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Robert Tchenguiz: Borrower from Kaupthing and investor in Kaupthing

Robert Peston | 13:57 UK time, Wednesday, 9 March 2011

The first thing to say about the arrest of Robert and Vincent Tchenguiz by the Serious Fraud Office, in connection with its probe into the collapse of the big Icelandic bank, is that both men deny wrongdoing.

The second thing to say is that the relationship between Robert Tchenguiz and Kaupthing was pretty unusual, according to the formal investigation into the Icelandic banking crisis carried out by a commission set up by the Icelandic parliament.

The commission disclosed the following facts.

1) Robert Tchenguiz was given a loan facility of around €2bn (£1.7bn) from Kaupthing's parent company, a further €210m (£180m) from Kaupthing Bank Luxembourg and €95m (£82m) from Kaupthing Singer & Friedlander in the UK. So Kaupthing provided Robert Tchenguiz loan facilities of just over £2bn in total - a fair old chunk of change.

2) The commission says that "the big increase in loan facilities to (Robert) Tchenguiz from January 2007 until October 2008 is noteworthy, in light of the fact that in late 2007 many of Tchenguiz's companies started going downhill. The minutes of the loan committee of Kaupthing Bank's board state, inter alia, that fairly often the bank lent money to Tchenguiz in order for him to meet margin calls from other banks". Or to put it another way, Kaupthing lent Robert Tchenguiz money so that he could repay other banks, which wanted their money back.

3) Robert Tchenguiz "owned at least 1.5%" of Kaupthing Bank's shares in his own right. He was also an investor in and director of Exista, which was Kaupthing's biggest shareholder.

4) Robert Tchenquiz put up his shares in Kaupthing as "collateral for loans from that same bank". Which is highly unorthodox. It is not standard banking practice for a bank to lend money to someone with shares in that bank being provided as security against the borrower's inability to repay (it is a banking equivalent of one of Zeno's paradoxes).

So what do we conclude? Well it is clear that the relationship between Robert Tchenguiz and Kaupthing was deep and close.

Comments

Page 1 of 3

  • Comment number 1.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 2.

    Like Madoff, these people do not believe they are doing anything wrong - Madoff denied being a bad person, Ken Eisold, psychoanalyst here:
    http://www.mindfulmoney.co.uk/wp/plenty-of-white-collar-crime-but-where-are-the-criminals/
    diagnosis him a 'narcissist' an inability to tolerate the guilt and shame of exposing his wrong doing and destroying the idealized image he had cultivated for so many years.

    I think that this may be a similar case of narcissism.

  • Comment number 3.

    FT Alphaville has a more in-depth piece on Robert Tchenquiz "unconventional funding strategies". Overall loan to value ratio of 98.6% at September, 2008?

    http://on.ft.com/i3TVEi

  • Comment number 4.

    ...so why did you block my explanation of how the Government intends to swindle the taxpayer (again) by claiming a profit in Northern Rock when it's finally sold back to the private sector?

    Nobody can even comment on this story - it's an ongoing investigation - everything will be subject to prejudicial anyway.

    Even the tabloids have worked this one out - that's why comments aren't allowed on stories that are ongoing.
    You need to speak to your legal department.

  • Comment number 5.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 6.

    Hi

    Please could Robert Peston and / or the other knowledgable commentators explain exactly what the issue being looked into is?

    Is it simply that the loan facility was "unorthodox" but all else was in order, ie interest paid at commercial rates, capital repaid on time?

    Or were there subsequently defaults etc and thus a significant loss to the Kaupthing Group as a result?

    If it's the former, of course it's worth checking into to ensure that proper procedures are followed from now on, but at the end of the day no harm done, and not fair to compare to Madoff, no basis for "pilfering" accusations, etc.

    If it's the latter, then the allegations (and at this stage that's all they are, the brothers have denied all wrongdoing) are potentially far more serious.

    Anyone know?

  • Comment number 7.

    #WOTW

    In answer to your blog on a previous subject, yes the Judge being arrested by the protestors because he wouldn't confirm he was on oath in the lawful disobedience hearing was exactly what I was referring to. The people fight back against the corprorate intrigue, I said this was being arranged but got mocked as usual.

    Watch this space ;-)

  • Comment number 8.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 9.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 10.

    So its ok to report and post on the arrest of some borrower but not on the "arrest" of a judge.

  • Comment number 11.

    I think that this is a story that is going to run and run. I briefly heard about this on the 'Daily Politics' show this lunchtime. Thanks Robert for highlighting this story.

    I'm not sure how this will effect the on-going story about banks, but it appears to show the rather 'sleazy' world operated by the financiers and business people around the world.

    I can say nothing about this current situation as I have no further information, however I feel a storm building in the media.

    I think there is more to be learned.

  • Comment number 12.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 13.

    It might all be irrelevant anyway.

    We won't get any money back if it needs to pass a referendum in Iceland, I.m just waiting for the new Irish govt to announce that the bail out there will need to be agreed by the same method?
    That base rate plus whatever were charging them won't look such a good deal then?

  • Comment number 14.

    When will society step in and put an end to the finance wild west show. There is obviously a lack of political will that has carried over from the last Labour government.

  • Comment number 15.


    Robert is obviously very wary of what he can / can't say due to the legal status of the issue, which maybe begs the question why blog at all on it if he / others are limited in what they can say.

    The Tchenguiz certainly seems like interesting characters.

    Raises a number of issues such as cross border ownerships, transparency of ownership, gambling / investing with loaned money (OK on the up, too bad for the investors on the way down), too much power being held in the hands of the few, the Icelandic bubble (bubbling mud maybe), is making money luck or skill?, reckless lending from institutions, nature of a boom (ie merely spending other peoples money), the danger of leveraging on property when the price of property is based on such a fickle thing as confidence, the nature of a security on such a fickle asset and so on.

    Given the wealth involved it would be interesting to know how much tax was paid by the above characters in the UK...

  • Comment number 16.

    ""collateral for loans from that same bank". Which is highly unorthodox. It is not standard banking practice for a bank to lend money to someone with shares in that bank being provided as security against the borrower's inability to repay (it is a banking equivalent of one of Zeno's paradoxes"
    -------------------------------------------------------------------------------

    So which of the "you have to pay the best to get the best" banksters allowed this one?
    Can I put up my shares in Lloyds TSB up as collateral for a loan from them?
    Or perhaps I should go to RBS?

  • Comment number 17.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 18.

    LTV 98.6% Secured partly on the value of shares????????

    This was seen by the board of the bank, those clever banksters, secured on shares, oh dear oh dear even Cap't Mainwaring would have seen that one coming!

  • Comment number 19.

    #12

    the file attachment that had £50 ;)

    Don't know, but I have had other posts moderated out that were on topic, but there is no way I know of to challenge the moderation decision

    Back on topic - there will be a lot of speculation and debate as to whether the unorthodox was illegal and until then I think it would be wrong to speculate.

  • Comment number 20.

    I have no knowledge about any of the specific dealings and events or the individuals Robert writes about - my comments are of a general nature about banking culture in the run up to the Icelandic meltdown, the Madoff Ponzi swindle and the US credit crisis which then spread around the world.

    Firtly I remember hearing an interview with a lady in the steet in Iceland when their banking system imploded - she said that the rights of barely a dozen individuals to exercise their freedom to engage in the sort of greed led to the collapse in Iceland, which has left the entire population deeply in debt for a generation at least cannot be fair, moral or acceptable - their rights to engage in taking gambles on this scale affected every person in that country and individual rights should not be at the expense of everyone else's.

    Secondly, I happened to have direct knowledge of a UK based NASDAQ Small Cap company whose management IMHO simply ran the company into the ground through "toxic financing" using a NASDAQ method to raise money through discounted shares to intermediaries, who could then sell them into the market and make a margin. I tried hard to warn small investors that their money was being poured down the drain by posting on bulletin boards, but predictably received endless legal threats to shut me up about it. In all, for a company with barely 50 staff at the top, they managed to get through $100 M of shareholders' money -despite complaints to the NASDAQ, SEC and UK authorities, nothing happened, except a series of "pump 'n dump" cycles which market makers like Bernie Madoff's company was involved in, turning over millions of shares - the typical retiree shareholders in Florida lost the lot.

    In the US following the credit crisis, we've still to discover the full story about what really was going on, but the film on release now "Inside Story" paints a picture of systematic fraud, mismanagement and naked greed at the heart of the system.

    My point is this - why do we go on believing in the myth of the financial entrepreneur and his/her god-given right to chase personal wealth in this way, whilst we the rest of society are then expected to bail out the system they have brought to its knees?

    We see no sign of any punishment for UK institutions or their managements for the UK banking crisis - OK some people have gone, but is it right that it appears that no laws were broken and therefore no one is in jail?

    If this is the case, then our laws need tightening and our investigators and regulators need to go after potential offenders to ensure that those responsible get the sort of punlishment that Madoff is currently receiving - so the alleged behaviour "gentlemen" like Robert and Vincent Tchenguiz and Kaupthing Bank faces effective regulation and law to protect the public interest and to punish harshly offenders who are found guilty under it.

    Meanwhile as a society I think we need to set our faces against this greed culture, we need to ostracise the "get rich quick" City culture and we need to start to rebuild our economy away from financial services and towards a sustainable future not built on imported oil and speculators backrolled by our taxes.

    Of course there are those in the City who threaten to vote with their feet and leave the UK. I'd say we need to take this seriously - I'd say offering to pay for their one way air tickets would be a good long term investment, if the story of Iceland's banking collapse is anything to go by.

  • Comment number 21.

    This is another so-called property empire built on the belief that property prices can only go up, never down! Banks also lent money based on this idiotic nonsense!

    The property price boom from 1997 - 2006 in the UK was driven by speculation, stupidity, fraud and greed.

    We will see many more similar stories in the months ahead.

  • Comment number 22.

    "Or to put it another way, Kaupthing lent Robert Tchenguiz money so that he could repay other banks, which wanted their money back."

    Bit of a clue that.

    If someone wants a loan from our Credit Union to pay off their credit Card, cos they want their money back, and they are already in debt beyond their means- guess what they don't get the money. I suppose that makes us a responsible lender.
    I suppose the banking apologists will be mocking me again.

  • Comment number 23.

    #14 I think the process actually started in the 80s with the property fueled boom and the fire sale of nationalised concerns. And the attendant abandonment of our manufacturing base. That's when the economy was placed firmly in the grasp of financiers.

  • Comment number 24.

    > both men deny wrongdoing.

    But there's never smoke without fire, is there?

    > So what do we conclude?

    I conclude that they should be sent to Reykjavik right away. There are many Icelanders who would just love to get hold of them.

  • Comment number 25.

    Actually I think the security works? If Tchenguiz defaults and the bank makes him transfer the shares to its treasury account under the terms of the security, and then cancels them, the effect is to increase the proportion of the bank owned by the other shareholders in the bank, compensating them for the loss caused by the default.

    So (to use made up numbers), imagine a bank is worth £10m and a shareholder owns 1/10th of the shares (10 out of 100 shares), and takes a loan of £1m from the bank secured on the shares (which are worth £1m also). He then defaults, and the bank's balance sheet takes a hit of £1m as the debt is written off. Let's assume the bank is now worth £9m. The 10 shares are transferred back to the bank for no cost and cancelled. The remaining 90 shares now own a bank worth £9m - 10 shares are still worth £1m.

    The part of this that doesn't quite fit is that the £1m hit on the balance sheet does not necessarily correspond to a fall of £1m in the market capitalisation. But in fact, I would have thought the fall in market value would be less rather than more than £1m? Could be wrong though.

    So I think it's odd, but not obviously fraudulent on anyone.

  • Comment number 26.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 27.

    Here we go again. former state owned businesses were not 'fire sold' - that suggests they had fabulous hidden value not realised by the former owners, hardly true for Rover was it? Or BA. Next, manufacturing. As an example, we make more motor vehicles in the UK today than even before, hardly an abandonment. we make more aerospace components by value than ever before, hardly an abandonment. we make more than £40bn a year in flows of valu into the UK from our financial sector which includes pensions, insurance as well as banking. Lastly, if the shareholders of an Icelandic bank want to mess around with their finances, so be it - that's an argument about transparency, not banking

  • Comment number 28.

    23,

    It probably started when Adam and Eve shared the apple.

    Greed and stupidity are not new things, nor amorality.

    Which maybe begs the question of what good are codes of conduct and regulation when the people who are supposed to be regulated are concerned only with their own enrichment and have no concern for society. Regulation just sets obstacles to be overcome / worked around rather than boundaries.

  • Comment number 29.

    All this user's posts have been removed.Why?

  • Comment number 30.

    @ 3. At 14:42pm on 9th Mar 2011, Sumproduct wrote:

    > FT Alphaville has a more in-depth piece on Robert Tchenquiz
    > "unconventional funding strategies". Overall loan to value ratio of
    > 98.6% at September, 2008?

    That's what many of the "City" darlings do. They go as far out on a limb as they can, claiming they have "talent" or "merit". There was a chap on about how much "merit" he has, only this morning.

    Then they crash down, but others loose the money. That bloke who's hunkered down in Guernsey after blowing all his money on EMI was in the same game - the "here today, gone tomorrow" crowd. Before that, there was some bloke at Polly Peck playing the same game. They're always at it. Look at Sir Greedie, for another example.

    Dickens mentions debtors and debtors' prisons in many of his novels. In those days, people did the right thing with these chumps, and made their lives not worth living. Now we give them a "cell" at the Hilton!

    It's all got to change, you know.

  • Comment number 31.

    #27 Peter Bench

    The point I'm making is that privatisation fueled the markets. The Water board, gas board, National Rail, electricity generating board, BT, national coal board, British Steel, council houses through right to buy and restriction on spending money to replace stock... Call it what you will it fueled the market and helped make the City the focal point of business activity. None of it improved the service to the people of this country despite the spin.

    I don't know what the motor manufacturing output was then but I'd wager as a percentage of market share it had gone down. And then we funded imported motor manufacturing bases through immensely lucrative investment subsidies and restrictive trading practices (that capped the percentage of Japanese imports). But that's only one aspect.

    Not to say that the restrictive practices of the Unions did not need to be addressed, they clearly did but their damage to the economy was far less severe than that wreaked by the bankers. And our subsidy of them (in real terms) was less.

  • Comment number 32.

    7. At 14:51pm on 9th Mar 2011, NorthSeaHalibut

    This event is far more important and significant than any we've seen before. Luckily the MSM have missed it completely - instead they are chattering about bonuses and wealthy crooks (like we didn't know they already exist).

    I can't say too much - and nor can you - this is the problem with "free speech" - it's only free until the Government instructs the media to suppress it.

    The revolution has begun - and here we have one of the bankers that the banking sychophants idolise identifying the same problems we have been banging on about for a long time now.

    http://news.sky.com/skynews/Home/Business/A-Senior-HSBC-Economist-Warns-Of-Food-Riots-In-The-UK-If-Prices-Continue-To-Soar/Article/201103215948496?f=rss

    Lets hope this economist is wrong (like the rest) unfortunately I am inclined to agree with this piece of 'realism' dropped on the unsuspecting public.

    Oh dear - a dilemma for the sychophants - do they trust the banker - or do they dismiss the banker?

    Decisions....decisions....which way will they turn to explain this one away?

  • Comment number 33.

    2. At 14:40pm on 9th Mar 2011, Marco82 wrote:

    ...I think that this may be a similar case of narcissism.

    And to make matters worse, it would appear that narcissism is on the rise in US students.

    http://www.smh.com.au/lifestyle/lifematters/new-generation-infected-by-narcissism-says-psychologist-20110302-1bewf.html

    Couldn't be anything to do with the economists and bankers behind the 2008 crash now teaching economics at Harvard could it.

    Watch Inside Job, it explains everything.


    http://www.smh.com.au/lifestyle/lifematters/new-generation-infected-by-narcissism-says-psychologist-20110302-1bewf.html

  • Comment number 34.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 35.

    tick ...tock ...tick ... tock ....move along ladies and gentlemen ..nothing of interest to read here.

  • Comment number 36.

    29

    Fully accept that a lot of early Madoff investors creamed it - I'm referring to the people who were sold the bum stock of the UK company that was NASDAQ listed to which I referred who had no direct relationship with Madoff at all - without exception, everyone who bought in the US float of this UK company lost their shirts, but for those over here who knew the reality of the business compared to the picture the management painted, it was plain IMHO that long before the company went bust how it would end, yet no amount of jumping up and down with either the NASDAQ, SEC or DTI here resulted in any action to prevent it, or to protect small investors from being repeatedly pump 'n dumped through carefully timed PR puffs and stock washing to generate trades, which allowed discounted stock to be salted back into the market at a profit - indeed an uncharitable person might conclude that a company doing this might be able in effect be able to print money in the shape of its own shares - literally billions and billions of them through doing "reverse splits", all right under the noses of the NASDAQ and the government regulators.

  • Comment number 37.

    Creditunionhero at 22:

    'If someone wants a loan from our Credit Union to pay off their credit Card, cos they want their money back, and they are already in debt beyond their means- guess what they don't get the money. I suppose that makes us a responsible lender.
    I suppose the banking apologists will be mocking me again.'

    Absolutely not. What you do is valuable. But what's your funding model? If you don't lend out customer deposits (ie fractional reserve banking) where do you get the money from that your customers can borrow by credit card or mortgage?

  • Comment number 38.

    @2. Marco82 wrote:

    "I think that this may be a similar case of narcissism".

    Why stop there? Goldman Sachs', CGI's and Lehman's top people didn't think that what they were doing (or were knowingly complicit in) was wrong either Nor any of the other culprits.

    And they, unlike Tchenguiz, have not even been charged with suspicion of wrongdoing; it's all been brushed under the carpet because the US government is, as someone in "Inside Job" comments, " a Wall street government" and the USA has sold itself to the bankers.

  • Comment number 39.

    When is a bank not a bank?... When the ordinary person in the street would not understand what a/the bank actually does?

    If a bank is not a bank ... What is it? ... a gambling den? ... a front for crime? ... The definition of what is and isn't a bank needs re-definition ... because this mess ain't a bank?

    Legislation please ... fines , taxes ... as this is illegal and many banks are simply breaking the law because even before the criminals move in .. the structures and operations of this and similar are not ... 'banks' ... they are houses of ill repute?

  • Comment number 40.

    Interesting developments but, as usual, Mr Peston misses the most interesting point - that the Icelandic parliament are doing their job and exposing such issues. When is Mr Peston going to address the lack of interest by the UK parliament in exposing many issues relating to UK banks? Specifically, when is Mr Peston going to call for the full disclosure of the minutes and correspondence between the UK government and Lloyds senior management relating to the HBOS takeover? How many promises were made and arms twisted to make Lloyds take on this toxic Scottish mess and how much inconvenient information was suppressed? Perhaps it was all above board (there is a first time in the life of every government) but, if so, why are the establishment fighting every attempt by Lloyds shareholders to pursue this matter? My solution is simple; get the Icelandic commission to conduct an independent enquiry into the Lloyds/HBOS fiasco.

  • Comment number 41.

    Under UK company law, limited liability companies cannot own their own shares. So a bank can't take its own shares as security for a loan, because if the loan defaults they will end up owning their own shares and breaking the law.

    So what Robert is describing here looks at first sight as if it would contravene UK company law. But I'm not sure if that applies to this Icelandic bank.

    But it's wrong to use the specific Icelandic mess to infer that all banks everywhere routinely break the law. There's no evidence for that. There was such bad management of some banks that some people (like most of the RBS board in my view) should have faced much harsher sanctions - but the post-crash investigation found even at RBS (the worst of the worst) no evidence of fraud. Just bad decision making.

  • Comment number 42.

    I think it's pushing the classical to compare this to one of Zeno's paradoxes. For it to be truly paradoxical the borrower would have to put up say 50% of the shares in the bank as security for the loan. Peston is straining the comparison.

  • Comment number 43.

    39. At 17:55pm on 9th Mar 2011, nautonier wrote:
    "The definition of what is and isn't a bank needs re-definition"

    Let's see:

    "an institution offering certain financial services, such as the safekeeping of money, conversion of domestic into and from foreign currencies, lending of money at interest, and acceptance of bills of exchange"

    So if you lend money, but not at interest, you are not a bank. Isn't "lending of money at interest" mutually exclusive when combined with "safekeeping of money"...? I note the definition doesn't specify WHOSE money it is safekeeping either.

    "...the funds held by a gaming house or a banker or dealer in some gambling games" - this brought a wry chuckle.

    You're right, it's definitely time to redefine the term "bank" from its current (financial institution) definitions.

  • Comment number 44.

    Is the party over, or just delayed?
    Will it be quiet at the MIPIM Property Trade Fair at Cannes, or will it be noisey with gossip about the Tchenguis Brothers?
    Will the most glamorous of women get glamourous for good reason, or will they get glamorous and stay home?
    The Tchenguiz brothers came out of nowhere (actually out of Iran via Iraq) climbing the rungs to property ownership with an apparent ease, including that great greaser of ease: READY CASH.
    They climbed the rungs:
    - Pubmaster Pub Chain
    - Somerfield Supermarkets;
    - various petrol stations;
    - Odeon cinemas;
    - health and fitness clubs;
    - Yates's Wine Bars...
    I'm not done yet. I just can't remember the rest, but there were plenty...
    These were not just companies; they were properties.
    Vincent & Robert had interests in 800 commercial buildings.
    Today, the Property Division is managed by Vincent, via the Rotch Company.
    Today, Robert's "R2O" manages the corporate investments.
    They share accounts, office support, and some Rotch Staff.
    The brothers became major west London landlords, renting out flats to students and tourists. The rules:
    1. borrow heavily to buy and
    2. use high rental returns to pay off the loan.
    But then, suddenly, unexpectantly, their main financial-backer, Icelandic Kaupthing called in its loans. As if this were not bad enough the brothers were also exposed to Lehman Brothers.
    Robert sold off interests; he lost £1B in the process.
    Is there guilt here, or just plain bad luck? I guess that what the intensive investigation will tell us.

  • Comment number 45.

    43. At 18:50pm on 9th Mar 2011, Stuart Wilson wrote:

    39. At 17:55pm on 9th Mar 2011, nautonier wrote:
    "The definition of what is and isn't a bank needs re-definition"

    Let's see:

    "an institution offering certain financial services, such as the safekeeping of money, conversion of domestic into and from foreign currencies, lending of money at interest, and acceptance of bills of exchange"

    So if you lend money, but not at interest, you are not a bank. Isn't "lending of money at interest" mutually exclusive when combined with "safekeeping of money"...? I note the definition doesn't specify WHOSE money it is safekeeping either.

    "...the funds held by a gaming house or a banker or dealer in some gambling games" - this brought a wry chuckle.

    You're right, it's definitely time to redefine the term "bank" from its current (financial institution) definitions.

    .....................

    Yeah ... that's the way forward... Is 'it' or isn't 'it' a bank ... that would get a good number of the dodgy ones sorted out within Britain/EU for the better ... a simple test to decide their tax rate, status etc.

    The existing definitions of what is and isn't a bank are not up to the job!

  • Comment number 46.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 47.

    #41. Slessac wrote:

    "Under UK company law, limited liability companies cannot own their own shares."?

    But is it not possible for companies to buy back their own shares in, for example, a capital reconstruction, albeit after successful application to the court for permission? Indeed I am fairly sure that given the complexities of options and futures trading and other derivative contracts many financial concerns must indeed land up owning (or contingently) owning their own shares. The other problem is that when subsidiaries have subsidiaries or indeed special investment vehicles that take sureties from other such concerns that they may land up being in the same position as the brothers Tchenguiz. It is all about a house of cards!

  • Comment number 48.

    The other problem that the Tchenguiz affair raises is that it will be almost impossible to prosecute because finding a jury that has any hope of understanding what has been done is almost zero. This is an issue all by it self and perhaps a more important issue.

  • Comment number 49.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 50.

    If taxpayers did not have to guarantee banks then this one would be toast.
    And its other shareholders.
    But no. We the taxpayer get burned instead.
    Who ended up with the moral hazard?

    But was this bank doing good by offering so much credit?
    Obviously the depositors looked no further than the rate offered.
    Gamblers working one sided bets. Heads I win - tails you lose.
    And we look up to them all in awe.
    They are not even smart. It's us that are dumb. Well. Some of us.

  • Comment number 51.

    41. At 18:30pm on 9th Mar 2011, Slessac wrote:

    Under UK company law, limited liability companies cannot own their own shares. So a bank can't take its own shares as security for a loan, because if the loan defaults they will end up owning their own shares and breaking the law.
    ..................................................................................................
    49. Mods getting jumpy here so I'll try again ... but BTW, I'm not a lawyer
    ..................................................................................................

    'In other words ... no one is sure because the law is year's out of date and is very unclear ... and no one is even sure what a 'bank' is anymore or what can even be still called a 'bank'
    and
    the only reason that there is likely no evidence of any wrongdoing here as in other cases, is that no one has looked properly for any evidence of wrongdoing as it would likely 'overturn the applecart'.

    If some of these dodgy institutions are not even 'banks' ... then there may be some serious crime here and many other places concerning what some would think of as 'banks' but are not really quite sure whether the definition fits their operations and structure.

    A simple test of whether some of these institutions are still fit to be called 'banks' ... would be a good starting point in clearing up the industry?

  • Comment number 52.

    @ 39. At 17:55pm on 9th Mar 2011, nautonier wrote:

    > When is a bank not a bank?... When the ordinary person in the
    > street would not understand what a/the bank actually does?

    Before this has run its course, every activity of each bank will need a separate licence to show that the activity is both socially useful (for us) and reliable. That's where Merv and him chum, Adair Turner, are driving this matter.

    No license = unemployment. I'll know things are right when I see pin-stripped suits in the dole queue (drat, I've just dribbled on my keyboard in anticipation!!!)

  • Comment number 53.

    The two chaps you mention Robert only mistake is they are not governments but individuals, our friend "writingsonthewall" points towards Northern Rock which is far more incendiary. Surely paying bonuses at a loss making company is ridiculous? Surely stating that the UK tax payer will get their money back is laughable? The sand is shifting and one hopes that you are allowed to comment on Northern Rock and others to let our peers know we know a swindle when we see one...

  • Comment number 54.

    7. At 14:51pm on 9th Mar 2011, NorthSeaHalibut wrote:
    ......
    Continuing to watch this space as well. An interesting development.

  • Comment number 55.

    But if we had modern Debtors' Prisons ... they could be organized along much more humane and tolerant lines : weekdays spent outside making a living...weekday nights in a cell...to remind them of the harm they have done to society. Then Weekends at liberty for family and socially inclusive reasons.... Other countries could do the same.

    Society does not address the problem of moral hazard. From wherever it stems in that society.

    Moral hazard is almost a worry-free gamble and it should NOT be....from many angles. Many of the people I know would be in Debtors' Jails. But not me ...and probably not most of you all either.

    Bankruptcy is too easy. So living on Easy Street is too too easy too.

    Lending was too easy. Moral hazard abounded. Both sides.

    And Depositors can be greedy too...two people I know decided to place thousands with Icelandic Banks because of higher returns.

    When I pointed out to them, after they had both asked for advice,.. that Iceland had a tiny in population, a fortieth of London's, and that I did not understand at all their banks' ability to finance preposterous and overpriced takeovers of the UK High Street...the comments were ignored and depositor 'greed' took the better of them.

    That is depositors' banking greed.

    And who was called the day everything blew up !

    Me, dear reader. And what did I do ?...I gave them solace.

  • Comment number 56.

    Sounds interesting! Keep us in the loop!

  • Comment number 57.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 58.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 59.

    52. At 20:24pm on 9th Mar 2011, Jacques Cartier wrote:

    @ 39. At 17:55pm on 9th Mar 2011, nautonier wrote:

    > When is a bank not a bank?... When the ordinary person in the
    > street would not understand what a/the bank actually does?

    Before this has run its course, every activity of each bank will need a separate licence to show that the activity is both socially useful (for us) and reliable. That's where Merv and him chum, Adair Turner, are driving this matter.

    No license = unemployment. I'll know things are right when I see pin-stripped suits in the dole queue (drat, I've just dribbled on my keyboard in anticipation!!!)

    ......................

    There should be only one activity and licence needed ... a 'banking licence' ... if a bank is doing something else ... they should call themselves something else ... speculators, hedge funds or whatever ... and be separately regulated ... and not hide under the umbrella of an ordinary high street bank and mislead all and sundry as to the nature and extent of their operations and trading?

  • Comment number 60.

    41. At 18:30pm on 9th Mar 2011, Slessac wrote:

    > the post-crash investigation found even at RBS (the worst of the
    > worst) no evidence of fraud. Just bad decision making.

    If we had proper debtors' prisons, we wouldn't have to worry about any of that. Sir Greedie and that Andy Trainset from HBOS would be safe in gaol, suffering as they ought to. RBS would still be owned by taxpayers, but Sir Greedies of the future would steer clear of stupid greed in case they end up sharing a cell with the ex-boss of RBS.

  • Comment number 61.

    Yes BlueBerry! You forgot quite a few, one of them Consensus with a $100million of debt to the Bank of America with the collateral being the ground rent from thousands of leasehold flats around the country acquired from Peverel plc. A retired person in one of their thousands of such flats must be very worried. Unfortunately many of them are retirement flats and the leaseholders are the "dribbling geriatrics" as they were described by Peverel, so this company will no doubt think they will have no trouble convincing them that all is well.

  • Comment number 62.

    59. At 21:08pm on 9th Mar 2011, nautonier wrote:

    > There should be only one activity and licence needed ... a 'banking
    > licence' ... if a bank is doing something else ... they should call
    > themselves something else ...

    From the wastrels who turn up here, there seem to be the main stories.

    First, they say they bring millions of pounds in tax revenue. Yet it is only bankers themselves who long for these taxes! The rest of the public (to a man) would gladly put them all on fishing boats in Grimsby and scuttle them half way across the channel. I wished they would take the hint.

    Second, they claim that their activities are none of our business. I call this the “Fred West” defence. We have to drag them, kicking and screaming if need be, into the light of day and make sure that each of their activities is in the public interest, else we shut them down and break them up.

    And last, some come here to boast about their own particular “merits”. I’ll say this about those ones: blokes (and most of the boasters are blokes) only boast when things are very low for them or very high. And they never tell us about all their miseries and faults. Such people are, essentially, children, but the banking cohort contains thousands like that.

  • Comment number 63.

    Anybody would think you didn't like bankers, Jacques.

    But if you had your way and locked up in jail all the people who are in debt then it would certainly take a lot of traffic off the roads.

  • Comment number 64.

    @ 54. At 20:37pm on 9th Mar 2011, Averagejoe wrote:

    > Continuing to watch this space as well. An interesting development.

    Birkenhead is, as we all must surely know, the centre of the known universe. It's long been my favourite part of England by a long chalk. There's just something hugely rebellious about the place, with just cause. And there's something magnificent about Hamilton Square and the US style grid layout of the streets. It's a chunk of New York on the wrong side of the Atlantic.

    And it is fitting that a judge was taken prisoner here, for the first time in many years. Let’s hope Michael Peake is the first of many!

  • Comment number 65.

    63. At 21:28pm on 9th Mar 2011, Slessac wrote:

    > Anybody would think you didn't like bankers, Jacques.

    They are pariahs.

    > But if you had
    > your way and locked up in jail all the people who are in debt then
    > it would certainly take a lot of traffic off the roads.

    There are no traffic jams, in Birkenhead. In any case, I'm talking about Bankers' Prisons. Unlike bankers, most people do not intentionally choose debt as a way of life.

  • Comment number 66.

    Mr Peston writes:

    (it is a banking equivalent of one of Zeno's paradoxes).

    Which paradox in particular, Squire ?

  • Comment number 67.

    47 John_from_Hendon you think a company must be able to own shares in itself because companies sometimes buy back shares to reduce the number issued - this is normally a return of capital to the existing shareholders. Because all the remaining shares become worth more.

    It's ages since I studied company law and there will be others much better informed than me, but I believe the underlying principle is (or used to be under the 1948 Act) that a company cannot be a member of itself. Which makes sense to me.

    In terms of investment management I believe this is addressed by beneficial interests being held by nominee companies - but the beneficial owners are the investors and not the company. So in the event of a liquidation the shares are the property of the investors and not the company.

    And that probably totally exhausts (possibly exceeds!) the bit I know (or think I know).

  • Comment number 68.

    62. At 21:27pm on 9th Mar 2011, Jacques Cartier wrote:

    59. At 21:08pm on 9th Mar 2011, nautonier wrote:

    > There should be only one activity and licence needed ... a 'banking
    > licence' ... if a bank is doing something else ... they should call
    > themselves something else ...

    The common thread is ... other dubious activities that are deliberately hidden from view ... ... there is plenty to go at ... but I fear ... that our wish list for reform is nothing like the feeble wish list of the banking biased establishment who will make the final decisions on what the new banking structure will contain.

  • Comment number 69.

    All this user's posts have been removed.Why?

  • Comment number 70.

    What we should continue to bear in mind in respect of the Tchenguiz Affair is the abysmal behaviour and failings of the Icelandic Government. Iceland has a very small and tight knit "ruling class". It is certain that senior figures in the Icelandic Government were fully aware and probably fully complicit in supporting the underhand dealings of this Bank, which, in practice, has proved to be no more moral in its dealings than the Mafia. Yet we see little or no sign of trials of politicians and Government officials in Iceland in relation to the overall banking fiasco. I wonder why that might be the case? Nepotism perhaps? Still, they have lots of cod to keep them going through what I sincerely hope is a very lengthy period of national poverty.

  • Comment number 71.

    Love the blog Robert. The more harm we can all do to all the bankers and capitalists the better! If we all got a share of their money none of us would ever have to work again. Just think of that. No work for anybody.

  • Comment number 72.

    #67. Slessac wrote:

    "47 John_from_Hendon you think a company must be able to own shares in itself because companies sometimes buy back shares to reduce the number issued"

    You misquote me. What I said was that there are special circumstances, that by permission of the court, that a company can buy its own shares and when they are purchased this is to reduce the capital of the company. OK, I also recall the 1948 Act, the 1967 one too and the 2006 Act. (Part 18 of the Companies Act 2006 should make interesting reading. also CA 2006, sec690 - sec708 if you are interested. The old common Law prohibition - Trevor v. Whitworth (1887) 12 App Cas 409 has been progressively circumvented by various Companies Acts.)

    However as we are dealing with an Icelandic company I really have no idea what law applies. So far as I can see the situation envisages is not explicitly covered, but that does not mean that it is either legal or illegal.

    What I went on to point out is that financial trading companies are in many ways in a situation where they may inadvertently(?) buy their own shares during the trading process. They may of course do so on account of a client, and presumably as nominees, but to do so as a means of supporting or influencing the price of their own shares would I think be against the law in most western jurisdictions. This will have to be argued in court. I also doubt if it is possible to get a jury to convict except in the simplest and most blatant of cases as the multi-layered, multi legal person, holding and pledging as surety makes matters hideously complex. I do wonder if the act of pledging shares that one had no reason to suspect were about to collapse as collateral for a loan is rather remote from the precision required for criminal conviction, particularly if it was done in the normal course of ongoing financial trading. (I pass no comment about the present case as I am completely unaware of the facts of the case.) But the successfully proving of criminal conspiracy is always tricky with complex fraud - one has only to look at the limited success with the cases that have got to court.

  • Comment number 73.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 74.

    62. At 21:27pm on 9th Mar 2011, Jacques Cartier wrote:

    And last, some come here to boast about their own particular “merits”. I’ll say this about those ones: blokes (and most of the boasters are blokes) only boast when things are very low for them or very high.
    ==============================================================

    Indeed some do come on here most don't and the ones who know about here would never because not one has ever answered WOTW question - 'where does (their) profit come from? I know - you know, in fact the folk who are somewhat sceptical/hostile to Capitalism all know. Most capitalist don't.
    Thankfully WOTW has started to explain to them how as they couldn't or haven't been able to figure it out.

    And you are too polite and compassionate - I say incarcerate all senior bankers in igloos in Northern Greenland, Iceland is too warm.

  • Comment number 75.

    " It is not standard banking practice for a bank to lend money to someone with shares in that bank being provided as security against the borrower's inability to repay "

    It is not standard practice....... Is that it?
    Is it not a criminal offence? Is it not a breach of 'regulations'?
    It does beg the question Who's in charge ?

  • Comment number 76.

    Zeno interpretation! Not sure he would agree! But nice try.

  • Comment number 77.

    Well I guess that this could be one of the first sets of bad commercial property loans that the bank are going to have to WRITE OFF rather than desperately reschedule, based on the false assumption that there is going to be any sort of 'long term rental growth'. Tip of the iceberg mate. BANG!

  • Comment number 78.

    Hats off to Mr Bunning... He is exactly right in what he said. Whilst working at a market maker in the City at the height of the crisis we were approached by a group of financial company directors (some "laudable" company names involved) who were searching for a market maker to 'run the book' on a floatation for a company engaged in leveraged debt offerings. I had to fight tooth and nail to say no to what seemed like the most stupid idea I had ever heard... plenty of people seemed to be fairly blase as after all a market maker only makes money on buying and selling and is not too bothered if it is 'the infamous crap' as highlighted by the senate committee. I was backed up by the group director. Other equally perilous companies squeezed through, a particular Guernsey based hedge fund outfit comes to mind... eventually we employees were also squeezed out... self regulation being what it is.

  • Comment number 79.

    As we now know, all transactions undertaken by banks are underwritten by the taxpayer. It does not matter if they are illegal or foolish, the taxpayer guarantee continues to apply. As it is in the UK so it is in Iceland.

    We also know that Bank Directors who enter into such arrangements are hugely rewarded no matter what the outcome.

    It is pointless discussing the finer points of company law as long as this situation prevails.

  • Comment number 80.

    "Major banks are refusing to tell the Financial Services Authority how many of their staff are paid more than £1m. Hector Sants, chief executive of the City regulator, told the Treasury select committee that "four of the larger banks" were not complying with his request to provide more information about how their top bankers are paid. He did not identify the banks, according to the Guardian."

    When will they grow a pair?

  • Comment number 81.

    74. At 23:19pm on 9th Mar 2011, M_T_Wallet wrote:

    Indeed some do come on here most don't and the ones who know about here would never because not one has ever answered WOTW question - 'where does (their) profit come from? I know - you know, in fact the folk who are somewhat sceptical/hostile to Capitalism all know. Most capitalist don't.
    Thankfully WOTW has started to explain to them how as they couldn't or haven't been able to figure it out.

    ===========================================================

    not entirely true, most of us "evil" investment managers are perfectly aware of where the profit comes from, its just that WOTW seems to have his own idea, in other words if i say that we invest in a motor company (Ford for example). i would say that we make profit by investing in the stock which then goes up in price maybe due to an increase in sales. we then sell the stock for a profit.

    that all seems very straight forward, however WOTW would say that i get that profit through the slavery of small african children who are then forced to pollute the whole world leading to terrible climate change and then i rip the money from a pensioner and give it to a dictator from some middle east country......and then i steal candy from a baby.

    its not that we are unable to say where our profits come from or that we are even bothered, no matter which company i invest in WOTW and his supporters will always have a problem with it, to that end we just give up trying to tell him because we know what his answer will be.

    PS. its funny how you have a go at us about not answering questions when he still hasnt answered two very simple questions for us and all of you.
    1. name any country in the world in any time period which has managed to live in the long run in the sort of resource based economy which he seems to love so much.

    and

    2.how are we going to move from our current situation to this hallowed Venus project esque life.

    of course his answer will be as it always is "this is a blog silly i dont have time to write all of that for some silly capitalist like yourself" but if by some miracle he does answer then i would be fascinated to see what he reads

  • Comment number 82.

    Jersey... not sure you have an opinion until you come back on-shore and pay your way.

  • Comment number 83.

    82. At 08:29am on 10th Mar 2011, Just_the_Fax wrote:
    Jersey... not sure you have an opinion until you come back on-shore and pay your way.

    ===========================================================

    hahaha oh deary me, yet another person telling me that even though i was born on jersey, lived on jersey all my life, pay all my taxes to the states of jersey, im still somehow "Bad".

    so are people not allowed an opinion here until i pay your government Tax, that doesnt seem fair, i mean i pay the licence fee for my TV so im paying as much for the BBc as you, surely that gives me as much right as you to talk on a BBC blog??

    if im wrong please do explain

  • Comment number 84.

    @20. richard bunning wrote:

    "My point is this - why do we go on believing in the myth of the financial entrepreneur and his/her god-given right to chase personal wealth in this way, whilst we the rest of society are then expected to bail out the system they have brought to its knees?"

    But (on this blog anyway) only a small minority any longer believe (or say they do) in that myth. A significant proportion clearly don't.

    The reality though is that over the past three decades or so the financial industry has been helped by our politicians to manoevre itself into an almost impregnable position, so that by now it can (and does) hold all of society to ransom. How has this happened, and with such incredible speed?

    It happened consequent upon the rise to power of a whole new generation of politicians who had fallen under the spell of the myth you refer to, and were single-mindedly determined to put its precepts into effect. In both the UK and USA, the mythology of neo-liberalism captivated politicians of all parties. The whole of our society was to become one vast, unregulated, market in which the supreme virtue was to acquire material things, the more the better. In which everything in life was to be turned into a question of money. The leitmotif was encapsulated in Gordon Gecko's immortal line: "Greed is good!"

    The financial moguls had only to seize with both hands the opportunity presented to them and milk it for all it was worth - which for them has amounted to billions in personal gains. The same pattern was clearly seen - insanely speeded-up - in Russia in the '90's, where, in obedience to exactly the same ideology, oligarchs were invited under Yeltsin (advised by American evangelists of the neo-liberal creed) to plunder enormous riches for themselves while around them society disintegrated and the economy descended into chaos. The result was the reassertion of political control in the form of authoritarian government replacing a nascent democracy.

    In the West this process, extending over a much longer time-scale, has resulted in the finance industry having been placed in the dominant position in our society. It can buy anything and anybody. The sole yardstick on the basis of which policies are judged good or bad is whether or not they are acceptable to the financial moguls.

    There is no way to change such a situation without turmoil. Oligarchies like these do not willingly surrender the positions they occupy, with the princely lifestyle it confers on its few immensely privileged beneficiaries. They have to be vigorously attacked and broken up. There is no other way. Ask Mr. Putin.

  • Comment number 85.

    @70. stedmund40 wrote:

    "Still, they have lots of cod to keep them going through what I sincerely hope is a very lengthy period of national poverty".

    Ouch!

    What have you got against the innocent, ordinary, Icelanders (like the lady quoted in richard bunning's post #20)?

    What have they done to deserve "a very lengthy period of national poverty"? Have you got a chip on your shoulder?

    And at least (as another poster has already observed) the Icelandic parliamentarioans have had the gumption to set-up a commission to enquire into the whole business.

    There's just as much anger there as here. It is said that there is not one single Icelander who has not been damaged in some way (there are only a bit over 300,00 of them all told I believe).

  • Comment number 86.

    08:21am on 10th Mar 2011, avalanche-jersey wrote:

    Good luck with eliciting the answers from WOTW....We are all waiting with the ever more bated breath...

    I chuckled when I saw some of the "revolutionaries" trying to bar you from debate on the basis of you...not paying the taxes in England. Well, that is how the world of communism/anarchy/glorious revolution works - if you don't agree with the dogma you are condemned. Freedom of speech? Forget it - that's for "Capitalists", the soul of the "revolutionary" could not possibly be polluted by the “reactionist and revisionist” propaganda...

    This is how it has always worked and that how it will work if we have the misfortune to stumble into that hell (sorry, "socialist heaven") - examples aplenty on this blog alone.

  • Comment number 87.

    #81 a-j

    1. name any country in the world in any time period which has managed to live in the long run in the sort of resource based economy which he seems to love so much.
    ------------------------------------------------------------------------------

    I think you have a fairly short view of history.

    On the whole most countries before the industrial and before that the agricultural revolutions, organised themselves on a self sustaining basis. You may be of the opinion that the world is a better place now than it ever has been, however "progress" hasn't necessarily delivered all the answers, if any.

    I for one think we should leave the remaing hunter gatherers the space to continue as they wish.Harvesting their habitat is what wotw would probably consider from where "profit" originates.As it does with most.

  • Comment number 88.

    The paradox being that by securing against your own shares you are effectively tethering a horse to its own tail and hoping it doesn't walk away.

    As far as aware, under previous CA regimes a company could not provide financial assistance to purchase its own shares, have been involved in various circumstances where this has been made clear. But not being fully up to date with recent changes in Company law, seems to have been relaxed.

    Without much knowledge would suggest that rather than being complicit as such, the Icelandic government were just way out of their depth. Stable door and horse bolting come to mind if reforming now, Iceland have probably mortgaged now their cod catch for the next few centuries.

    Ah but all is not lost! those ever friendly and helpful Russians offered to help out...not sure what's worse, being in debt to a number of consumers / businesses or the Russians. "We don't need security, we have other ways of enforcing our debts"

    This being the same Russian government that helped to bail out Rusal when the commodities markets went pop a couple of years back.

    The cold war is over, now the Russians have far more effective weapons, natural resources and capital.

    Now, where are we going to get our natural gas and oil from going forwards, as we've frittered away all of ours and p*****d away the proceeds...

  • Comment number 89.

    #20 Richard Bunning. Richard, thank you for some wise words

  • Comment number 90.

    87. At 09:12am on 10th Mar 2011, creditunionhero wrote:
    Please could you answer the question posed at #37.
    This has been asked before and I am intrigued.

  • Comment number 91.


    There are no traffic jams, in Birkenhead. In any case, I'm talking about Bankers' Prisons. Unlike bankers, most people do not intentionally choose debt as a way of life.

    -------------------------------
    Yep, that's why none of the "ordinary hard working people" bought mortgages they couldn't afford(willful ignorance is not a defence against being guilty), why "students" take out loans and then spend them on gap years, expensive Apple products and alcohol while doing their 3-year "degree" in hairdressing, why no one in America has voted for a party that even thinks of cutting public spending. Yep, only banks are responsible for irresponsible borrowing beyond their means, "ordinary salt of the earth" people never would think of it.

  • Comment number 92.

  • Comment number 93.

    87. At 09:12am on 10th Mar 2011, creditunionhero wrote:

    think you have a fairly short view of history.

    On the whole most countries before the industrial and before that the agricultural revolutions, organised themselves on a self sustaining basis. You may be of the opinion that the world is a better place now than it ever has been, however "progress" hasn't necessarily delivered all the answers, if any.

    I for one think we should leave the remaing hunter gatherers the space to continue as they wish.Harvesting their habitat is what wotw would probably consider from where "profit" originates.As it does with most.

    ==========================================================

    hmmmm, while im sure there were some quite nice places to live in history (venice during the renaissance period there are a few problems historically.

    1. War, there used to be quite alot of it, i mean you had wars which lasted 100 years and everyone seemed to be at war with everyone else.

    2. poverty, do i really need to go into this much.

    3.Health, cholera/typhoid/plague/measles etc etc, alot of those older more dangerous diseases are far more treatable nowadays.

    4. slavery, yes im not going to try and say that there isnt any poverty, but atleast we dont take boats to africa catch a load of them and then make them work in various parts of the world. the brits for instance dont control most of the world with a totalitarian fist.

    theres just a few reasons why the past wasnt as good as the present.....i mean they even had bankers in ancient times but they didnt have regulators

  • Comment number 94.

    i would say that we make profit by investing in the stock which then goes up in price maybe due to an increase in sales. we then sell the stock for a profit.

    -------------------------------------------------------------------------------
    the profit is derived from the use of earths natural resources, steel oil etc plus labour. The question is to whom do the worlds natural resouces belong.

    To put it in simple terms, if I were to suck the earths atmosphere into a pressurised steel vessel and then start selling it back at a profit to those that could afford it, I,d probably be the most successful capitalist ever. Whats to stop me or anyone else doing it. You might think you have a right to your air but you don't own it anymore than you own the oil we extract from the North Sea.

  • Comment number 95.

    @72. John_from_Hendon wrote:

    "I also doubt if it is possible to get a jury to convict except in the simplest and most blatant of cases as the multi-layered, multi legal person, holding and pledging as surety makes matters hideously complex".

    A sobering critique!

    This is where the average layman begins to despair of the law. The impression gained is that the law has (perhaps deliberately but more probably unintentionally) been made needlessly complicated, to the pecuniary benefit of lawyers.

    If law is supposed to enshrine moral values - many of them of Biblical simplicity and authority - it cannot do so, cannot perform its basic societal role, once allowed to become "hideously complicated". That should ring all the alarm bells teling us that somewhere along the road this law has lost its way - in other words, cries out for reform.

    It's observably a cycle, in which within any branch of the law over a long period complexity multiplies to the point where the law no longer works. Then comes a fundamental reform, a re-codification; then the same cycle repeats, ad infinitum.

    Company law certainly shows all the classic signs of morbidity, to my mind. Has the institution of the limited liability company outlived its time?

    (And the same question poses itself in regard to fractional reserve banking).

  • Comment number 96.

    Oil from the North Sea, I think we burned all of that. What about the CO2 from it? going full circle it seems that Tchenguiz was trying to sell the Co2 as well.

  • Comment number 97.

    Let us hope that at last someone will have their collar felt if they can be proved to have done a misdeed.

    As a director of this bank he and all the directors should simply have all their assets and pension contributions taken over by the Icelandic state to recover the costs of their group failure.

  • Comment number 98.

    @79. KKP wrote:

    "As it is in the UK so it is in Iceland".

    I had understood that the Icelandic government (uniquely in the present crisis) refused to bail-out any of its banks and that, in consequence, all non-Icelandic depositors/investors in those banks received no compensation from the Icelandic authorities.

    Precisely the converse of what was done by UK and Ireland.

    Have I got it wrong?

  • Comment number 99.

    94. At 09:27am on 10th Mar 2011, creditunionhero wrote:

    To put it in simple terms, if I were to suck the earths atmosphere into a pressurised steel vessel and then start selling it back at a profit to those that could afford it, I,d probably be the most successful capitalist ever. Whats to stop me or anyone else doing it. You might think you have a right to your air but you don't own it anymore than you own the oil we extract from the North Sea.

    =========================================================

    Big difference, an oil company will firstly buy permission from whichever country it is drilling in, it will then buy the land it want to drill on. if you wanted to buy the air, you would have to get the country to which the air is in to let you buy that air, otherwise your just stealing.....and stealing is wrong



  • Comment number 100.

    The two were likely to have a fall as their business plan was built on the highest debt at the cheapest price whilst ignoring the detail of a loan. Back in the late 90's I refused them a property loan as they tried to have me accept a valuation on a well known London office building, a valuation that was to say the least excessive, and from a leading property agent who should have known better and was deeply embarrassed when we pointed out the unprofessional approach. I was then summoned to see Robert Tchenguiz, lets just say the greeting was in marked contrast to my exit having refused to change my position.

    I have always been nervous making property loans to those who have little or no background in real estate and the Tchenguiz brothers are number arrangers not property experts.

    This morning in Cannes @ MIPIM there will be a few property agents and bankers hoping the SFO don't come calling as there are likely to be a few skeletons in a few cash-lined cupboards, in addition to a number of risk managers in banks scrambling to calculate their exposure to these two.

    Whilst they may not go to prison its likely they'll lose everything which might hurt more than a few years in the Scrubbs!

 

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