Barclays Cayman toxic debt move queried by UK MPs

(Telegraph): Suspicions about a scheme devised by Barclays during the financial crisis to spin off its toxic debt have been reinforced by the lack of detail in the deal’s only public disclosure to date. Asked about Protium by MPs on Tuesday, Bob Diamond chief executive said: "We had some illiquid assets that were sold, so Protium is not a part of Barclays." Under a plan orchestrated by Barclays’ investment bank the lender sold $12.3bn risky sub-prime assets in September 2009 to Protium Finance, a Cayman Islands registered fund. Protium was financed by a $12.6bn loan from Barclays and staffed with about 45 Barclays bankers. The arrangement allowed Barclays to "derecognise the assets" – kicking a risky problem "into the long grass", as one analyst said.

At the time, Alistair Milne, a banking professor at Cass Business School, described the deal as "murky" and "suspicious".

Protium is registered at Ugland House, identified by President Barack Obama as "either the biggest building or the biggest tax scam on record". Bar the profit in London, 16 months on, details of the deal remain opaque, though there is no suggestion it is a tax scam.

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