News from NRSAG/UKSA

Northern Rock Shareholders' Action Group   Newsletter No. 66

In This Issue Northern Rock Valuer's Final Assessment Notice Did investors have the correct information on which to base their decisions? What action can you take? Update on legal case Deregistration of 'free' UKSA memberships Support, funding and donations Please advise address changes On-going Chairmanship  Quick Links Action Group Details and Registration   Campaign Donation   About UKSA   Address changes email address   Template letter to Valuer    Mr Caldwell's email address   Contact details for your MP

Northern Rock Valuer's Final Assessment Notice You will no doubt now be aware that on the 30th of March, Andrew Caldwell announced his unsurprising decision to value our former shareholding in Northern Rock as worthless.   In his Final Assessment Notice, he quotes the artificial valuation assumptions on which he is bound by law to base his valuation. He is not bound though by moral or professional standards to accept such terms but has chosen to accept them nonetheless.   This latest statement is no different to that given by him in December 2009 where Mr Caldwell requested representations to be made to him, representations on behalf of well over 130,000 small shareholders that appear to have fallen on deaf ears.   As invited by Mr Caldwell, we will be seeking reconsideration of the nil valuation with the hope that such requests receive the required consideration although it would seem that, as long as the Governments artificial terms of reference are allowed to stand in law, Mr Caldwell having accepted the appointment of valuer, may have no choice but to choose law over moral obligation.   You can also take action to further represent your views to Mr Caldwell, which we have detailed below.   Only the day before Mr Caldwell's statement, the Chancellor stated that Northern Rock had enough Capital: the Special Liquidity Scheme announced only weeks after Nationalisation of Northern Rock would have provided the liquidity required to continue as a "Going Concern". This key assumption required to arrive at a fair value was not allowed under the Compensation Scheme Valuation Order.   With over £500 Billion available under the Special Liquidity Scheme and Inter Bank guarantees from April 2008 Northern Rock would have continued as a solvent, liquid, profitable entity, therefore supporting the small shareholders claim that their Human Rights have been violated firstly by the Compensation Order and finally now by Mr Caldwell's report. Did investors have the correct information on which to base their decisions? Only two weeks after Andrew Caldwell valued the former shareholding in Northern Rock as worthless, the small shareholders now find the information on which they based their investment decisions was flawed.   The FSA announced their fines of Mr Barclay and Mr Baker for their part in manipulating figures on the performance of Northern Rock's mortgage book but as yet we have to hear the involvement of Mr Applegarth. So far, Mr Applegarth has been legally gagged and prevented from commenting, but did he and his fellow Directors also know about this manipulation or were Mr Barclay and Mr Baker really alone in this decision-making?   Where were the regulators in analysing their information? Or have we forgotten the regulators involvement, or lack of, in the lead up to the financial crisis. Or the legislators, including Gordon Brown, who as Chancellor changed the limits applicable to the borrowing capacities of banks and building societies 12 years ago.   Where 'fairness' now appears to be a political buzzword in campaigning, the small shareholders would like to see evidence of fairness in practice, not just in a manifesto for votes. It would seem that the government would lay the blame solely at the door of 'greedy bankers'. Whilst this may be true in part, the outgoing Government bred the said greed in pedigree conditions.   These latest fines fully vindicate the small shareholders claims of ill treatment not only by the governance and regulatory framework but also by the institutions in which they invested. Such governance turned a blind eye and failed miserably to protect the rights of investors large and small. What action can you take? As with his December statement, Mr Caldwell has invited former shareholders to make share their views and thoughts through written representations to him on why he should reconsider this assessment. To reiterate from our last update, it is important to recognise that this news completely vindicates our assertion that the terms of the compensation order were manifestly unfair, and the fact that this valuation has finally been released will remove much of the uncertainty that the government and its lawyers have hidden behind in their (now demonstrably false) allegations that the terms of their compensation order adequately allow for the payment of fair compensation to shareholders. To this end, former shareholders should write to Mr Caldwell as he has invited them to do so, by the 5th of May 2010. Former shareholders should also make representations to their MPs who sanctioned the legislation that brought about the demise of our assets. To assist, we have prepared template letters for the valuer. Please feel free to edit this template and include your own thoughts, comments, frustrations and anger in your own letters. The template can be found on the website at: www.uksa.org.uk/valuerletter    Your letters can be also be emailed to Mr Caldwell at: northern.rock@bdo.co.uk   You can locate the contact details for your MP at: http://findyourmp.parliament.uk/ Update on legal case: Application to European Court of Human Rights (ECHR) Following the announcement from the Supreme Court that it would not be accepting the application made by Northern Rock shareholders to appeal the earlier decision of the High Court, the legal case continues to make its way into the European Court of Human Rights in Strasbourg, although it could take up to 3 years for the case to be heard and a decision known. We will continue to support the small shareholders, headed by lead plaintiff Dennis Grainger, who are now to progress their case to Strasbourg, arguing the case "afresh" (as opposed to an appeal), in a court where the judges have historically had no compunction in making EU-member governments such as ours accountable for the violations of the human rights of EU citizens.  Note that as this will be a lengthy process, you may receive less frequent newsletters in future from us. Deregistration of 'free' UKSA memberships We continue to extend our thanks and gratitude to all those supporters who have donated to this campaign. Some of you will have donated based on receiving a complementary 'free' membership of the UK Shareholders Association (UKSA), reverting in subsequent years to being fully paid up members of UKSA upon payment of the annual fee (currently £50). It is important to remember that this campaign is run and operated as a separate committee of UKSA, the independent not for profit organisation who represent the views and campaign on behalf of us all, the small private shareholder. It has recently come to light that the UKSA Board feel they cannot recognise such free members and have written to 'free' members in effect canceling their membership, although they have offered fully paid up membership upon payment of £25 to UKSA for this. If you are a supporter whose membership has been deregistered in this way and you do wish to remain a member of UKSA, please contact Chris Hulme, the Co-Chairman of this campaign on 0161 434 6016 or by email to northernrock@claytonhulme.co.uk Irrespective of your 'membership status' with UKSA, as a supporter of this campaign, we value you input, support and generosity and we will not deregister you from our contact list or this campaign (unless you wish to do so). Support, funding and donations Thank you to all those supporters who have donated to support this campaign. More than sixteen thousand supporters have now generously donated, and we are very grateful for their financial help that not only helps fight the legal battle but also covers some of the costs of keeping you informed of progress. There are many former shareholders that we haven't yet been able to reach. To this end, we would ask that you forward on this update to any friends, family and work colleagues who you feel may have an interest in the case or may know someone who would. Whilst the Government has significant resources to defend our case against them, we are operating on a voluntary basis and still need donations and financial support to continue the fight on your behalf and any donations are gratefully received. Donations can be made directly to UKSA at the following link where you can also find all of the updates on this case: www.uksa.org.uk/NorthernRock.htm We will provide our next update as further news and useful information arises. Until then, thank you once again for your support. Template letter to Andrew Caldwell [Insert your name and address here]   Andrew Caldwell Northern Rock Valuer c/o BDO LLP 55 Baker Street London W1U 7EU   27 April 2010   Dear Mr Caldwell Thank you for your latest letter concerning your so-called "independent" valuation and your suggestion that my former shareholding in Northern Rock is worthless. It is strangely reminiscent of your letter in November last and you appear to have taken no notice whatsoever of my comments sent to you at that time. You have maintained from the beginning that your role was "to conduct a fair, open and transparent valuation", in fact your paymasters have used the term 'fair' on many occasions of late, more recently in their campaigning for MY vote in the General Election. For fear of repeating my comments in my last letter to you, how on earth could you proceed with the work as an "independent valuer" when the Government had set the valuation rules in contradiction to any possible independence? This repetition is absolutely required. My comments in my previous letter appear to have fallen on deaf ears, as you have made no attempt to consider my views, or any of the views of the small shareholders in your assessment. I suspect that this letter will also fall on the same deaf ears. It therefore continues to be unforgivable and questionably professional of you seemingly to set aside a moral standpoint in order to undertake paid work such as this. I call upon you to inform your paymaster and employer that you cannot fulfil this moral duty that affords ALL parties an even, balanced and fair view of the assets of the business that was Northern Rock plc. I therefore implore you to show full understanding and apply moral fibre in your final deliberations and, at the very least, advise your paymasters in your report that, without the said assumptions being forced into the deliberation, you would have no hesitation in finding that there was a substantial value of company net asset worth belonging to us as shareholders at the time Her Majesty's Government confiscated OUR property. Yours sincerely Please advise address changes Please advise any postal or email address changes to uksa3@btconnect.com (telephone 0208-468-1027). It is particularly important to do so for email address changes otherwise we may lose touch with you altogether. And please include some other identification such as your postal post code and your name so we can identify you in our database when sending us such communications. On-going Chairmanship Chris Hulme and Shum Ghumman are continuing to act as co-chairman of this action group and their contact details are: Shum Ghumman                                     Chris Hulme T: 07872 617 737                                  T: 07775 794 291 On behalf Northern Rock Shareholders Action Group Email: uksa3@btconnect.com Web: www.uksa.org.uk Note that all previous "Update" notes on Northern Rock that we have issued are present on the following web site page: www.uksa.org.uk/NorthernRock.htm . PLEASE DO NOT REPLY TO THIS EMAIL TO NOTIFY CHANGES OF EMAIL OR POSTAL ADDRESSES OR FOR ROUTINE INQUIRIES. THOSE SHOULD BE SENT TO: uksa3@btconnect.com, Tel: 020-8468-1027

Stolen

Finance chief David Jones leaves Northern Rock


Stolen from The Journal Apr 21 2010 Story by Matt McKenzie



A FINANCE chief under investigation as part of a City watchdog inquiry into mortgage figure manipulation at Newcastle-based lender Northern Rock has left the business, it has emerged.



The bank said David Jones had quit the asset management side of the company with immediate effect ``to focus on an ongoing Financial Services Authority (FSA) investigation into matters relating to a period before the company entered public ownership".



It is believed the regulator is investigating Mr Jones in relation to a recent inquiry into misleading mortgage arrears figures at the lender, which last week resulted in a near-record fine for its former deputy chief executive.



Details of the FSA investigation emerged when former deputy chief executive David Baker was fined £504,000 and banned from working in any regulated activity after the watchdog found that he misled shareholders and analysts by quoting inaccurate data.



The fine is believed to be the highest ever for this type of offence and one of the largest handed to an individual.



A £140,000 fine was also handed to Northern Rock’s former managing credit director Richard Barclay for failing to ensure the accuracy of the figures.



Newcastle-based Northern Rock collapsed into public ownership in early 2008 after it was forced to seek emergency funding from the Bank of England and suffered the first run on a UK bank for 150 years.



The bank has now been split into so-called ``good" and ``bad" banks. The former contains £10.3 billion of the mortgage book and £19 billion in retail savings and is set to return to the private sector.



The latter is the asset management business, which holds approximately £50 billion of residential mortgages and unsecured loans of £3.9 billion. This business also holds the Government loan and does not offer any new mortgage lending.



A statement from the company said Hugh Graham, current head of its treasury operation, has been appointed as its interim chief financial officer, subject to FSA approval.

Another top Rock director being probed?

According to today's Sunday Times, another senior executive at Northern Rock at the time of the crash is under investigation by the Financial Services Authority. The FSA's judgement about heavily-fined and banned David Baker mentions a "senior and suitably qualified colleague" who "also expressed the view that there was no obligation to amend statements in the annual 2006 accounts, which were about to be published" about nearly 2000 impaired mortgages.

The Sunday Times alleges this person is former Finance Director David Jones, who was close to Adam Applegarth at the time. Nobody is saying anything on the record. This modern trend of "spinning by leak" is reprehensible and unfair. But the emerging facts about Northern Rock imply a failure of regulation, and one wonders if there is the possibility of Equitable Life - type legal action against the company, the Government and individuals. No doubt that is something the big corporate shareholders are pondering even as this is written!

Massive fines for faulty bankers

The Financial Services Agency has hit the former Deputy Chief Executive of Northern Rock with a fine of over £500,000 - and a colleague in charge of the Debt Management Unit £140,000. The full judgements and a news release can be found on the FSA website.

David Baker, 57 next month, retired from Northern Rock in early March 2008. At the time the chairman Ron Sandler praised his "immense contribution to the business" (For which he was paid in excess of £530,000 a year. He sold Northern Rock shares for £1,200,000 in January 2007. The shares started to slide shortly thereafter down to their present worthlessness. The zeroes seem to have been unequally distributed...)

Baker has been fined and banned "as a result of Mr Baker's misconduct as an approved person under section 59" of the Financial Services and Markets Act 2000.

He was found guilty of a lack of integrity in that he knew in December 2006 that 1,917 loans had been omitted from the impaired loans figures but he did nothing about it, and then made misleading statements.

Richard Barclay, who left Northern Rock last month, knew that the firm’s arrears position enabled senior management within NR, analysts and the FSA to form a view of NR’s asset quality, but failed to ensure that the management information reported by the DMU was accurate despite warning signs at an early stage.

Robin Ashby comented "This is outrageous, but the punishment has been savage. There are immediate questions that must be answered:

"Did anybody else in Northern Rock know about this deception, and if not, why not? What did they know and when did they know it? Who else is to be held to account?

"Who will pay the fines? Are they personal - if so, they are about a year's wages. If not, are they being paid by the company, in effect the taxpayer?

"And what actions will the company now take against the individuals, whose bonuses may well have reflected a level of performance which is now shown to have been based on false premises? I believe Baker took a reduced pension and pay off when he left. was there a deal here? And what were the terms of Barclay's departure?

"Shareholders and other stakeholders who have suffered so grievously need answers, and need them promptly."