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ICELAND CRISIS: Angry Icelandic Government to Sue Britain in Kaupthing Fury
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by Christina 123 | October 9, 2008 at 01:02 pm
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FURIOUS Icelandic ministers are today pointing the finger of blame for the collapse of their largest bank, the Kaupthing, at the British government. Legal moves are being taken after Gordon Brown PM used a 2001 Anti-Terrorist Law to freeze the assets of a Kaupthing owned unit in England by having one part taken over by ING and the other by Administrators, claiming a default by the bank in not being able to protect savers' interests.
So far, administrators have sold off £4bn worth of Kaupthing assets. The diplomatic breakdown comes shortly after a furious Gordon Brown accused the recently nationalised Landesbankki of acting illegally when thousands of British savers were unable to access their accounts with the bank's internet arm, Icesave. Hundreds of millions of pounds of local authority money from all over the UK is tied up in Icelandic banks.
' rel="nofollow">http://uk.reuters.com/...ws/idUKTRE49B3TK20081012"]LONDON (Reuters) - The Icelandic government has appointed lawyers to look at suing the British government over comments made about a UK subsidiary of Kaupthing Bank, a day before it collapsed, a media report said on Sunday.
Warnings by the Treasury that action had been taken to protect retail depositors in Kaupthing, Singer and Friedlander, may have led savers to think its assets had been seized, a lawyer for the government told Channel 4 television.
The following day the Icelandic government took control of the country's biggest bank and halted all trade on its stock market.
"They should have been aware that this would caused the collapse of the Kaupthing business in Iceland, which it seems to have done," Richard Beresford of Grunberg, Mocatta Rakison said.
"Certainly according to the Kaupthing board, this is their conclusion which they have reached.
"Then, yes, potentially the British government will be liable to shareholders and creditors of the Kaupthing Business in Iceland and therefore the potential compensation would be substantial ... potentially billions of pounds sterling."
A letter sent from the Prime Minister's office to Iceland's authorities this weekend made it clear Britain had only seized assets belonging to the UK subsidiary of collapsed Icelandic Bank Landsbanki, the programme said.
"To clarify the situation regarding Icelandic companies, I am confirming it is only Landsbanki's assets that have been frozen in the UK... No other Icelandic company's assets have been frozen."
A spokesman for Iceland's Finance Ministry told the programme: "It is no good telling us now that Kaupthing's UK assets have not be seized. It's too late, the whole bank has collapsed."
DIPLOMATIC relations between Britain and Iceland fell to an all time low tonight as a bitter row broke out between the deposed directors of Iceland's largest bank the Kaupthing and furious British Prime Minister Gordon Brown who is suing the Icelandic government for £1bn for failing to let British investors access their funds in Icesave, an internet banking arm of the no. 2 bank, Landesbankki, nationalised by Iceland on Monday. "It is quite illegal", stormed Mr. Brown in an interview with BBC's political commentator, Nick Robinson.
Kaupthing – among Britain's 20 largest banks – became the third financial institution to be taken over by the Icelandic government this week, after Chancellor Alistair Darling seized its UK operation on Tuesday and ruled out help through the bail-out.
Sigurdur Einarsson, the bank's chairman, said the seizure of the UK arm directly led to the collapse of the entire group. "It is very sad, unfortunate and disappointing," he said.
Meanwhile a fierce diplomatic row broke out between the UK and Iceland with Prime Minister Gordon Brown accusing Iceland of "completely unacceptable" behaviour by not recompensing UK savers in the failed Icesave bank. Mr Brown said he is freezing assets of Icelandic companies in the UK as a result.
Mr Einarsson said that Kaupthing wanted to take part in the UK government's rescue plan, but was rebuffed – the catalyst for its collapse just hours later.
"We are not Barclays, HBOS or Lloyds TSB, but I believe we are the twelfth largest bank in the UK and we were not allowed to participate in the rescue plan. We asked and the answer we got was a firm no," he said.
He added that a "significant number" of Kaupthing's 30,000 shareholders were British investors, whose stakes were wiped out when the Icelandic government put the bank into receivership yesterday.
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Christina 123
LONDON, United Kingdom
Most RecentMost Recommended Comments (10)
at 13:18 on October 9th, 2008
Christina 123, I like this story. It's good stuff.
Good for Gordon Brown at least for saying something!
at 13:54 on October 9th, 2008
Thanks, Amy, that's what I thought: Gordon Brown showing his clunking fist at last!
at 14:05 on October 9th, 2008
Yeahh... It's easy to stand tough finally when you can find a defenceless enemy. His solution for financial crisis is to kick the one in crisis down and grab the wallet.
Pitiful and cowardly words by Brown trying to score points for support.
at 14:19 on October 9th, 2008
Christina 123, I like this story. The Icelanders lived like Kings promising taxfree accounts, investing the money in poor speculation, the situation was known since february. Everbosy silent it will work out, no it did not.
at 21:11 on October 9th, 2008
Christina 123, I like this story. It's good stuff.
at 21:39 on October 9th, 2008
Christina 123, I like this story. It's good stuff.
at 23:04 on October 9th, 2008
Christina 123, I like this story.
Hreiðar Már Sigurðsson (CEO),
Sigurðsson paid the highest taxes for the year 2006 of all residents in Iceland, over 400 million krónur. Assuming that almost all of that was paid at the 10% rate of Capital gains tax, Sigurðsson's 2006 income was on the order of 3-4 billion krónur (approx. 40-50 million EUR).
In 2007, Kaupthing Bank had net earnings of €812 million, compared with €986 million in 2006. As of 31 December 2007, the bank had a total assets of €58.3 billion On Wednesday, October 9, the Icelandic Financial Supervisory Authority nationalized Kaupthing after the resignation of the entire board of directors. I wonder if the board of directors had their assets frozen? The point is the real reason for this bank going down is bad investment in the finacial market place, the former directors will of course blame this all on UK. But there has been a problem of UK investors not being able to draw their money out and these investors were lured by tax free banking unfortunatly why should the Prime Minister of UK bail out this bank with tax payers money. I feel sorry for those that lost money, but as a tax payer why should my taxes money pay for their gamble. Seemingly the guys running this bank think after twelve years earning hugh salaries that they can just walk away leaving the blame on UK.at 00:55 on October 10th, 2008
I disagree with the 'all time low' assesment. It's pretty bad between the two countries, but not as bad as 1976, and it's in both countries interest to sort it out. www.skynews.com/foreignmatters
at 17:46 on October 10th, 2008
Although everything you said is true, some facts are missing. What happened was that the head of Iceland's central bank said that the Icelandic government would not pay everyone's debt. What he meant was all the Icelandic banks debts and besides that's not his decision to make. Even the Prime minister of Iceland told the chancellor of the exchequer that Iceland would pay, they were simply trying to find the means. But Mr.Brown not quite fluent in Icelandic saw a chance to maybe win back some votes and acted like they wouldn't pay at all. Reacted harshly and even indicated that the republic itself was going bankrupt. Then no other of those so called friends or neighboring states would touch them because any loan to them would be lost money. Then the Icelandic government was forced into the hands of the Russians who are very willing to give them the loan. But simply being friendly probably is not why they are so very willing.
What Mr.Brown did was like kicking a lying sick man. If Iceland goes bankrupt a large chunk of who to blame will fall into Mr.Browns lap.
at 13:00 on October 11th, 2008
As I understand this grotesque dispute now, Mr. Gordon Brown and Mr. Alistair "believe it or not" Darling want Icelanders as a nation to retroactively take more responsibility for the mistakes of those banking geniuses than was the legal due. I fully support paying all that I am legally responsible for in this matter. After all, those financial wizards were to some extent operating on my (unwitting) credit. But I greatly resent being called a crook collectively with all Icelanders just because my government hesitates to cry uncle while receiving a brutal arm-twisting by brave sir Gordon.
We will of course need time to pay this unless the British want to be paid in Icelandic currency. For the last few days Icelandic currency has been about as popular as radioactive waste, so I imagine the British would rather wait for something else. Sir Gordons brave attacks against us are not helping us collect the funds needed.