Saturday, September 19, 2009

It's time to address moral failures in the Isle of Man

On 18 September Paul Myners, Financial Services Secretary, addressed the Financial Times Global Finance Forum on the topic: Developing a new financial architecture: lessons learned from the crisis

In it he said that the fundamental role of any country’s financial sector is to manage risk. "Risks have become increasingly complex, opaque and inter-linked; and it is now clear that the assessment and management of risk by financial institutions failed....But we also learned that that power of the financial system was not matched by responsibility for its actions, creating an accountability gap that has had to be filled by taxpayers across the globe."

That is what happened when the directors of KSFIoM transferred half the bank's liquid assets to KSFUK which were then lost in administration. The directors failed to exercise due diligence when confronted with the known risks of the Kaupthing hf scenario, and the inherent risks to which its sister banks were exposed on account of it. Today they still refuse to accept any responsibility for their crass decision. They refuse to give account - or offer an apology - to the depositors who lost everything through their action.

In advance of its own Select Committee of Inquiry the IoM government has been quick to pronounce the directors, and the FSC that supported them, innocent of any culpability. Blame is placed at the door of others in order that the directors & the FSC could be excused from being held accountable.

Mayners went on to say: "Corporate leaders in the global financial sector have begun to talk about addressing moral failures and that is to be welcomed... it is time to start hearing how they intend to drive moral reform within their institutions."

Now that is an interesting concept that seems to be beyond the current thinking of the IoM government, the FSC and the finance houses of this offshore financial centre. Any notion that they have a moral responsibility to uphold the trust that depositors placed in a bank on this island does not feature in the values they hold.

It is time that we started to hear how the IoM government intends to drive moral reform within itself & its institutions. Until it does people will not trust it. Until then the message to the people of the world is: DON'T BANK ON THE ISLE OF MAN as it is an offshore centre that has no moral integrity. It has no interest in people, only their money.


  1. Agree totally. The Isle of Man financial industry still has time to save itself but just saying 'not our fault' will not help it achieve this. People are not fools and will see that anyone who can let this happen and then proceed to do nothing in response cannot be trusted with their money.

  2. Kaupthing - Isle of Man savers were cynically sacrificed as a quid-pro-quo for IOM miraculously avoiding the UK Treasury's "tax haven black list". Judas' 30 pieces of silver translates into a £ 24,000 salary increase in 2009 for the person who authorised the upstreaming of half of KSF-IOM's assets on the day that UK Treasury had to cover the losses of KSF-UK. Some coincidence.
    The moral failures here stem from the conspiring of two governments to cover their own backsides at the cost of the life savings of around 10,000 depositors, mostly retired expat workers, who are spread around the world and thought to be politically insignificant, thus unimportant. The human misery that they have caused does not touch them, and the blood that is on their hands does not worry them.
    Some “democratic” governments seem behave like organised criminal organisations, seizing the property of others, passing laws to protect and exempt themselves from prosecution, using the courts, parliamentarians, police, and military to enforce their actions. An indifferent public never think that it may some day be their turn to be done over by ruthless politicians. Democratic governments are becoming a sham in the 21st century.

  3. Quite right. Let those responsible for the total mismanagement of our funds take the blame and refund us 100%. The campaign don't bank on the Isle of Man is only in its infancy.
    Hope the IOM residents still like kippers and growing flowers.

  4. "Kaupthing - Isle of Man savers were cynically sacrificed as a quid-pro-quo for IOM miraculously avoiding the UK Treasury's "tax haven black list". "

    Pure nonsense, I'm afraid. The Isle of Man met the OECD whitelist criteria since it had Tax Information Exchange Agreements in place with 14 countries (including 12 OECD nations). The goalposts were moved only on behalf of Jersey and Guernsey, which both had 12 TIEAs in total (not all with OECD nations).

  5. Meeting the OECD whitelist criteria does not make the IoM whiter than snow. The latest research shows that the IoM is only 17% transparent in the way it conducts its offshore financial business. This makes it a secrecy jurisdiction which hides the wealth not of depositors but of megga rich people who are averse to paying taxes & can afford the cost involved to escape from doing so.

    The IoM is wealthy but it is morally bankrupt.

    Frank R (Wirral)

  6. When ‘investors’ in the Isle of Man based Premier Low Risk Fund plc first complained to the IoM regulatory authorities about the misleading advice that persuaded them to transfer their life savings to the island they were told that they were only complaining because the Fund had lost (a lot of) money.

    It did not occur to the Isle of Man government that these pensioners were law abiding people who had never been involved with shady dealings before – and irrespective of their life savings losing or gaining they did not want to be involved with people who promised one thing and then did another.

    The Isle of Man regulatory authorities do not consider morals and ethics of primary importance and tend to assume that other people share their same lack of principles. This attitude is so deeply ingrained that it comes as something of a shock when decent, law abiding people complain.

    Repeat after me … “Never invest or deposit savings in Isle of Man based financial products or banks.”