Kaupthing Singer & Friedlander Limited (Determination of Compensation) Order 2008

I declare a non-interest in that my wife is Icelandic. I obviously have family in Iceland but neither I nor my wife has bank accounts in Iceland. I make that absolutely clear because I wish to refer to financial aspects of this issue. My noble friend will know that I have been tabling Questions to his department asking for information. I wish to read a Question and the Answer I was given and I would like my noble friend and the civil servants in the department to consider it. I asked: "““What conversations took place on what dates between representatives of the government of Iceland and its banking industry and persons representing the interests of United Kingdom depositors in Icelandic banks on impending difficulties in the Icelandic banking sector; and whether they will place transcripts or reports of those conversations in the Library of the House””." I also asked: "““What discussions have taken place, are taking place, and are planned with representatives of Iceland on financial support that can be given to Iceland to help that country during its period of difficulty in the banking sector””." My noble friend replied: "““Treasury Ministers and officials have meetings and discussions with a wide variety of organisations in the public and private sectors as part of the process of policy development and delivery. As was the case with previous Administrations, it is not the Government’s practice to provide details of such meetings and discussions””.—[Official Report, 25/11/08; col. WA 281.]" I say gently to my noble friend that that is not a fair answer for the Treasury to give either a Member of the Commons or a Member of this House. We require far more detailed information than the Treasury is giving us at this stage. If these questions had been asked in a Select Committee of this place, the answers would have been far more substantial and, in the event that they could not be answered during proceedings in the Select Committee, the Ministers or civil servants would probably have offered to provide additional information in a written memorandum to that committee. Indeed, in January, I understand, the Treasury Select Committee in the other place will probably carry out an inquiry and I am sure that it would not be satisfied with answers as brief as that one, which was obviously provided to my noble friend by people in his department. The reason this is relevant is because, in the daily conversations that take place between my wife and myself and the other half of our family in Iceland, we are repeatedly told that people simply do not understand what is going on. I saw this morning five editions of Morgunbladid which had just arrived in the post as I left. My wife was trawling through them for information and it is quite clear that many people in Iceland simply do not grasp the nature of the crisis and they are desperate for more information. I saw it, in part, as my role at least to secure information from within the United Kingdom. Earlier this year the Icelanders were publishing through their Central Bank press releases as to developments in Iceland prior to the crisis. I received from the Central Bank in Reykjavik a list of all the press releases that were given earlier this year, which will no doubt be of interest to the noble Lord speaking from the Liberal Democrat Benches, on what was being said about meetings on the issue of the stability of the banking system in Iceland. On 20 May this year, Moody’s downgraded Iceland’s ratings. That information was published in the Icelandic media and there was a press conference in Reykjavik. Why did not that information get through to the United Kingdom? If it did, why was not that information relayed to the local authorities and other institutions that were busy placing money there? On 22 April this year, Fitch Ratings issued a report on Iceland. On 17 April, Iceland sovereign ratings were lowered on external funding risks—outlook negative. This information came from the rating organisations. On 9 April this year, Moody’s issued an annual report on Iceland which was negative. On 1 April this year, Standard & Poor’s ratings services placed its ratings on the sovereign of Iceland on credit watch with negative implications. On 1 April, the same day, Fitch changes Iceland’s outlook to negative. On 5 March this year, Moody’s assigns negative outlook to Iceland’s ratings. In other words, material was available earlier in the year which should have alerted the United Kingdom institutions investing on behalf of public bodies to the fact that there was a problem in the stability of the Icelandic banking system. I want answers to my questions because I wish to dovetail that information with the information available in Iceland. When people in Iceland read about this, they conclude that people abroad must have known something was wrong, so why did they keep on investing? That is the question they put and there might be a simple answer. I am not a banker—I am a widget maker by origin; a manufacturer—but if this information was available, why did it not get through? Is it not fair for Icelanders to question to what extent they are culpable in view of the information that was being made available within the United Kingdom? The other question which has arisen during my browsing over the material that came from the Central Bank in Iceland concerns Glacier bonds, which I understand are króna-denominated Eurobonds. It seems that the Icelanders closely researched developments in New Zealand some years ago where, because it was short of internally available money for investment, New Zealand issued Kiwi Bonds, and the Icelanders copied them with Glacier bonds. As a number of these bonds mature in the years to come, I do not know whether they are included in the published figures about the liabilities of Iceland to institutions in the United Kingdom. I have been reading a very interesting article by Thorvardur Tjorvi Olafsson on this issue, which he wrote in 2005, several years before the crisis, in which he sets out the problems that could arise with the sale of these bonds on western markets. As I say, I am not a banker and I do not know the answer. I do not expect my noble friend to give a specific answer today, although he is very knowledgeable on these issues and perhaps he does know a little about it. However, if he does not, I hope that he will write to me with some information on the matter. Finally, I go back to my original proposition and ask that more information and more detail be published on the background to the meetings that took place. People are entitled to know what has been going on over the past six, seven or eight months with regard to the impending crisis—or what we now know to be the current crisis—in the Icelandic banking sector.