Sigrún Davíðsdóttir's Icelog

Landsbanki Luxembourg and its victims: two events of potential interest

with 13 comments

“… when it comes to unified European financial  sector it only works for banks, facilitating cross-border operations. For clients and consumer protection this sector has as many holes as a Swiss cheese. A food for thought: if cross-border operations only work for banks and not for clients they should not be allowed.”

As often mentioned earlier on Icelog a group of Landsbanki Luxembourg clients have been trying to attract the attention of Luxembourg authorities as to the nature of the bank’s operations and to the handling of the bank’s administrator of their cases. Contrary to Icelandic authorities and the Landsbanki winding-up board, busy investigating the bank in Iceland and charging/suing its managers, Luxembourg – the tiny country dwarfed by its towering financial sector – has shown no appetite for any such undertaking.

Now there are two new and very different developments which might be of interest for the Landsbanki clients, all of whom are foreigners, mostly elderly people, with properties in France and Spain. Labour MP Huw Irranca-Davies has drawn attention to the Rotschild bank, which also sold equity release products, causing default and loss of property, to a similar group of clients. And creditors in the long failed Luxembourg bank, Bank of Credit and Commerce International, BCCI also, like the Landsbanki Luxembourg clients, think that Luxembourg authorities are difficult to deal with.

MP Irranca-Davies raised the equity release issue in a House of Commons debate and had some harsh words for the Rotschilds: “… you have badly deviated from your core values, badly served your brand and reputation, badly served people who regarded themselves as your clients – not the clients of some intermediaries as they claim – and who are now facing penury after investing in products which your name, Rothschilds, your integrity, your values were used as a key selling point.”

Interestingly, conservative Treasure minister offered to raise the matter with counterparts in Spain and Guernsey. Should he do that someone should tell him not to leave out the Landsbanki Luxembourg cases since they also concern equity release loans.

One aspect of the equity release loans is that they have been sold by banks not operating in the country where the products have been sold. Rothschild, Landsbanki and several Scandinavian banks, all active in this business, sold the products to people in Spain and France, not from their operations there but from their Luxembourg operations. An interesting aspect, which has created a sort of vacuum around these operations: when the clients felt they had things to complain about Luxembourg authorities have not really listened as the products were not sold there; and authorities in France and Spain have so far not really taken the issue seriously since the banks were operating abroad.

This case has shown that when it comes to unified European financial  sector it only works for banks, facilitating cross-border operations. For clients and consumer protection this sector has as many holes as a Swiss cheese. A food for thought: if cross-border operations only work for banks and not for clients they should not be allowed.

For anyone following the world of finance for some decades BCCI is a familar name. The bank was operating – yes, in Luxembourg for two decades from the 1970s. Founded in Luxembourg in 1972 by a Pakistani financier, Agha Hasan Abedi, it eventually failed in 1991 after financial regulators in several countries feared it was badly regulated.

It took years to get the Luxembourgians to act but when they did it turned out that its operations were not only mundane lending and borrowing but money laundering and other criminal activities. One interesting aspect, in light of development in the three failed Icelandic banks is that the BCCI administrator, Deloitte, sued the bank’s auditor, Ernst & Young. The case never came to court but was settled for $175m in 1998.

All of this has turned into a long saga, which quite remarkably is still ongoing. The latest is that some of its creditors are now fighting authorities in Luxembourg, claiming it is blocking money from creditors. Though the BCCI creditors certainly with deeper pockets than the Landsbanki clients, they are no less upset and do not intend to drop their case any time soon. One of them is dr. Adil Elias, whose story has earlier been told by the WSJ.

Quite intriguingly the two gropus – the Landsbanki Luxembourg victims and the BCCI creditors – have one  thing in common: both had cases ruled on right up to Christmas in Luxembourg and in both cases those complaining lost. Maybe a coincidence – or this is the time Luxembourg courts feel is the best time to rule on “unruly” bank clients ready to take on Luxembourg authorities.

*See an earlier Icelog on this issue, with links to older coverage on Icelog.

Follow me on Twitter for running updates.

Written by Sigrún Davídsdóttir

January 23rd, 2014 at 4:48 pm

Posted in Iceland

13 Responses to 'Landsbanki Luxembourg and its victims: two events of potential interest'

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  1. THE E.U. HAS TO PUT IT’S FOOT DOWN.

    LANDSBANKI Luxembourg SA and BCCI S.A and BCCI HOLDINGS S.A. have the same liquidator Yvette Hamilius.

    Is this a coincidence?
    Is it a coincidence that Karin Guillaume and Yvette Hamilius do most of the ‘delicate’ administrations of bankruptcies, Karine supervising Yvette?
    Is it a coincidence that Yvette Hamilius joined the administrations of the BCCI bankruptcies for the last 8 years where the damage was done?
    Why did Franz Prost quit the Landsbanki administration as soon as it had begun leaving Yvette Hamilius under the supervision of Karin Guillaume to ‘handle’ it?
    Both cases give rise to suspicions of money laundering especially when one sees how these 2 cases were dropped so close to each other at Christmas time without investigation.

    Luxembourg is afraid of investigation of financial crime and it is time Europe started INVESTIGATING LUXEMBOURG especially with Jean-Claude Juncker wanting more power and influence in Europe.

    Is Luxembourg trying to give a message to Europe that it does not give a stuff about E.U. rulings agains corruption, embezzlement, fraud, false accounting and money laundering and will not adhere to the 2004 rulings or the MiFiD but still want to be an important and powerful figure influencing Europe?
    Is Luxembourg trying to tell Europe that whilst everyone else is supposed to obey rules and regulations , Luxembourg will refuse as it is happy with it’s reputation and will continue to blame Iceland and other countries for what it is guilty of.

    This is a Quote from one of YVETTE HAMILIUS’ press releases to Paper Jam following the class action against the LANDSBANKI Luxembourg and the administration lodged in Luxembourg in 2012.

    In this press release the administrator boasts of her experience as a liquidator and cites the 8 YEARS as administrator of BCCI HOLDINGS and BCCI SA, as she was administrator of BOTH.

    PAPER JAM:

    « Avez-vous déjà conduit d’autres liquidations de banques au Luxembourg ?
    « Oui. ”
    Notamment la BCCI (Bank of Credit and Commerce International) qui a été mise en liquidation judiciaire en 1992.
    J’en étais le liquidateur de 2003 à fin 2011, lorsque j’ai démissionné parce que la liquidation touchait à sa fin et parce que j’avais trop de travail.

    Pour BCCI, un dividende de 86,5 % a déjà été payé. La liquidation concernait 65 pays.

    Ce fut également une réussite pour la place financière.”

    The financial place of Luxembourg has certainly not been helped by these abusive bankruptcies and Luxembourg should wake up to the reality of their terrible reputation which will have long term damaging effects on every product that they try to sell as trust and respect are sadly lacking for a country which cannot abide buy any rules or any codes of behaviour Europe is supposed to endorse and stand for.

    Alexander Edwards

    23 Jan 14 at 7:40 pm

  2. No, it isn’t a coincidence Sigrun. Hamilius and Guillaume were selected together, as friends, to deal with this administration in a way that comes easy for them. Because they do not have any humanitarian scruples towards clients, because they are ruthless without compassion and are prepared to arrogantly impose their rules to any situation, even though they know they are wrong, does not concern them. They feel protected by the Luxembourg questionable system. That is why they were selected, it is definitely not a coincidence.

    JK VICTIM

    23 Jan 14 at 8:43 pm

  3. Thank you Sigrun for your consistency in reporting on this scandal.
    We need all the help and press coverage that we can get.
    J.Wyndham-Davies

    June Wyndham-Davies

    24 Jan 14 at 8:44 am

  4. Many thanks to Sigrun, many thanks to Alexander Edwards and to all the others who help to uncover those criminal actions that affected the lifes of hundreds of pensioniers and that brought so much sorrows, grief and harm.
    How would Yvette Hamilius feel if she were in the position of the victim?
    I am one of the victims in Spain and I still hope that justice will win in the end, although after 6 years waiting and suffering, sometimes I feel sad, worn out and weak.

    Heidi Molkentin

    24 Jan 14 at 8:57 am

  5. Thank God, people are starting to fight our corner. We are pensioners wanting justice so that we may live in peace. Landsbanki have ruined many pensioners retirement. We are the law abiding generation, all we want is for Landsbanki to obey the law.

    Ann Tissington

    24 Jan 14 at 10:14 am

  6. “SOFT TARGET” That’s how the calculating Landsbanki financial planners saw us, easy meat. Sadly it seems the powers that be who we should all trust to protect us against just this sort of scam feel the same way.

    After all, what kind of resistance will a bunch of old fuddy duddies have against these powers.

    Very little except that this bunch of oldies is fighting back. So my message is: Just because we are old don’t think we will take this lying down. We are here for the duration with just one objective in mind and that is to beat this massive corruption and see the perpetrators dealt with as they deserve.

    Nina Foster

    24 Jan 14 at 11:03 am

  7. I agree Nina, we will not give in to this Administrator and the corrupt dealings that has lead us Landsbanki victims to the state we now find ourselves in. Yet another poor victim of this fraud has died due to the terrible stress put on us for the last six years.
    At last an MP is speaking up in Parliament about Equity Release. We must make ourselves heard.
    Luxembourg seems to think it can make up its own rules and not abide by E.U. laws. Why are the other member States turning a blind eye?
    We might be a bunch of oldies but we have paid our dues all our lives and deserve better.

    CAROL HAMBELTON

    24 Jan 14 at 11:22 am

  8. Our Landsbanki Luxembourg Equity Release was a deliberate ASSET -STRIPPING exercise and could never work in the favour of the client, whether there was a financial crisis or not.

    This is important, in order to be able to understand the nature of the product and how it can take on a criminal aspect and fit neatly into the money laundering process especially if there has been a loan from a Central bank made just prior to the bankruptcy which the administrator then pays off .

    This is what happened in the Landsbanki Lux. case where the BCL Central Bank of Luxembourg lent an abusive loan against insolvency rules, to the de facto insolvent Landsbanki.

    This case does not compare with then cases of Equity Release where the bank lending the ER did not go bankrupt.

    In those cases serious fraud, criminal false accounting and abusive SCR claims in order to transform creditors to debtors before the bank closed and so transfer all the money out of Luxembourg, is much more difficult.

    Money laundering becomes a strong possibility when there are so many pointers to ASSET STRIPPING being used to confuse the clean money with the dirty money when paying back the loan to the Central Bank.
    Characteristics of the Landsbanki case compared to other Equity Release schemes.

    1. There is much evidence of fraud in the Landsbanki case.

    2. there was an illegal loan from the CBL which artificially delayed the insolvency allowing the bank to empty client’s accounts and invest massively in Landsbanki, Kappthing and Gliner etc as the bank was already insolvent.

    3. Rothschild & others abusing ER clients, were not bankrupt so none of these suspicious transactions could take place as they did in Landsbanki during pre-bankruptcy and above all post bankruptcy as the crimes were ignored and endorsed.

    4.In the Landbsanki case there are 2 parts both showing fraud.

    a.) the Pre-Bankruptcy crimes which concern both Luxembourg and Iceland mother bank remembering that nearly all Landsbanki funds were going through Luxembourg, as shown in the SIC report.

    b.) the Post Bankruptcy period under Yvette Hamilius where fraud is endorsed, continued and validated.

    5. In the Landsbanki case there are ongoing Criminal proceedings and investigations concerning the allegations of fraud, abuse, mis-selling, embezzlement, false accounting and possibilities of money laundering. These proceedings are going on in Iceland, Luxembourg, Spain and France and London.
    Is Rothschild being attacked for fraud and embezzlement with possibilities of money laundering being behind the ASSET STRIPPING scheme?

    6.The article on Rothschild being debated in the Houses of Parliament says quite clearly that the Ombudsman found that there was no blame to be put on the banks as what happened was due to the financial crisis. This is not the case for Landsbanki Luxembourg.

    This Ombudsman decision seems extraordinary as there is clear mis-selling in all these cases including Rothschild.

    All the schemes are flawed and show mis-selling and it is true that the scheme could never work as shown in the Bryse report. They all abuse the `MiFiD consumer/client protection E.U rulings.

    This applies to all these schemes, some or most of which were ASSET-STRIPPING schemes aimed at ensuring the clients assets were ultimately swallowed by the bank.

    Ours, the Landsbanki Luxembourg was an ASSET-STRIPPING EXCERCISE in order to convert our portfolio and our properties into money to reimburse the illegal loan by the CBL. ( hence the money laundering possibilities behind the scheme.)

    The seriousness of these practices abusing E.U regulations of 2004 on the duty to report all possibilities of money laundering and the serious breaches in the MiFiD rules mean that as Sigrun rightly says, if the clients are being so atrociously abused and the banks so well protected within the E.U. abusing the cross-border trading, then there should be no cross-border trading and no E.U. as it is becoming one big Luxembourg.

    Rachael Williams

    24 Jan 14 at 11:40 am

  9. I am glad that you clearly make the distinction between Rothschilds and Landsbanki Lu. Whilst the two schemes were questionable there can little doubt that the intention on the part of Landsbanki was to steal from their clients under the cloak of acting as investment managers.

    As you so rightly state Prof Eric Briys clearly states in his report that the scheme could never work, nor was it intended to in the way we were all told it would. It was set up by the bank and for the bank to the detriment of their clients and their investments.

    In the words of one of the biggest shareholders in Landsbanki (who appears to have used the Landsbanki as his own piggy bank)when questioned about where the money went “It’s gone to money heaven” With it has gone all our homes by the look of it.

    Such arrogance. I imagine that when he made that statement he probably should have said “Cayman Islands”

    Nina Foster

    24 Jan 14 at 1:16 pm

  10. Thank you Sigrun for continuing the focus on this scandal which is proving so tragic for many people, mostly innocent pensioners. As one of those affected I can attest that the stress and worry over the past 6 years has been immense and still continues.
    We need all the help and press coverage that we can get to fight these ruthless people.

    Linda Proctor

    24 Jan 14 at 4:08 pm

  11. Well done Sigrun – top skills as ever and thankyou for helping to fly the flag. I believe a British MP has raised for the first time in Parliament the fiasco of the offshore equity release scam and I implore everyone involved to write to their MP and MEP asking what the EEC and the British Parliament are doing about this scandal. It cannot be brushed under the carpet anymore.

    Adam Pollock

    24 Jan 14 at 4:35 pm

  12. Good call Adam, it is easy to get their address:

    Who is your MP? – http://www.theyworkforyou.com

    Who is your MEP?

    http://www.europarl.europa.eu/meps/en/map.html;jsessionid=258716885CF251D5BDD3BA607EE7B6D3.node1

    Nina Foster

    24 Jan 14 at 5:49 pm

  13. […] Icelog has already written about several times there are grave questions unanswered regarding these loans: Icelog has […]

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