Licensed Theft

An anonymous former shareholder reported recently:

"My Dear Sirs,

I wish to report to you a conversation that I overheard in pub in County Durham over Easter weekend between a group of people who either worked for the Northern Rock or who were auditors or advisers to that bank.

I used to be a shareholder before the government stole the few shares that I had and that is why when we heard these people talking we were interested.

These people said that the government were fixing the accounts of the Northern Rock to show a loss for that year when really it had made a lot of money so that they could pretend it was not worth anything when it came to working out how much the shareholders were going to be paid.

They said that instead of the accounts showing over £500 million profits they were going to be fixed so that they would show that the Northern Rock had lost £76 million. This would mean that the shareholders would get less and then the government could fix it back again later to show that they had made the money instead. They said this was going to be done in several places like the losses on loans, some things they called sieves that were going to be showed as being worth less than their neat asset value and they said that they were going to stuff everything in these accounts so they could stuff the shareholders.

I don't know if this means anything to you but it didn't sound right to me and they shouldn't be doing it.

These people also said that the people in charge of the Northern Rock were deliberately not getting all that they could from the business that they were getting out of Denmark. They said that the bosses were just bailing out of Denmark for no money when other banks wanted to buy that business and they could have sold the business for a profit but they didn't care because it was only the shareholders that were going to lose out, not them."

An article covering many of these issues appeared in The Sunday Times on 30 March 2008. Below is a summary:

Northern Rock will reveal this week that it has dived into the red on the back of huge writedowns and interest payments made to the Bank of England...Northern Rock claimed in September that it was on track to make profits of more than £500 million...It is understood that Ron Sandler, the bank's new Chief Executive Chairman, is keen to write off as much as possible...Sandler has already closed Northern Rock's Danish savings business...The Government is expected to approve the shareholders' call for a judicial review.