30-Mar-2016: Liquidators' Update, see Deloitte site

Press Release 20-Jan-09.


The Landsbanki Depositors’ Action Group (LGDAG) is setting the record straight regarding recent events, not least the comments in the media from Treasury & Resources Minister, Charles Parkinson and a letter received from the Chief Minister, Lyndon Trott. This is in the context of LGDAG’s ongoing three-month long fight to recover the seventy percent of their savings, currently at stake.

When both rescue schemes proposed by the Administrator, were discussed at theLGDAG’s recent meeting, attended by the Chief Minister, Treasury Minister Parkinson and Chief Executive Mike Brown, the LGDAG asked if both proposals had been put to all the Deputies. The four Action Group representatives were given to understand that Ministers, "took soundings among all Deputies", however at a meeting of over 100
depositors and a number of Deputies, which subsequently took place at Castel Douzaine, the LGDAG learned that this was not the case and that Ministers had apparently rejected the Administrator’s proposals without consulting the States, ie: all Deputies.

In light of this discovery, the LGDAG wrote to all the Deputies to present them with the proposals. This engendered a number of written replies from Deputies, which further confirmed that they had not previously received this information - contrary to what the LGDAG had understood from the meeting with The Chief Minister and Treasury Minister Parkinson.

In response to a subsequent letter from the Chief Minister, LGDAG has sought to set the record straight based on the facts and its members’ comprehensive understanding of them. A copy of this letter was also sent to all Deputies.

Treasury Minister Parkinson and the Chief Minister have been quoted in two different media sources over the past few days with what appear to be two different and conflicting messages. One claimed that, ‘the LGDAG had stated that Deputies had rejected the ‘idea’ of a Phantom Depositor Compensation Scheme (PDCS)’ while another said that, ‘plans for a PDCS had not been put to States members’. LGDAG would simply like to know which of those alternatives represents the reality.

The LGDAG were given information at their meeting which appears to conflict with what they are now being told by the Deputies themselves and which differs from what was released in a statement by Deputy Parkinson. The LGDAG suggests to Treasury Minister Parkinson and Chief Minister Trott that they must have misunderstood the position and calls upon them to make the findings of both schemes available to all States
Members, to put an end to this confusion.

On the issue of using tax-payers’ money, the LGDAG confirms that based on its understanding of the proposals – and contrary to the Chief Minister’s claim - ‘no taxpayers’ money would be expended to bail out LG depositors. The only cost to the States would be Civil Service time. Monies disbursed would return to the public purse and the reimbursement indeed may be greater than the initial outlay.

In brief, the States would underwrite commercial loans that would be backed by assets in the bank, which are greater than any required public contribution, through interest-rate intervention or loan guarantees. The States and the taxpayer would benefit from such loan structures, as the long-term return would be greater than any monies committed. The Bailiwick of Guernsey would also avoid significant negative publicity and the inevitable, unfavourable comparison with other Crown Dependencies and jurisdictions, by its facilitation of the return of deposits to the vast majority of savers.

As things currently stand, the Administrator has informed depositors that the earliest they are likely to receive any further repayment of their money, is towards the end of 2009 - nearly fifteen months after the collapse of the bank. The Administrator has also posed doubts about the return of 100% of depositors’ money without government intervention.

The LGDAG believes that the proposals put forward by the Administrator, which have now been circulated to the Deputies, and in particular a PDCS, would alleviate enormous stress particularly among older depositors in the bank, the eldest of whom is 97 and lives on Guernsey. Several other Guernsey-resident depositors with the bank are also in their nineties. Many elderly depositors relied upon the interest from their savings to live and that money is no longer forthcoming. Some savers may not survive long enough to see their money returned. Any acceleration of repayment, even by a few months, would obviously be welcomed, although not - it would appear - by the States of Guernsey, who deemed that an acceleration of a few months was, ‘not a worthwhile option’ and would,
‘be of marginal benefit’.

Based on his correspondence with the Deputies following the LGDAG’s letter to them, it appears that the Chief Minister believes there is no moral obligation to help local people and British citizens of the Bailiwick and elsewhere. Instead what he appears to be saying is that there is no moral obligation to help those British citizens who trusted in a Guernsey high street bank that was allowed by Guernsey to represent a worthless
‘parental guarantee’.

The LGDAG believes Chief Minister Lyndon Trott is really saying that the States simply has no interest in assisting depositors in this jurisdiction and feels no obligation to do so.

The LGDAG emphasises that there is a huge difference between asking for money from the States, which to date it has not, and there being a strong moral case for them to provide it. The group believes that there is an unequivocal moral and practical case for such financial assistance of which the Chief Minister is apparently oblivious, despite the minimal costs involved.

There was no apparent regulatory failure in the UK however Her Majesty’s Government clearly felt that it had a moral obligation to bail out Icesave - an Icelandic internet bank with no physical presence in the UK - over and above the levels set by any compensation scheme to the full extent of individual savers’ deposits.

While the Chief Minister has stated that ‘he will do all he can to help’ and the LGDAG would welcome this support, there has not yet been any tangible evidence of this to date.

In response to the Chief Minister’s claim that there has been no governmental failure, LGDAG wishes to point out that the clear recommendations for the introduction of a depositors’ protection scheme in the Edward’s Report in 1998 and GFSC’s consultation documents in 2002 and 2008, were ignored. LGDAG adds that the recent enquiry into
the GFSC’s actions was ‘lightweight’ and in its view, somewhat inconclusive.

Responding to Treasury Minister Parkinson’s statement, the LGDAG points out that it did not ask the Minister to use tax payer’s money, it asked whether or not the proposals had been put to the Deputies. The LGDAG will be seeking further clarification at today’s Creditors’ Meeting on these and other avenues to recover depositors’ money.

[Click here for a PDF copy of the release.]