November 02, 2010 Mr. Jaime Caruna General Manager Bank of Intemational Settlements “Sent by email and mail” Centralbahnplatz 2 Basel Switzerland CH-4002 Basel Dear Mr. Caruna: On October 26th, 2010, I tried without success to speak with you by telephone to discuss the matter of the United States Federal Reserve’s failure to credit Tropos Capital Corporation of America, Trustee, with USD$700 billion, which was transferred from the Bank of Taiwan to Tropos in accordance with a valid ACATS. This letter is meant to describe the issues and responsibility of the Bank of International Settlements (“BIS”), and outline its failure to act on this matter in accordance with its own rules and regulations. We have written extensively to the BIS, beginning on June 14, 2010 regarding the Notice of Demand to the United States Federal Reserve for payment of $700 billion, plus the accumulated yield thereon, which was initially transferred pursuant to a valid ACATS on ‘November 4, 2004. Among other things, we requested that you conduct an internal investigation of the United States Federal Reserve, who is one of your members, in order to bring the appropriate sanctions and discipline against the Federal Reserve, which are required by law and your regulations. We have made this request to the BIS because you are the final regulator of your members. On July 05, 2010, we wrote to the BIS advising that the United States Federal Reserve had been noted in default in a proceeding under applicable International Law, the applicable forum for seeking resolution of the failed ACATS transfer. In that letter, we requested, “under the circumstances that you strictly abide by the rules and regulations of ‘Tropos Capital Corporation of America, Inc. 2528 Bayview Avenue, P.O. Box 35535 ‘Toronto ON Coneda M2. 2v4 Tet, 416.946.2777 Fax 416-225:9623 el iomickBatloss net Ags i |3ePusAwae the Bank of International Settlements governing parties in default.” Notwithstanding our request, the BIS took no action. Money is simply credit and when timely settlements occur, the result is a functional, efficient and sustainable system of finance. Have we missed something? Should not the BIS stop all clearing for a member who defaulted on an international settlement of a proper and valid ACATS until the default is cured? Under the circumstances, how can any other member knowingly clear for this defaulted member or even count on the Federal Reserve to clear future international settlements? Have you considered the consequences, intended or unintended, of allowing this behavior on behalf of the United States Federal Reserve? In our letter of September 20, 2010, after no action by the BIS, we drew your attention to your treatises entitled “The Interdependencies of Payment and Settlement Systems,” dated June 2008, and “Central Bank Oversight of Payment and Settlement Systems” dated May 2005, wherein the BIS declares an interest in and oversight of matters in question. Our questions remain unanswered. This now leads to the most basic question, given that you and certain of your directors have officially or otherwise received copies of our letters: have you abided by your own rules of conduct on an executive and board level and informed all your directors of the default of the Federal Reserve to properly credit the $700 billion transferred to Tropos pursuant to a valid ACATS? Have you informed your BIS members, the other central banks, of the default to settle an ACATS transfer originating ftom the Bank of Taiwan? If not, then why not? In our last letter to the BIS, dated October 19, 2010, we pointed out your continuing lack of response to the specific questions raised, and in addition, pointed out to you that under Article 21 of BIS statutes, let alone others, that the BIS has the tools and authority to settle on behalf of a member, the ACATS transfer on an impartial basis prior to any sanctions and discipline being imposed on a defaulting central bank member. Is not adherence to your own standards fundamental to the health of the financial system and a reflection on all parties? What message is sent to existing BIS members, as well as to the emerging nations who are exhorted to maintain a safe and sound banking system? What about the message to Switzerland, your host country, who lies in the shadow of your silence? Why risk credibility when you can act? We understand that the Central Banking System, where the BIS is the regulator, is a private system where each member controls the issuance of private scrip. It is wellsettled that its members own the BIS private system with the United States Federal Reserve having a 37% ownership interest in BIS. Is the world to accept that this system serves private interests at the expense of the global financial interest at large? Where is the competent exercise of your fiduciary duty of care pursuant to your own standards and rules? Will not the passage of time make it inevitable that the BIS become complicit with the illegal action of the Federal Reserve, and thus open itself and its members to joint and several liability for the consequences? Why do this? None of this should surprise you, since we have raised similar questions in earlier writings to the BIS. And all of our questions to the BIS remain unanswered. What are we to make of your silence and your general failure to respond to our request to complete the ACATS transfer? This matter is perhaps unheralded in magnitude, but all within your discretion and ability to solve. History teaches us that for centuries nations have been controlled by treaty and adherence to standards set by central banks as issuers of private scrip. And in so doing, banks in those countries are brought into line by the issuance of standards, which are enforced. Is not the health of the banks and therefore the central bank system, a function of agreement to have integrity in the application of standards that give rise to growth and to protect private individuals and corporations from pillage by a transfer trustee (Federal Reserve)? Surely this does concern the BIS! Sadly, your delay and apparent refusal to redress this grievous failure to complete a valid international ACATS settlement raises the question of the safety of any funds transfer by any person or company or country. It raises further questions about why parties should accept your direction, if action by you is of a one-sided benefit for your existing members. ‘Your failure to date to act on behalf of Tropos in the aforesaid described ACATS matter undermines world cohesion in banking on global scale. One would have expected that the BIS would have been proactive in this regard. ‘Not long ago in a speech, Jean-Claude Trichet, the current president of the European Central Bank, emphasized “global governance is of essence to improve decisively the resilience of the global financial system.” Trichet went on to say in a speech at the Bank of Korea “central bank cooperation is part of a more general trend that is reshaping global governance.” As the pinnacle of central banks, one imagines you would lead in this direction by example, which certainly, is not demonstrated by your lack of action over a failed international settlement by one of your members. (ye? fh if? 23eTUSA ° ia acPUSAUSA ‘We along with many other interested parties wait to see what action the BIS will take in this matter, ‘Yours truly, Robert G. Hryniak President 416.820.9325,