Tynwald Select Committee hearing 24 Feb 2010

Category: DAG Public News

Angela Downs (« anrigaut», representing KSFIOM DAG) and Steve Thomas (« expat », of the Partially Protected Depositors group) gave evidence on behalf of KSFIOM depositors at the Tynwald Select Committee on Wednesday. As befits our different backgrounds and personalities, our styles were quite different, but the essential message was the same : that the FSC and the Directors failed the depositors abysmally (they could have saved the bank, but didn`t) and that in any case responsibility lies fairly and squarely with the IOM, to whose jurisdiction we entrusted our savings. Whatever the external events leading up to the disaster, in the final analysis « the buck stops here ».

 

Juan Watterson MHK (chairman) began by reminding everyone that at this stage the Committee is concentrating on the first part of its remit : the cause of the collapse and the role of the FSC in ensuring proper management of the bank to protect depositors` funds. Depositors are likely to be invited to give further evidence at a later date concerning the credibility of the DCS and other relevant matters. The committee appeared generally sympathetic and attentive and genuinely desirous to get to the botom of what actually happened and why. Angela began by reading a statement prepared by the DAG Strategy Team (see here) and Steve expounded forcefully his views on the amateurish management and lack of professionalism of both the Directors and the FSC.

 

The opening statements were followed by further discussion through a series of questions from the Committee. Both Steve and I focussed heavily on the total failure of the FSC to ensure that its own resolution of 2 May 2008 to eliminate all exposure to the Kaupthing Group was fully and properly implemented ; as we know to our cost, moving funds to KSFUK did not eliminate exposure to Iceland. In the following months, the situation could still have been rescued by recalling funds from London as the crisis in Iceland deepened. But no such action was undertaken. Both the Directors and John Aspden of the FSC have stated categorically in evidence to the Committee that had these unsecured funds not remained in London, KSFIOM would not have collapsed. I have to say I wonder what further evidence of failure the Committee needs ; clearly the FSC at least were aware there was a potential problem with Iceland (otherwise why would they have made that resolution on 2 May ?). In Steve`s words, « alarm bells were ringing ». It was neither sufficient nor professional for the FSC simply to accept the assurances (if any ?) from the FSA and Iceland that all was well (they would say that, wouldn`t they ?). It was the job of the Directors/FSC to assure themselves by their own due diligence and to protect depositors accordingly.

Other issues discussed included the circumstances surrounding the takeover of the Derbyshire by KSF in late 2007 (of particuar interest to me as a former Derbyshire depositor) and the rejection of the Parental Guarantee by the Kaupthing Winding-up Committee. Questions need to be asked over the extent of due diligence (if any) undertaken by the FSC to ensure that the guarantee, used heavily by the bank to reassure former Derbyshire depositors and to attract new customers, was indeed binding on Kaupthing hf. The point was clearly made that if this rejection (currently strongly contested by our Liquidators) were to be confirmed by the Icelandic court, very serious questions would need to be raised and answered.

The chairman confirmed that both the Directors and the FSC would sortly be recalled for a further evidence session and requested that we send him any further questions we would like them to be asked as soon as possible. He also announced that the FSA have declined to give evidence (make of that what you will…).

The Hansard transcript of the session will be uploaded on the site as soon as it becomes available.

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