Letter to Guernsey Press  2^nd October 2009-10-06

By Mark Ashby

I MUST say I was shocked to see the chief minister accusing LG depositors of 'wanting to put their hands in others' pockets' (Guernsey Press letter, 26 September 09).
Why would anyone put their hand in someone else's pocket if not to steal their wallet?
The chief minister is therefore, by not-too-subtle implication, accusing Cheshire/LG savers of 'would-be theft' for expecting the Guernsey government to help depositors.
Just to put this expectation into context: the UK Government disbursed £7.5bn of public funds to reimburse UK Icesavers and the Isle of Man committed £193m. of public funds - yes, that's £193m. of Manx public funds - to repay Kaupthing IoM savers.
I have never heard anyone say - or even imply - that UK Icesavers and Kaupthing IoM savers are thieves. Not the Prime Minister, not the Chancellor, not IoM Chief Minister Tony Brown, not IoM Treasury Minister Allan Bell. Not even the general population of the UK or Isle of Man - or even the media.
What I have heard and read, though, is that helping stricken savers who placed their trust in their jurisdiction was the right, honourable, and economically sensible and logical course to take in order to safeguard depositors' savings, the reputation of the jurisdiction and the stability of the UK financial system to which the Crown Dependencies finance centres are so intrinsically linked.
In stark contrast to the huge sums disbursed by both the UK and the Isle of Man, it would cost Guernsey only between £3.4m. and £10m. over time, according to the chief minister's own briefing paper issued in June. Compared to the UK's £7.5bn and the Isle of Man's £193m. this is indeed a very small price to pay to safeguard the depositors' savings and the reputation of the Guernsey finance centre.
Ensuring the stability of the UK financial system to which the Guernsey finance centre is so intrinsically linked has already been taken care of by Chancellor Darling pumping billions of pounds of UK public funds, including UK taxpayers' money, into banks such as Northern Rock, Lloyds HBoS and RBS NatWest, which all have branches in Guernsey with substantial deposits.
Does this reliance on UK taxpayers' money for the survival of its own finance centre make the population of Guernsey thieves? No, of course not. The UK (and Isle of Man) simply took the right and moral course.
I would therefore urge the chief minister to:
1. Refrain from making accusations of would-be theft against LG savers and instead direct his energies towards making the necessary arrangements to make up the shortfall in lost savings from public funds - as the UK and Isle of Man have honourably done.
It should be remembered that taxpayers' money only occupies a percentage of the contents of public coffers.
A large part of public funds is composed of other income such as rates, ground rent, duties and excise, income from property sales, other government business etc.
It should also be borne in mind that Guernsey taxpayers include Guernsey-resident LG savers as well as expat LG savers via the EU Savings Directive.
2. Launch an independent public inquiry into the evidence of alleged negligence by the GFSC uncovered by the LGDAG (relying on a third-party assessment of the ring-fencing of assets held with Heritable Bank, rather than carrying out its own due diligence).
In contrast to the GFSC-funded Promontory 'whitewash', members of parliament in the Isle of Man are currently conducting a proper public inquiry into the failure of its own IoM FSC-regulated Icelandic-owned bank. Guernsey needs to follow suit.
MARK ASHBEY