Oct our life savings was in the UK in transit from the Isle of Man to our current accounts and seized by FSA's action against Kaupthing Singer and Friedlander. Yet this action and administration of the bank was not official or announced until Wednesday 8 October.

How can this be a fair or just result of your "extraordinary action under 'sealed orders' actually help UK residents' financial security in the Icelandic banking crisis, when so many are extraordinarily harmed ruined and forced into hardship?

-OR-
Gentlemen do you intend to assist or require the Administrators of Kaupthing Singer and Friedlander (UK) Ltd, to release withheld transfers from KSF (IoM) to their rightful UK equitable beneficiaries who are UK residents and taxpayers and sucessfully transferred their savings into the UK on Oct 6, 7 prior to administrative action?


Any thoughts, input or comments welcome


Funds transfer process

  • cold-dose
  • 11/10/08 31/05/09
  • unspecified
  • Offline
  • Sun, 26/10/2008 - 21:07

I think it might be helpful for some people if I just reiterate the process by which these transfers happen.

Leaving aside the actual electronic messages (which are probably best thought of as just being fancy emails), it happens a bit like this:

(The people, banks and accounts are fictional! For illustration only. Any similarity to real people or banks is purely coincidental.)

Bob has an account at Lilliputian Bank.
Bob to transfer £100 to Alice, who has an account with Wyvern Bank in the UK.

Lilliputian Bank is small, and does not have direct access to the clearing system. Therefore it uses the services of another bank, Megabank, to settle transfers.

Bob asks Lilliputian Bank to make the transfer to Alice's account. [*] They debit £100 from his account balance. This prevents the £100 being called upon for any other purpose whilst the transfer is in progress. They will simultaneously credit £100 to their suspense account to ensure their books continue to balance.

Lilliputian Bank has an account of their own at Megabank. This is sometimes referred to as a 'nostro' account. This account has a balance of £20 million.

Lilliputian Bank send an electronic message to Megabank, asking them to transfer £100 to Alice's account at Wyvern. (This then also cancels out the temporary entry in the suspense account).

Megabank debit £100 from Lilliputian Bank's account. [**]

Megabank forward the electronic message to Wyvern Bank, so that they are aware they will be receiving £100, and so that they know which account it is for.

Megabank have an account at the Bank of England. They have a £1 billion balance in this account.

Megabank ask the Bank of England to take £100 from their account, and put it into Wyvern Bank's account (also at the Bank of England). [***]

Wyvern Bank receive notification from the Bank of England that they have received £100 in their account.

Wyvern Bank then use the account details from the electronic message to credit £100 to Alice's account balance. This stage must happen within the day.

The first point to note is that no money actually moves between the banks. It's all a 'paper' exercise, with the numbers being transferred from one column to the other. As Occam's has noted earlier, it is not a game of 'pass the parcel'.

(Balancing of settlement accounts due to overall net inflows or outflows happens at a higher level).

The stages are not automatically linked - there is some manual intervention to ensure that the various intermediary accounts have a sufficiently high balance to be able to complete the transfer. If there isn't, the transfer will be held up until more funds are made available (normally by incoming transfers).

The key events from the point of view of the legal arguments that have been made on these forums are:

[*] Bob's request has _potentially_ created a constructive trust for that sum of money. This would logically devolve on all parties handling the transfer until it was completed, and mean the money wasn't available to be hotchpotted for the liquidation. This is not an argument in contract law, incidentally - it is a trust law argument.

[**] At this stage there is a distinct and identifiable sum of money (if CHAPS) outside the immediate asset base of Lilliputian Bank. However, at this point Lilliputian Bank could still contact Megabank and instruct that the transfer is stopped. This is really the point where the funds become 'in flight'.

[***] Once the Bank of England transfer the funds, neither Megabank nor Lilliputian Bank can recall them. It is analogous to a cash payment in some ways. This does not preclude legal action to order the return of the money. The funds are legally held to be to the benefit of Alice from this point onwards.

International SWIFT transfers operate to a similar process. For example, Lilliputian Bank has an account at Dreisen Bank in New York, with a balance of $2 million. Transfers are deducted from this account and passed through the Federal Reserve System (in place of the Bank of England) to the destination bank. So, in the above example, Dreisen Bank New York takes the place of Megabank.

In the event of the liquidation of Lilliputian Bank both the balance of the nostro account at Megabank in London and at Dreisen Bank in New York would normally be considered assets of Lilliputian Bank and recovered by the liquidator for the general pool. The legal action that has been started is to argue that transfers requested before the liquidation order was made are effectively 'ring fenced' for the benefit of the intended recipient.

CHAPS transfers distinct 'chunks' of money for each transfer. For BACS, and sometimes for SWIFT there will be combining or 'netting off' (transfers in and out are combined, and only the resulting total is transferred, rather than have money constantly shuttling back and forth between two banks). This would make identifying the specific money associated with a transfer harder for these 'constructive trust' arguments.

For international payments, there is an additional complication - the Herstatt situation, whereby the insolvency occurs outside banking hours in one country. For example, a payment from Lilliputian Bank in Britain to Dreisen Bank in New York could be sent before the start of the US banking day. It would then be waiting to be processed when Dreisen Bank begin work - but Lilliputian Bank might collapse in the meantime. This is an especially bad problem if sending money into the bank that becomes insolvent.


cold-dose

  • arny
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Sun, 26/10/2008 - 21:25

I'm not, unfortunately, involved, it was too late for me when I tried to move my monies. However, thank you for taking the time to explain the process to the cannon fodder. All part of a learning curve etc.


REVERSING CHAPS PAYMENT

  • losinghouse
  • 24/10/08 31/05/09
  • unspecified
  • Offline
  • Fri, 24/10/2008 - 12:38

Bank liable for reversing suspicious CHAPS transfer
OUT-LAW News, 22/07/2004
A UK Court has ruled that a bank that re-transmitted a suspiciously large CHAPS transfer back to the sending bank is liable to its own customer for the losses - albeit the bank's only motivation was compliance with regulations.

A UK Court has ruled that a bank that re-transmitted a suspiciously large CHAPS transfer back to the sending bank is liable to the customer into whose account the transfer should have been made.
The case reaffirms the view that a CHAPS transfer is as good as a cash payment - but also highlights a risk that can arise if compliance with the UK's money laundering rules is taken too far.

CHAPS, or the Clearing House Automated Payment System, is a method of transferring cleared funds from one bank account to another, and is often used in business and legal transactions, where real time transfers are necessary.

The case concerned Hosni Tayeb from Tunisia, who had been running the top level internet domain for Libya, prior to negotiating the sale of the domain database to the Libyan Corporation General Posts and Telecommunications Company (GPTC).

On 21st September 2000, GPTC's solicitor instructed the CHAPS transfer of the purchase price - £944,114.27 - from a Barclays Bank account into Tayeb's newly opened HSBC account. Barclays informed HSBC that the payment was going to be made, and then initiated the transfer of the money.

This arrived into the account, and an automatic acknowledgement was sent to Barclays confirming the receipt of the money.

On the assumption that the transferred purchase price had also been credited into his HSBC account, Tayeb completed the sale of the database.

However, the HSBC branch assistant manager, Mr Wigham, had been suspicious about the transfer, and placed a marker on the account - effectively preventing any withdrawals from the account without the bank's approval.

According to court papers, a day later, after meeting with Tayeb, Mr Wigham arranged for the money to be re-transferred back to the Barclays account from which it had come. He then closed the account, and cancelled the interest that had accrued in the short time that the database purchase price had been credited there.

As Mr Justice Colman said in his ruling, "The position therefore appears to be that GPTC have received delivery of the domain name database but, having initially remitted the price to HSBC, have, by the re-transfer, received a windfall payment equivalent to the price."

Tayeb sued the bank.

In its defence, HSBC argued that the suspicious circumstances of the transfer justified its actions. In particular, the bank was concerned that it would commit an offence under the Criminal Justice Act 1988 and that it would breach the Money Laundering Regulations.

The main question for the court was whether the money had actually been transferred into Tayeb's account, or whether the bank had retained sufficient control over the money to enable it to re-transfer the money back to Barclays.

The ruling

According to Justice Colman, "There is a continuing duty on the bank to credit to the account all such transfers it receives from external sources and which comply with the terms subject to which the account is constituted."

"However," he continued, "the bank's entitlement to decline to accept a transfer is not in the nature of an option exercisable according to the bank's perception of what is commercially desirable but the consequence of the operation of the terms of the account contract with its customer."

Worries about breaching the 1988 Act and Money Laundering Regulations were not sufficient to allow HSBC to decline to accept the transfer because an offence would not be committed so long as the bank reported their suspicions to the National Criminal Intelligence Service.

"The proposition that by reason of its justifiable suspicions, the bank retained an overriding discretion to reverse the transfer into the account after the 12 noon deadline on the next banking day on the basis of banking practice has not been established on the evidence," said Justice Colman.

"Any such practice would not only be fundamentally inconsistent with the bases of the contract with its customer and with the CHAPS rules, as I have demonstrated, but would go well beyond what was reasonably required either for compliance with the Criminal Law or for the reasonable protection of the bank against the risk of liability as a constructive trustee," he added.

This meant that once the funds were credited into Tayeb's account, had been authenticated and the acknowledgment sent, "HSBC became indebted to the Claimant in respect of the transfer".

The fact that the bank had placed a marker on the account, freezing it, did not withdraw the debt due to Tayeb - it simply prevented him from accessing the funds.

Accordingly the bank was now due to pay Tayeb the purchase price, plus interest.

See:

a.. Text of the ruling


Not really relevant

  • cold-dose
  • 11/10/08 31/05/09
  • unspecified
  • Offline
  • Fri, 24/10/2008 - 20:02

The above decision is merely confirmation of established understanding of the way CHAPS works.

Once money has been transferred through the Bank of England to the receiving bank, it must be credited to the receiving account within the day. It cannot be sent backwards without outside legal intervention - it is basically 'in the hand' of the receiving party.

KSF UK had an agreement with RBS to handle payments on their behalf. To put it another way, RBS was the sending bank as agent of KSF UK. As the money hadn't left the sending bank the 'same day' requirement to complete the transfer speedily hadn't come into play, nor had the legal restrictions on sending the money back.

The traditional view of the situation at that point is that the funds are still in the control of KSF UK, and KSF UK could have got on the phone to RBS and lawfully said "Stop the transfer! We want the money back!"

Of course, Hopper's legal team are challenging this at a level above - that the funds during the entire transfer process are effectively held in trust for the purposes of the transfer only. The structure of CHAPS is helpful in this respect, as each transfer is made distinctly and separately - they are not netted-off.


Bank liable for reversing suspicious CHAPS transfer

  • JS
  • 10/10/08 31/05/09
  • unspecified
  • Offline
  • Fri, 24/10/2008 - 13:06

This interesting. Can only help our cause. I'll email it to 'guttered' for inclusion in any revision to the Technical Paper and to Hopper as it may be useful for the lawyers.


From HOPPERS (and others)Legal Team

  • IanAbroad
  • 11/10/08 13/08/09
  • a depositor
  • Offline
  • Thu, 23/10/2008 - 20:10

Mail received this evening in response to a question I raised about E&Y holding the transfers in flight. I'll post this on the HOPPER thread also.

Good evening again everyone.
It has come to my attention that there is talk of the in flight monies currently being with Ernst & Young in London.
As you may recall from Hopper’s original post on the web-page the claim we submitted on his behalf was submitted to Ernst & Young at that time.
That is where the claim we have submitted on his behalf was directed and where we have always believed any action should be focussed at this stage.
As I have said in previous emails (particularly the one dated 17th October) it may be necessary to prevent the monies returning to the IOM as part of any action we take.
I hope this clarifies some issues.
Regards
Richard

Richard Gore
Partner
Gregg Latchams WRH
7 Queen Square
Bristol BS1 4JE
Tel: 0117 9069424
Fax: 0117 9069459


It may be too late!

  • Jas III
  • 14/10/08 31/05/09
  • unspecified
  • Offline
  • Thu, 23/10/2008 - 23:03

""It may be necessary"???

It seems it is VERY necessary to make every effort to immedaitely prevent the monies from returning to the IoM later today.

Despite your efforts for Mr Hopper. Please let us know if you are doing anything to prevent or get an injunction on money from leaving the E&Y back to KSF (IoM) with Mark Simpson and Manx delegation meet senior officials from the Treasury and the UK Financial Services Authority. The delegation will demand the release of about £550million of Isle of Man deposits held by KSF in London that were frozen on October 8. . . or are you waiting for the cut off time for more $£100 punters in your pen... before anything more is done?

By Tuesday it appears .... the horses your being instructed to find and catch for us might on their way to the old home offshore! If this happens I'm told there is very little your team can do get it back or support for it. Thats a fight not many will be able to afford and maybe choose not to ...if everything possible is not done now to stop this money from returning.


Criteria for decisions about transfers in flight

  • lesleys
  • 10/10/08 31/05/09
  • a depositor
  • Offline
  • Thu, 23/10/2008 - 14:58

I sent this to Mike Simpson earlier today. I will share reply if and when one is received.

Text of request sent below:

To Mike Simpson:

• Can you please provide the precise decision making criteria that you are using to determine if funds in transfer will go forward to their intended destinations or go back to KSF (IOM)?

•Since transfers can of course occur using different methods I imagine the decision making criteria may be different so can you please provide the criteria for each type of transfer.


From MS PWC own lips dated : 20th October

  • MichaelB
  • 16/10/08 31/05/09
  • unspecified
  • Offline
  • Thu, 23/10/2008 - 19:25

Ms made this statement on the 20th Oct at the Update site.
http://www.kaupthingsingers.co.uk/Pages/3989

He clearly says that " Firstly, let me make it clear that I have absolutely no interest in trying to claw back transfers which should legally continue to their intended destinations. "

How clear can he be ? Should we not believe him ?

Transfers in transit
The matter of transfers in transit was also discussed with Ernst & Young on Friday. It now appears that banks were told to cease processing transactions for Icelandic owned banks on 6 October, but did not tell KSF that this was happening. We do not know why this happened, but it would be consistent with the anti tipping-off provisions which are contained in anti terrorist legislation. Ernst & Young have agreed to assist us in identifying and locating transfers in transit.

I have had contact from a number of you who are concerned about my motives for trying to unfreeze the clearing system to enable these transfers to move. Firstly, let me make it clear that I have absolutely no interest in trying to claw back transfers which should legally continue to their intended destinations. If I did, I am sure that the Court would not permit me to do so. However if, for whatever reason, any transfers did not successfully leave the control of KSF IOM, then I would be legally obliged to seek to recover them. This is not a straightforward area of the law, and I am taking legal advice to make sure that transfers are treated appropriately. Some of you have forwarded copies of relevant legal cases which I have made my lawyers aware of.


Simpson knows

  • aikom
  • 16/10/08 21/06/09
  • unspecified
  • Offline
  • Thu, 23/10/2008 - 15:54

Just had confirmation from an employee at KSF IOM that Mike Simpson KNOWS that all the transfers are being kept in an account with KSF UK. Also confirmed that his legal team is trying to prove the transfers should be returned to IOM.
I imagine he will take as long as is needed to give his legal team the best chance of achieving this. This is why we need an injunction freezing them on our behalf just in case he proves it.


Could RBS or KSF (UK) loose money?

  • losinghouse
  • 24/10/08 31/05/09
  • unspecified
  • Offline
  • Fri, 24/10/2008 - 12:58

Dear Aikom
Please read post above about reversing Chaps payments. Based on this info, if KSF (UK) did send Chaps back, they could loose some of that money through liquidation and they (KSF (UK) or RBS) would still owe us the money. I'm not a lawyer so would appreciate others understanding of this precedent.

In addition Thank you and everyone else on this site for working through this together.

anonynous


reply to losinghouse

  • aikom
  • 16/10/08 21/06/09
  • unspecified
  • Offline
  • Sun, 26/10/2008 - 11:24

sorry for delay in reply. I decided to pay attention to my 2 young children for a day! You may have your answer by now but it's polite to give mine.
The crucial question is, how far did the transfer get. It seems mine was still n the control of KSF UK, RBS say it was only being processed by them. Besides all UK banks had orders to freeze from Monday the 6th. So no transfer left the control of KSF UK. So RBS off the hook. KSF owe either IOM the money or ourselves. This is what this website is trying to prove depending on the status of your money.
The only way any other bank would be liable is if, according to the above legal example, your funds reached your account and then were transferred back.
When KSF UK and IOM are wound-up we only get a percentage of the assets retrieved by the liquidator. This is why ones with in-flights are trying to prove theirs should continue to destination, 100%.

Note to consider: If KSF UK do not volunteer to send these in-flights on, only a court order can make them, if they decided to return them to IOM, again only a court order can stop them, in either case no one has yet applied to the court, thus could be too far behind in this race with Mike Simpson. Time has being HORRIBLY WASTED on this matter.


See above

  • cold-dose
  • 11/10/08 31/05/09
  • unspecified
  • Offline
  • Fri, 24/10/2008 - 20:03

See above


RBS returned transfer

  • aikom
  • 16/10/08 21/06/09
  • unspecified
  • Offline
  • Thu, 23/10/2008 - 16:01

This second had a call from my bank, they traced my BACS. It is confirmed that my transfer request left IOM on the 7th, IT REACHED RBS on the 7th too. However RBS was told on the 10th to send ALL transfers back to KSF. My bank is trying to confirm exactly where in KSF.
If I can find this out, then do you really think Mike Simpson doesn't know.
Don't see any solicitors getting anywhere fast either-Hoppers not started yet I guess.