To believe, let alone prove, that the UK Government set out to ‘steal’ money from a bank operating in the IOM, requires more than just cynicism and jingoistic fervour.

There appears to be a widespread held belief, or at least one that is being widely promoted in the Island, that the government in the UK has ‘nicked’ the £500+ million, ‘belonging’ to Kaupthing Singer & Friedlander (IOM) Limited, which was ‘deposited’ in the ‘sister’ bank in London that is now in administration/liquidation. But is this theory - and the conspiracy that supports it - even the tiniest amount credible?

The fact that the court papers dealing with the ‘winding-up’ of KSF (UK) have been sealed from public scrutiny can only lead to a suspicion something ‘underhand’ took place; but it hardly constitutes 100% proof of what is being alleged. To believe, let alone prove, that the UK Government set out to ‘steal’ money from a bank operating in the IOM, requires more than just cynicism and jingoistic fervour.

For the UK to have achieved what is alleged it would have required a significant amount of devious machinations, and forward planning, to get to the point, in October 2008, when they could finally get their hands on the money. Perhaps Gordon Brown and Alistair Darling really did start plotting a decade or so ago for this event, but it would almost certainly need for fact to be stranger than fiction.

Let us imagine that the two of them did indeed decide, years in advance, on a plan of how they could ‘ruin’ the ‘good’ reputation of the IOM.

So what was this ‘cunning plan’?

Clearly it involved the manipulation of the UK and Icelandic business sectors to such a point that a bunch of Vikings would buy - at vastly inflated prices, and with vast amounts of borrowed money - British shops, football clubs and, of course, banks.

However, it couldn’t be just any bank it would need to be one that operated in the IOM for the plot to work. As we all know, this part of the ‘plan’ somehow came to pass and - if the evidence presented by a former CEO of S&FL Tony Shearer is to be believed - the UK Financial Supervision Authority (FSA) was in on the ‘plan’; by turning a ‘blind eye’ to his alleged warnings over the suitability of Kaupthing to own a British bank.

However, it still required the ‘transfer’ of the loot, to the UK, before it could be in a position to ‘fall in’ to Darling’s hands.

The next part of the ‘cunning plan’ had to involve the collapse of the global banking system - the one easily accepted part of the ‘plan’ given Gordon Brown’s financial ineptitude - as a ‘cover’ for the destabilizing of the Icelandic banking system. This was needed to trigger the ‘suits’ in the IOM Financial Supervision Commission (FSC) into action to ‘protect’ depositors in the IOM division of the bank.

According to evidence presented recently by FSC CEO John Aspden, to the House of Commons Treasury Select Committee (HoC TSC), the FSC boldly decided, in March 2008, that there could be no exposure of KSF (IOM) funds to Iceland; and set out to find a ‘safe haven’ for £500+ million. With the whole World to consider they - for reasons not yet fully known or comprehended - were apparently bewitched by the siren calls of the FSA to look no further than the ‘sister’ bank in London.

What information and assurances, if any, were provided by the FSA to the FSC are still very much in dispute; with both sides appearing to lay the blame for any ‘mistakes’ on the other. Only the other day (Wed 25th Feb) CEO of the FSA, Hector Sants gave evidence to the HoC TSC that, in effect, challenged some of the evidence presented, to the Committee, by Mr Aspden.

Nick Ainger referred to a letter sent by the FSC to the FSA, dated 21st May 2008, asking four questions; the forth being in respect of a possible inter bank placing, between the IOM and London, and asking for information on the liquidity regime and the ability to repay the money. He said that a reply had been issued on the same day, providing the information requested, and inquired if it had been sent to give reassurance that the deposit would be “secure and covered”.

Mr Sants replied that the purpose of the letter was to confirm the liquidity regime in place - which he said had been put in place in 2005 and was more onerous than normal owing to some of the previously mentioned concerns - but whether it provided sufficient enough assurance to the IOM regulator, he said, is a matter for them to decide. He went on to say that as the host regulator it was not for the FSA to make judgements on the information provided; but just to provide it.

Mr Ainger put it to Mr Sants that the FSA had effectively been accused of instigating the transfer; to which Mr Sants responded that there is “no evidence at all” to support the assertion.

He followed this up by asking Mr Sants if he was sure that no approaches had been made to KSF (UK) along the lines of, you need to put further assets into the bank; and were any attempts made to influence a bank so that a transfer of funds, from the IOM to London, took place.

“No” came back the emphatic answer from Mr Sants.

Mark Todd picked up on this point, and asked if the Committee had all the correspondence related to the matter, to which Mr Sants replied that to the best of his knowledge they did.

Mr Sants, who appeared to be grinning a lot during these exchanges - which is perhaps his normal manner - continued to add that he had met, personally, with the IOM regulator and that he (Mr Aspden?) had made no suggestion that any encouragement had been made in respect of the transfer; therefore he was “mystified” where the suggestion had come from.

So the evidence of the UK Regulator is that neither the FSC nor, by extension, the management of KSF (IOM), was induced or exhorted to make the transfer. In other words the transfer was made as a result of their own free choice.

As of yet no convincing contrary evidence has been presented, by any other party, to prove otherwise; so, on the face of it, the FSC and the management of KSF (IOM) ‘voluntarily’ handed the money over.

However, this doesn’t answer the question whether the ‘deposit’ was unlawfully ‘misappropriated’ once it was deposited in London.

Unfortunately, until the court papers, filed when KSF (UK) was put into administration by the FSA, are unsealed, it is not entirely possible to be sure if any ‘underhand’ tactics were employed by the UK authorities; and, if so, that they were deliberately aimed at ‘destabilizing’ the economy, or reputation, of the IOM.

What is not in doubt though is that the FSA did not ‘tip off’ the FSC that they were planning to put KSF (UK) into administration; and thereby prevented KSF (IOM) from trying to ‘recover’ the money before the doors were shut.

Whilst this may appear, to some people, as a bit ‘uncooperative’ of the FSA - although imagine the furore that would have been created in the UK if the FSA had tipped off the FSC, and it became public knowledge, which it surely would have done, that an offshore bank, in a tax haven in the Irish Sea, had been allowed to get its money out when other depositors, including charities were not - other people would probably suggest that the FSC, presented with a similar situation, would have acted in exactly the same way.

Be this true or not the fact remains that the FSC and the management of KSF (IOM) should have been alert to this risk. It will be interesting to find out how often they made inquiries with their opposite numbers in the UK as to whether KSF UK was adhering to the parameters laid down by the FSA in respect of its ‘imposed’ liquidity regime; and what answers they were given.

The Manx Herald has in fact posed these questions to the FSC, and the management of KSF (IOM), and if any answers are received they will be reported on in due course.