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13 Aug 2010

In an article published in Charities Management Magazine, Hamza Ali, SCI's Director of Finance and IT, explains how he and the trustees disregarded investment advice and recalled SCI's cash on deposits in Iceland's Kaupthing in 2008.

'Since I joined SCI in mid-2005, I have emphasised management risk as the most effective tool. During the recent market turmoil, SCI kept ahead of the curve. We started selling both equities and corporate bonds in spring 2007, and the last sale was in March 2008,' he notes.

Spotting that storm clouds were looming over Iceland, Hamza and the trustees decided to recall SCI's cash on deposits with the Icelandic bank Kaupthing, in the nick of time.

'It was a near disaster, less than a millimetre away,' Hamza writes. 'Significant amounts were placed in 2007 on term deposits with Kaupthing Singer and Friedlander at over 5.5%. The maturity date was mid October 2008'.

'During this period we did not once hear from our two respected investment managers with a recommendation to sell', he says. Kaupthing was nationalised on 10 October 2008.

The Society has since appointed new advisers. 'The investment policy is based on an 'appetite for risk', not chasing 'alpha performance',' Hamza points out.

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