LONDON (AFP) — Prime Minister Gordon Brown stepped up pressure on Iceland Thursday as Britain tried to establish how many hundreds of millions of pounds of local government cash had been in frozen Icelandic banks.
“What happened in Iceland is completely unacceptable,” he told BBC television. “I’ve been in touch with the Icelandic prime minister, I’ve said that this is effectively illegal action that they’ve taken.”
He added: “We will take further action against the Icelandic authorities wherever that is necessary to recover the money.”
Brown earlier said Britain was “trying to freeze the assets of Icelandic companies here” and told Sky News television Britain had “taken action to seize the assets of Icelandic banks.”
A Treasury spokesman told AFP this referred to the decision announced on Wednesday to freeze the assets of Icelandic bank Landsbanki using anti-terrorism laws.
Brown’s tough talk came as the Local Government Association, which represents local councils, said that 108 of them had deposited nearly 799 million pounds in Icelandic banks.
Many local councils say there is no risk to services such as housing, social services and waste disposal but the LGA said some may have “specific problems”.
It and the government issued a joint statement after meeting Thursday saying they would agree “an appropriate set of ways to assist” local authorities facing “severe short-term difficulties.”
One local authority, Kent County Council, had 50 million pounds deposited in Landsbanki’s British subsidiary Heritable and Glitnir Bank.
Transport for London, the agency responsible for the capital’s public transport, had a further 40 million pounds invested with Kaupthing Singer and Friedlander.
The bank, along with Glitnir and Landsbanki — Iceland’s three biggest — have all been nationalised by the government in recent days.
Some 15 police authorities — the bodies which oversee police forces — also had nearly 100 million pounds invested in Icelandic banks, according to the Association of Police Authorities, which represents them.
London’s Metropolitan Police Authority said it had 30 million pounds invested in an Icelandic bank out of a budget of 3.5 billion pounds.
The meltdown in Iceland has sparked a diplomatic dispute between the two countries, with London threatening legal action over depositors’ savings.
Reykjavik, however, has said the two countries would work together to try to find a solution through official diplomatic channels.
Brown announced legal action against Iceland on Wednesday, but officials could not confirm on Thursday if London was pressing ahead or seeking a diplomatic solution.
The 410 local councils in England and Wales are responsible for around 113 billion pounds’ worth of spending and employ around 2.2 million people in services from culture to refuse collection.
Brown has pledged to do whatever it takes to recover individual savers’ money from banks including Icesave, an online British arm of Iceland’s second biggest bank Landsbanki.
Press reports said nearly 300,000 British customers had four billion pounds deposited in accounts with Icesave.
But Finance Minister Alistair Darling admitted the protection may not extend to councils.
“I think they’re in a slightly different position in that they are more of an informed investor,” he told lawmakers Wednesday. “But this situation is evolving, we are trying to sort the matter out with the Icelandic government.”
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18/02/10