Meeting with Icelandic Ambassador to the UK Sverrir Haukur Gunnlaugsson – 20 October 2008

Meeting with Icelandic Ambassador to the UK Sverrir Haukur Gunnlaugsson – 20 October 2008

Kaupthing Singer & Friedlander Isle of Man Action Group
Primary points arising from the meeting with Iceland’s Ambassador to the UK Sverrir Haukur Gunnlaugsson – 20 October 2008
1. The representatives of the group met the Ambassador at the Icelandic Embassy in London and made four requests:
a. That the Icelandic government, as primary stakeholders in Kaupthing Hf (parent of Kaupthing Isle of Man), honour a guarantee given by the parent bank to safeguard 100% of all deposits held within Kaupthing Singer & Friedlander Isle of Man.
b. That the Icelandic government confirm that, should Kaupthing Hf be restructured in a similar way to the two other failed Icelandic banks, that the guarantee of KSFIOM’s deposits would be transferred to the new structure and remain in force.
c. That the Icelandic government confirm that when the Icelandic Prime Minister stated on Channel 4 news that Iceland would honour its overseas obligations, this included an obligation to honour the guarantee given by Kaupthing Hf to KSFIOM.
d. That in any negotiations with ally countries or organisations such as the IMF, the Icelandic government remember its obligations to the depositors in KSFIOM.
2. The Ambassador confirmed that all four points would be passed on to the Icelandic government.
3. The representatives of the group briefed the Ambassador on the situation the depositors in KSFIOM find themselves in, including the following:
a. A large number of depositors, as British expatriates, had no option but to seek banking facilities in the Isle of Man as they were precluded from banking in the UK due to their overseas residence.
b. The failure of KSFIOM has had the affect of wiping out the life savings of thousands of depositors saving for their retirement, as well as those who used the bank for everyday banking activities.
c. Depositors in KSFIOM are not limited to bank account holders but also bond holders and those whose pension schemes invested with the bank.
d. A large proportion of depositors came to be with KSFIOM as a result of the takeover of the Derbyshire Building Society (IOM). At the time of the takeover further reassurances were given to depositors regarding the 100% guarantee of their balances.
e. 60% of balances belonging to KSFIOM were being held within Kaupthing UK at the time that Kaupthing UK was placed into administration by the UK government.
f. It was the failure of Kaupthing UK that led to the subsequent failure of KSFIOM.
4. The Ambassador stated that the Icelandic government believes it was the actions of the UK government in the week commencing October 6th 2008 that led to the failure of Kaupthing UK and as a result to the apparent loss of all the KSFIOM deposits held within that entity.
5. To illustrate the above point the Ambassador made the following statements:
a. On 8 October 2008 Alistair Darling stated in a public forum that the Icelandic Government had informed the UK authorities that it has no intention of honouring its obligations in the UK.
b. The Icelandic government denies that any such message was conveyed and, to this date, the UK government cannot supply the name of the person in the Icelandic government that supposedly delivered the message.
c. In a press conference later in the day Gordon Brown and Alistair Darling suggested that Iceland was a bankrupt country and that it could not meet its worldwide obligations.
d. On the same day the UK Government instructed the FSA to seize (please notice that this is different to ‘freeze’) the assets of Kaupthing UK.
e. On October 9th Gordon Brown used a ‘walkabout’ in Birmingham to inform the press that the UK would be freezing numerous Icelandic assets in the UK. The Ambassador was keen to point out that the Prime Minister was including non-banking institutions in this statement, institutions such as high street retailers with significant Icelandic interests.
6. The Ambassador believes that the actions of the UK government helped destroy belief in the Icelandic economy and caused a run on the Icelandic banks including Kaupthing UK.
7. It wasn’t until the evening of Saturday 11 October that the Ambassador received clarification from the UK government that, contrary to Gordon Brown’s statements on 9 October, only the assets of Landsbanki were frozen. By this stage the Ambassador believes the damage had been done and the credibility of the Icelandic economy had suffered a fatal blow.
8. The Ambassador confirmed that Kaupthing Singer & Friedlander UK was a solvent, liquid bank up until the UK government’s actions on 8 October and that its balance sheet was ‘one of the strongest of all the banks in the UK’.
9. The Ambassador pointed out that other Kaupthing Bank companies around Europe had been taken over by other institutions with little effect on depositors and it was only here in the UK, where the government took such drastic action, that repercussions such as the demise of KSFIOM are still being felt.
10. Here the Ambassador expressed the disbelief of the Icelandic government at the fact that the UK government had used anti-terror legislation to freeze and seize assets of a ‘NATO Ally’ and ‘a member of the European Economic Area’ and therefore in effect branding Iceland a ‘terrorist state’.
11. The meeting ended with the Ambassador accepting a petition from the Kaupthing Singer & Friedlander Isle of Man Action Group and agreeing to convey all the discussions to the Icelandic Government.
The Kaupthing Singer & Friedlander Isle of Man Action Group would like to thank the Icelandic Ambassador to the UK for taking the time to hear our plight and our points of view in the absence of an appointment. It has been noted that our plight has now had the public attention of both the Icelandic Prime Minister and the Icelandic Ambassador to the UK whilst our own government remains silent and seemingly unconcerned about the situation of its citizens.

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