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British Banking History Society

Bank of Alderney

It has been said that the whole of the world's population could be contained on the Isle of Wight. It is not claimed that they would be comfortable, but they would be there. Try the same exercise on Alderney in the Channel Islands and not a few people are likely to fall off perhaps to be swept away by the notorious currents of the Race of Alderney, or to fall foul of the jagged rocks of Les Casquets. In fact this island of some three square miles accommodates around 2,300 individuals, chiefly within the capital, St Anne's.

It has also been said, you may think somewhat unkindly, that the island is inhabited by 2000 inebriates clinging to a rock whose main export is empty bottles floating away on the tide. Perhaps someone is jealous or themselves has been drinking too much - I cannot say. Officially the local industries are dairy farming and tourism - to which, with tax rates in mind - might be added banking and finance. From the eleventh century, part of the domain of Normandy, the island is now within the Bailiwick of Guernsey, but has a President and States popularly elected and a Court of Justice. To be one up on the average tourist, please note the following - the ancient strip farming fields in rectangular blocks are known as riages; turnings for ox teams are vaindifs and the gatherers of seaweed vraci tcherieux.

Things, you might conclude, are/were a bit different over there - and that brings us to a long lasting trial - scheduled to last for eight weeks - held in the early part of 1966 at the Old Bailey. Now the complexities of fraud cases are notorious: after a lifetime's training in the law the judge just about follows the script while the jury shuts its eyes and dreams of Marilyn Monroe and/or fish and chips. Hence the ensuing account of proceedings is much simplified. Three company directors - Messrs Burden, Kraft and Stekel - were charged on an indictment of seventeen counts alleging conspiracy to defraud and fraudulent conversion. (Incidentally the gaff had been blown by an article in the Financial Times.) The prosecution was conducted, most appropriately, by Mr J Buzzard of counsel.

It emerged that, while it was difficult for anyone to get Board of Trade approval to establish a company with the name "Bank" in the title, at that time no such difficulty applied within Alderney, where registration took place in 1953. In the spring of 1960 the Bank of Alderney was registered as an overseas company in the United Kingdom. Originally seven subscribers had somehow managed to scrape together enough to purchase shares of two shillings each, giving a grand total of fourteen shillings in paid up shares. (There was a hiccup since the Bank's Memorandum of Association had failed to allow the company to trade as a bank - voluntary winding up and reformation was necessary.) The allegation was that Messrs Stekel and Kraft obtained control of three rubber and one shoe company through purchase of the shares of those company by utilising the funds of the companies they were buying. Part of the wheeze involved the purchase and use of the so-called Bank of Alderney Limited purely as a vehicle in which to pass funds - a lesser species, one supposes of money laundering. November 1959 saw several of the companies sold to Leonard Burden after a complicated series of financial transactions which left him holding the baby and not much else. The upshot was the conviction in respect of fraudulent dealing of Messrs Stekel and Kraft, each of whom were fined 60,000. But the story was not over.

At the Metropole Hotel, Brussels on 4 June 1965, a Mr F J Edwards, described as a modest property tycoon, who had been Mayor of Twickenham, agreed to purchase the bank, which by the way, also had branches in London and Malta. The price was 102,500 but no money passed - there being an agreement to charge securities. There arose - among much else, liquidity problems. Payments were suspended and doors closed. We have already encountered a Buzzard - now there flew in a Heron - to be precise one Graham Heron, international finance broker - who expressed interest in purchasing the bank. The transfer of ownership was supposed to occur at a board meeting in August 1967, held at Le Bourget airport, near Paris. Nothing could be that simple though and we then find a summons taken out by the appointed liquidator against Mr Edwards. These proceedings took place at the centuries old Court of Alderney. It will be no surprise to find the court employing, in its judgment, words such as 'confusion', 'disaster', 'dubious transactions' etc. The result was an award of some 250,000 against the aforesaid Frederick Edwards.

It should, in fairness, be mentioned that, at certain times in its peculiar history, the Bank of Alderney Limited did legitimately take money on deposit, issued its own cheque forms and otherwise acted as a normal banking institution. Liquidated it was, though, in May 1968. Do not worry about the islanders, they currently have a good choice of branches on the island. Natwest, HSBC, Lloyds TSB and Portman Channel Islands are represented on the island.

Tony Beale

Click here for a large size picture of a Bank of Alderney cheque.

Copyright 2010 BBHS