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Chief Minister accused of participating in PR ‘disaster’
Perhaps Mr Brown thought the Treasury Committee was laying a trap for him when he was given the advice that the IOM may have a very good case against the FSA: is that why he didn’t take it?
Chief Minister, Tony Brown was so accused by Liberal Vannin Party leader, Peter Karran in yesterday’s (Tuesday 10th Feb) sitting of the House of Keys.
Mr Brown was answering supplementary questions to a Question from Michael MHK, David Cannan, who inquired what implications there are for the Island following on from the IOM delegation’s appearance before the UK House of Commons, Treasury Select Committee on 3rd February.
Mr Karran wanted to know what action is going to be taken “to try to minimize the bad PR” that came about from the visit.
Mr Brown’s response was the only bad PR came from some of the KSF (IOM) depositors “who have a different interest to my interest”. He went on to say his interest covers both that of the depositors and the whole of the IOM.
Whilst the political ‘posturing’ by Mr Brown, in both Keys and in Westminster, may have been designed to ‘protect’ the ‘independence’ of the IOM, it has done little to placate the, growingly disgruntled, ‘victims’ of the second ‘Cod War’ - the depositors of KSF (IOM) - and an increasing number of concerned IOM taxpayers who stand to ‘lose’ £50 million upwards.
The Manx Herald has received a number of emails, in response to the Chief Minister’s comments, and typifying the content is one from the KSF (IOM) depositors’ action group - about the ‘Blame Game’ being played - in which they say:
“Is it the Financial Services Authority (FSA) who at best 'encouraged' the FSC and the directors of KSFIOM to move £550m of deposits to KSFUK? Placing almost 50% of a bank's assets in one place is clearly not normal practice for any financial institution employing effective risk management practices, but doing so without any ring-fencing or protection of any kind is bordering on madness.
Is it the Financial Services Commission (FSC) who relied solely on past practice and a vague memorandum of understanding when moving the money to London? Quote John Aspden at the Treasury Select Committee on 3 February 2009 "…if all the understandings that we had [with FSA] had been adhered to I would not have thought that the London bank would be in quite the predicament that it appears to be." These understandings are apparently expressed in a yet to be seen exchange of letters with the FSA. So the FSC believes the fault lies with the FSA?
Is it the directors of KSFIOM who chose to follow the advice of the FSA and the FSC and move almost half of the bank's assets to London? Paul Myners, Minister for the City at HM Treasury now comments on this in writing by saying "KSF IOM…could have chosen to put its money elsewhere and to have diversified the deposits it made rather than making a single large deposit, which concentrated the credit risk to which it was exposed." So HM Treasury blames the KSFIOM directors?
Is it the Isle of Man Government who still insists [quote Tony Brown, Chief Minister at the TSC] that "we are a well-regulated transparent jurisdiction. People who put their deposits there should be aware that there is a compensation scheme and that has served us well, and our commitment to do the best for the depositors is well-known"? Try telling that to the KSFIOM depositors. Well-regulated and transparent would not be the first adjectives to come to mind.
So there we have it…
Two governments;
Two regulatory organisations;
Some massive unforgivable mistakes;
But no one taking responsibility;
Everyone playing the blame game.
At the Treasury Select Committee Tony Brown was asked three times whether KSFIOM depositors should seek redress from the UK Government. Three times he chose to avoid a straight answer, eventually saying that "As far as the situation for the Isle of Man is concerned, we are accepting our responsibilities and endeavouring to rectify the situation."
It's time that the four parties in this financial drama do just that - accept their responsibilities and rectify the situation by funding 100% return of monies to depositors. Otherwise it looks like it's going to be a long and painful legal process for everyone, a process that may be forced to start by examining the actions of the authorities in the Isle of Man.”
Clearly the ‘retail’ depositors are right to feel ‘stitched-up’ by the actions/inactions of UK and IOM authorities and want to see all their money being returned; but it is the IOM taxpayers, who stand to foot a large part of the bill in clearing up this mess, who perhaps should be feeling most aggrieved.
Whether it was a case of regulatory failure, incompetence, negligence or a combination of these, or other, factors, if the UK authorities are believed to have some culpability in the IOM’s predicament, then the Chief Minister should have had the guts to say it to their face and not just behind their backs back in the (relative) safety of his offices.
Perhaps Mr Brown thought the Treasury Committee was laying a trap for him when he was given the advice that the IOM may have a very good case against the FSA: is that why he didn’t take it?
How or why did he think, by saying yes, it would make any significant difference to the relations between the IOM and the UK? Is it because he really is convinced the UK might send a gunboat or two?
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Any 'bad publicity' being generated for the IoM has to rest quite firmly at the door of Tony Browns office. If he had the guts to firstly ensure the depositors were paid 100% of their money (which were not 'Investments' as Aspden put it - while trying wriggle out of his responsibility) and then stand up to the UK Government and FSA who caused this disaster in the first place then he would be greatly respected all round and the PR for IoM would be fantastic. But he seems to prefer to kowtow to the the UK and try to blame the KSF depositors who are about the only innocents in this!
Rather then expend energy on trying to come out of this looking good a bit of introspection is probably needed and then a real effort to actually help the souls affected by this.
As it stands, only a fool would think of investing in, or putting money into an Island institution; and who could blame them!
Manx James
Firstly, had they been left where they were, they would be worth less than half of what they probably will recover from the UK.
Secondly, if they were placed in a bank vault in Douglas, KSFIoM would have been unlikely to have been able to offer the rates that lured the voracious expats in the first place.
As John Aspden correctly pointed out, if regulators went about placing excessively onerous capital requirements on banks, there would be no financial services industry left.
Start a war with the UK government which will inevitably have detrimental consequences to the Island's status, regardless of whether it wins this particular battle?
Write out a 500 million cheque to the KSFIoM depositors and charge it to the account of the Island's taxpayers?
Or work within reasonable boundaries with all parties to establish a workable solution that does worsen the situation of the Isle of Man?
Come on, Manx Herald, don't just criticise, be constructive.
It was the right decision not to move the money to Iceland. But the decision to put all the money in one place was certainly the wrong decision. And actually Iceland does owe KSF IoM money too.
And in answer to David and to this poll question:
"No, why should the Manx taxpayers bail out other countries tax avoiders"
A good number of depositors in KSF IoM are tax payers AND IoM tax payers - IoMG have collected on witholding taxes under rhe European Directive and of course many of the depositors live in the IoM.
In consideraton of those that are not IoM tax payers, the IoM presumably created the special tax status precisely to attract those seeking different tax treatment and it has used that to grow its banking sector to the great advantage of the Island. It seems to me that all the islands depositors have made significant contributions to the IoM and should be protected, not just in their own interests, but in the interests of the IoM.
He has had four long months to take advice and still he is frozen in the headlights.
He needs to take a loan from the British government to cover the depositors - he will get it back over time with the running down of the loan book ( worth 410 million) and the eventual sale of assets from the Bank held by KSFUK.
Instead he has done nothing for the reputation and future of the IOM as a banking centre and absolutely nothing for the depositors who trusted the IOM with their savings.
As he seems to be deferring to FSC- when I thought from his title he was supposed to responsible for IOM Finance business
And many depositors are IoM residents and tax payers too.
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