Landsbanki Guernsey Fiasco

Saturday 26th September 2009

In a personal letter to the Guernsey Press, Guernsey’s Chief Minister Lyndon Trott fails

 

to address the new evidence showing possible neglect by the Guernsey Financial Services Commission over the

 “Landsbanki Guernsey Fiasco”.

 

Give Offshore Banks a Wide Berth. Guernsey Press 28th Sept 2009 -2.30pm

THE States has come under heavy criticism in the national press for not supporting investors who lost money in the Landsbanki collapse.

An article in The Times on Saturday launched an attack on the way Guernsey’s government dealt with the banking crisis and said the message to UK savers was clear: ‘If you value safety, you should give offshore banks a wide berth.’

The article by the paper’s deputy personal finance editor, David Budworth, said the savers involved were the forgotten victims of the credit crunch whom governments had ignored when they should have helped.

‘Pressure should be applied to the Isle of Man and Guernsey authorities to ensure that as much of their savings are returned as possible, as quickly as possible,’ he said.

The Isle of Man was at least trying, he said.

‘However, even faint praise cannot be extended to the Guernsey authorities. Worried about the damage to the island’s reputation, it has belatedly introduced a hopelessly inadequate compensation scheme, but it is not open to the Landsbanki victims.’

Chief Minister Lyndon Trott said his letter to the Guernsey Press, published on Saturday, adequately covered Guernsey’s view.

 

 

Letter to Press By Lyndon Trott CM Guernsey.

 

Posted on Saturday, September 26, 2009 - 09:56 am: 

FURTHER to recent letters on these pages relating to Landsbanki Guernsey, I thought it would be useful to address some of the key issues raised. 
Claims that the States of Guernsey have not seen fit to support the savers of Landsbanki Guernsey are simply not true. 1My support, on behalf of the States, of the court-appointed administrators, has been robust and consistent throughout this process. 2I share the administrators' hopes that legal action against the Icelandic authorities will not be necessary. However, it is important to emphasise that should litigation be pursued, it would not be for want of effort on the part of the States of Guernsey. 
3 I have personally raised the concerns of Landsbanki Guernsey depositors with the Icelandic authorities at the highest level, including with the Icelandic Finance Minister as well as the ministries of Foreign Affairs and of Business Affairs. 
Under Icelandic law, it is the Winding-up Board for Landsbanki which has the responsibility to take legally binding decisions on individual claims, subject to judicial review in the Icelandic courts. I met with the director of the Winding-up Board to press the case for an early, positive and amicable resolution of the claims of the joint administrators and the Landsbanki Guernsey depositors. 
I also put their concerns to the director general of the Icelandic Financial Supervisory Authority and representatives of the Icelandic Resolution Committee, which is responsible for collecting assets and maximising their value. 
4To claim that the States have not seen fit to support the savers of Landsbanki Guernsey simply is not true and, in my view, reflects poorly on those who choose to ignore the facts. 
I feel that it is also important to correct some misconceptions concerning the Guernsey Financial Services Commission, which have appeared in recent correspondence. 
5 A recent letter called for a full and public investigation into the actions of the GFSC in regard to Landsbanki Guernsey. 
Such a review has already been undertaken and is publicly available at 
www.gfsc.gg.6 The report, by Promontory Financial Group (UK) Ltd, led by Michael Foot CBE, looked into the circumstances leading to the placing of Landsbanki Guernsey Ltd (LGL) into administration and found that the GFSC measured up to good practice, that it met international standards and that there was no regulatory failure. Recent correspondence has suggested that the States of Guernsey should directly reimburse Landsbanki Guernsey depositors. Let me reiterate that it is the view of a majority of States members that the States should not spend public funds on this matter, a position no doubt shared with the vast majority of taxpayers. 
7The depositors' action group has itself said publicly that they have not asked for the taxpayer to bail them out. 
Nevertheless, current statements would indicate that some members of the group, at least, now want to put their hands into others' pockets. Understandably, the depositors seek fair and equal treatment in the handling of their claims with the Icelandic Government, and this is an aim which I have been consistent in supporting. 
However, as chief minister, I must balance the needs of the depositors with ensuring the fair treatment of all Guernsey taxpayers. 
In the view of the Policy Council of the States of Guernsey, that objective is being achieved. 
DEPUTY LYNDON TROTT, 
Chief Minister.

 

COMMENTS by this website
1 But failed to achieve anything, support by the Guernsey Government should be more than just assisting the Administrator. The Government has a political role seperate to the administrator and a responsibility to depositors who placed their money in a Guernsey regulated bank. They have failed miserably.
2 If it is necessary, it will be at depositors expense
3This was August 6, 7, 8, 2009, a short release on the visit was announced on the 10th August 2009 and todate (10th August 2010) apart from this personal letter to the press, no updates have been received.
4The Chief minister has never laid out the facts, in fact the Landsbanki Guernsey depositors have become used to learning absolutly nothing from him, despite asking many questions.
5Out of date and shallow in the first place, commissioned by the GFSC for the GFSC with their terms of reference and paid for by them. Commissioned solely to prevent litigation.
6The Chief Minister still clearly fails to address the new proof showing neglect by the GFSC in the way due diligence was carried out some some months prior on “Heritable”.
7The Chief Minister's favourate sentence when he is floundering for an honest open transparent response, bring up the Tax payer phrase, but here he actually accuses the depositors of wanting to put their hands into others pockets. All the depositors are taxpayers, 600 (approx) are Guernsey taxpayers and have contributed to Guernsey’s wealth over the years. The majority of the remainder pay tax through withholding tax. The depositors Action group never said that they would not accept help using taxpayes money, the majority of which would be paid back to Government as the Administrators  regained depositors funds. This would have boosted Guernsey's International reputation and assisted depositors.

CONCLUSION

No objectives by Guernsey's Government have been achieved to our knowledge and the prime objective, which is the return of 100% of depositors savings is certainly no nearer and will not be achieved, as we have said in the past, without Government aid and political intervention.

Guernsey still remains the only jurisdiction in the Western world to totally fail to assist depositors and with its inadequate Depositor Compensation Scheme must remain a place not to be trusted by depositors.

It is also one of the only places who have not held a totally independent Select Committee type inquiry into the actions both prior and immediatly after the 2008 banking crisis and in particular Landsbanki Guernsey.

 

 

September 26, 2009

The forgotten victims of the credit crunch

The panic may have subsided since last year, but many savers and investors are still fighting to reclaim their cash from collapsed banks

 

Mark Atherton

 

An extract from his report covering the “Landsbanki Guernsey” aspect.

 

A year ago the collapse of Lehman Brothers sparked a worldwide financial meltdown. Stock markets tumbled as investors ran for cover, while savers panicked and rushed to withdraw their money. Markets are calmer now and, for many people, the headlines screaming “markets crash” are a fading memory.

But for others the fallout from the credit crunch has blasted a gaping hole in their finances. The financial crisis engulfed both depositors with savings accounts and stock market investors. Both groups believed that they were putting their money into reputable organisations that would never go bust.

However, that belief proved ill-founded. Some savers and shareholders have taken a savage hit — and feel that their pleas for proper compensation are going unheard.