Kaupthing Bank loaned its staff a total of ISK 47.3 billion (in the region of USD 640 million at the time) solely to buy its own shares in 2006 alone. This comes from the tabloid DV newspaper which claims to have a complete copy of the Kaupthing 2006 loan book in its possession. The newspaper reports, among other things, that Kristjan Arason, then head of commercial banking was granted ISK 893 million in so called ‘bullet loans’. Arason is the husband of former Independence Party Minister of Education Thorgerdur Kartin Gunnarsdottir.
Helgi Sigurdsson, the bank’s chief lawyer also took a loan to buy shares to the value of around ISK 450 million at the same time as a private brief was issued assuring the bank’s owners that everyone’s personal responsibility for share-buying loans would be written off if it became necessary. In an interview with the newspaper, he said that he wasn’t behind the brief about the loan write offs, although admittedly he was responsible for the brief in his role as head lawyer.
In similar news on Visir.is at the end of February, it was revealed that the former Kaupthing Director, Hreidar Mar Sigurdsson established a company in his own name and took a loan to buy shares in the bank. The loan added up to around ISK 3.5 billion and is a ‘bullet loan’ with a payment date in 2011.
Another intriguing deal has become apparent and caused yet more exasperation: It seems the former head of the board at Kaupthing, Sigurdur Einarsson found a foolproof way to build himself an immense summerhouse without any personal risk.
He established an entire company to be responsible for the building of the luxury second home. Therefore, all responsibility for the project’s success or failure would fall on the company and not him. This was clever as the project in 2007 when there was already a strong possibility that property prices would decrease, making the final house worth less than expected.
So here’s the fun part: Einarsson made sure he was personally the company’s longest-standing and largest investor – and therefore the priority claimant if it went under. He invested ISK 218 million in the project before taking a 200 million loan from VIS, a company owned by Exista, which was Kaupthing’s largest stakeholder. SPRON was also tapped for 76 million Japanese yen. All loans were secured with the house itself as collateral.
Now that the project has actually fallen through with the house half completed, it will likely go to auction. Sigurdsson and representatives of VIS and SPRON will all be present and the probable winner will be Sigurdsson himself, because any bid he enters up to the value of ISK 218 million will go directly back to him to cover the money the failed company owes him as priority claimant on its bankrupt estate.
THAT, dear friends, is how to obtain a half completed luxury 840 square metre summerhouse ‘compliments of the house’.
(Photo courtesy of Olafur Kr. Olafsson)
It was reported by IceNews back in June 2009 that DV had a copy of the 2006 loan book of Kauphting. Two months later the revelatory 2008 Kaupthing loan book was leaked on Wikileaks. The public still hasnt seen the 2006 loan book yet. Certainly, Kauphting bondholders would like to see it since in 2006 Kaupthing sold billions of bonds to investors around the world.
I had to stop myself typing a big, detailed reply Fisy, as you’ll just ignore it :) .
Suffice to say that if you can’t see the absolute wrongness with the Arni case and how he has, rather than being socially censured, been allowed back into power, then nothing I say will change your true belief.
I think that a number of the UK MPs are being looked into by the police. Whether anything happens is a different matter, however note a few things:
1. The majority of the claims have been legally acceptable but morally not so. Rather different to raiding a warehouse.
2. The UK parties seem far more sensitive to public pressure. Therefore:
3. People have resigned.
I suspect that (2) is a direct result of the willingness of the media to go after politicians in the UK. Often it’s distasteful, but it does provide another check and balance. One that, I believe, has been pretty-much absent in Iceland – remember how upset some people were at Sackur’s treatment of Haarde?
Finally, regarding Mandelson, just have a look at the wiki entry on him. Change all the names to Icelandic ones and tell me what looks odd. Perhaps things like “he resigned”? :)
Lets imagine just for fun that Iceland manages to get 50% of LB assets to pay for the Icesave scam
how much of that would actually be used to pay back the depositors and how much will be stolen by the elite here in Iceland,
the only way this “sell the assets to pay Icesave deal” idea could work is if we eliminate corruption first, it simply can not be done, they have built a system around them to protect them
and its just too strong,
Valtýr the chief prosecuter who has a son who is Exista’s CEO refuses to resign and can not be fired, former minister of justice Björn Bjarnason, whos son inlaw is Heiðar Már Guðjónsson former CEO of Novator hired most of the supreme court and of course the special prosecutor, and our current minister of justice Ragna Árnadóttir is a former co worker of BB as well,
despite of the obvious fact that most of this took place outside Iceland and lots of foreigners are involved, no one outside Iceland has shown interest in investigating the part of the scam that took place in their country,
the general idea behind the Icesave deal is to incorporate Iceland into the EU,
there for nothing will be done who could possibly prevent this from happening,
some one might think that the serous fraud office in Britain would investigate this but justice and laws come second to politics.
http://www.retail-week.com/careers/appointments/hamleys-picks-ex-baugur-chief-as-chairman-after-board-shake-up/5004064.article
some of the Elite members
http://www.hvitbok.vg/
Árni Johnsen robbed a hardware store in broad daylight :), there was absolutely no way for the government to let that slide, he was convicted and did serve his time but when he got out he was pardoned by some one acting as president because the president was out of the country, from there Árni went straight back to Parliament where he is still in the company of thieves just like in prison,
the only difference is that many of the prison inmates can be reformed,
Árni Johnsen has newer admitted to any wrong doing but has said he made a technical mistake.
One of the reasons why corruption is at a such a high level is that the media is more or less controlled by corporations and politics, just look at BBC which is trash at best,
http://www.timesonline.co.uk/tol/comment/article6591950.ece
news are now sold as product, the people who pay decide what is news,
http://www.youtube.com/watch?v=trWcqxrQgcc
i don’t listen to stod2 fréttir or read Fréttablaðið any more because they are not news media, just propaganda, MBL is slightly better and the most reliable media is RUV if you filter out the trash, i wonder if this has always been like this or am i just noticing this now,
the level of corruption in Iceland is probably similar to Britain, its just better hidden in Britain and fewer “Tecnical mistakes” made by MP’s.
Fisy, I have called the icelandic economic and political system completely corrupt especially because of outrageous cases as the one mentioned above this thread (and there are many more).
You do have a point when you mention that Arni got his prison time , while plenty of corrupt politicians from other countries got off the hook, however I must say that the place where Arni did his time looks more like a holiday home to me:
http://www.nat.is/images/kviabryggja_prison.jpg
Moreover the guy got pardoned meaning that he can not only continue his political carreer but maybe even might get compensation for the time he did (do not know if it works like this in Iceland though?)
Brumley:
>>That there was pardon after he served jail time is different matter.
>
>hahahaha!
Did you be asleep during the last years of political life in the UK when for example case of Peter Mandelsons MP and Minister of Blair from UK parliament who had to resign due to corruption ( as you say would say if he were Icelandic politican ) and was only out of office for only 10 months before he was bought back.
And then he had to resign again for yet more corruption 2 years later ?
And then where did he go after that ? To become UK’s EU commissioner.
And where after that? Back from EU commission into UK government in 2008 as Business Secretary and given a nighthood !?
So tell me Brumley and Peter – London how many politican in UK have been jailed for embezzlement of the tax payer money like Árni in the last years ?
How many will be charged and serve jail time like he due to current expenses fraud scandal ?
Many UK politicians are caught taking far more than Árni and while they have had to give back money how many are going to be charged and serve any jail time at all ?
I particularely cant believe Peter – London attitude to this embezzelement by UK MPs. What next you invite this poor “underpaid MPs” over to take your TV and you DVD player from your house because they deserve it ?
>Do you honestly think that the press or the other parties wouldn’t have, rightly or wrongly, nailed Thorgerdur Katrin Gunnarsdottir if she was a UK politican? If Fred Goodwin’s wife was in the shadow cabinet there’d have been an uproar.
Why would I have any problem with this exposing of people that have done wrong ? As I say in other posts those that have done bad acts cannot take back they actions and will be punished if they broke the laws or they fiduciary duty.
We have the legal system here that is strict about this kind of thing.
I am annoyed that this posters here that I otherwise respect use this broad stroke generalization about Iceland having a ” totally corrupt business and political system” without bothering to list the specific facts and cases. Even ones as Neils !
When you do you find it is a handful or two of business people and politicians that deserve the punishment. For these I have no sympathy but again let them go in front of the judge and be judged on the facts not some witch hunt.
You’re missing the point. New Kaupthing lawyers have advised that the decision to write-off cannot be reversed. Therefore, New Kaupthing won’t be trying to get it reversed.
As we’ve both mentioned, there are other investigations that may lead to prosecutions, but those are a different matter. The prosecutions may well even not attempt to reverse the decision (see legal advice by New Kaupthing’s lawyers :) ).
hahahaha!
See Peter’s comment. Do you honestly think that the press or the other parties wouldn’t have, rightly or wrongly, nailed Thorgerdur Katrin Gunnarsdottir if she was a UK politican? If Fred Goodwin’s wife was in the shadow cabinet there’d have been an uproar.
hahahaha! Afram Island!
Fisy said:
“The sad reality is that in the UK of today — and for last 20 years in EU — unlike in Iceland where Árni Johnsen is the exception that stand out in his unrepentent corruptness and aims of self inrichment at tax payer expense — in UK parliament of today and EU of of last 20 years he is the norm.”
You are comparing the utter, total and thorough corruption in Iceland, a system that has destroyed the countries economy, with underpaid MP’s cheating on their expenses?
At least many of those MP’s are being kicked out. How many politicians, bankers and lawyers will get their comeuppance in Iceland? not many.
>>Brumley don’t forget that opinion of lawyer is not what counts.
>
>Not the case at all. It’s the opinion of the lawyer that counts if New Kaupthing
>decide not to go in front of a judge because of it.
As I say this cases from shareholders and creditor is already on the desk of Ólafur Thór (special prosecutor ) desk. That is why we hear of these cases before.
It is not Kaupthing lawyer or any other that will decide on this.
>I hope you’re not holding Arni Johnsen as an example of the long arm of the Icelandic law.
I am giving him as example to show that corruption is prosecuted and jail time ensues. That there was pardon after he served jail time is different matter.
Just in case it not drippingly clear from my posts such as this one and this one
http://www.icenews.is/index.php/2009/06/16/former-iceland-pm-defends-bank-privatisation/#comment-81564
— let me make it clear that I think that politicians are by they nature to be watched and held in automatic contempt and under scrutiny. I do not care from which party they come — all are suspect.
It is just that some have crazy ideas as well. Which make them doubly dangerous to the rest of us.
The sad reality is that in the UK of today — and for last 20 years in EU — unlike in Iceland where Árni Johnsen is the exception that stand out in his unrepentent corruptness and aims of self inrichment at tax payer expense — in UK parliament of today and EU of of last 20 years he is the norm.
In UK they had that freedom information act that showed it recently.
But they dont have the same in EU commissoin and parliament no transparency like that — they put you in jail and hound you out of you job if you try to investigage — but can tell you that in there there are many like Árni Johnsen from the middle level right to the top in EU commission.
Failed politican in they home memberstates been gravitating there for last 20 years. Once there they become corrupted by the culture of the EU commission.
Jim – under English law you can go back a certain period from insolvency and open up undervalue transactions from the past. Although this is obviously pointless if the targets have limited funds.
Looks like it’s link-to-IWR-day. Not sure where she gets it from, but Alda says today:
“According to latest reports, the liquidation committee of the new bank has not approved that particular move”
http://icelandweatherreport.com/2009/07/kaupthing-bank-dishes-up-yet-another-scandal.html
Helgi Sigurdsson, the bank’s chief lawyer, who wrote off the bullet loans in question wrote off his own loan as well, he quit his job yesterday, because he was unhappy with the critic he was getting because of all this.
this guy got 3.5 b kr in 2006
http://www.dv.is/frettir/2009/7/1/taepir-35-milljardar-krona-til-ethiopisks-sjeiks/
Mohammed Al-Amoudi, he is believed to be one of the richest Arabs in the world, why would he need a loan from KB.
>Brumley don’t forget that opinion of lawyer is not what counts.
Not the case at all. It’s the opinion of the lawyer that counts if New Kaupthing decide not to go in front of a judge because of it. Of course, there are other challenges to the write-offs and perhaps they’ll succeed, but New Kaupthing not challenging them isn’t a good start.
This is of course a separate issue from whether the directors acted as they should have or not.
I hope you’re not holding Arni Johnsen as an example of the long arm of the Icelandic law. He got a full pardon!
http://icelandweatherreport.com/2006/11/corruption-thy-name-is-arni-johnsen.html
DV ( a tabloid like The Sun in UK ) is going to enjoy putting out the results of it getting hold of the loan book of the bank.
I do wonder where same loan book of Glitnir is — but best not to ask questions like that I suppose.
As Gylfi did say in that article you quote at Icelandreview “This dubious method was not restricted to Kaupthing alone,” although he did not name any other institutions.”
Brumley don’t forget that opinion of lawyer is not what counts. It is what a judge rules that does.
steveservaes there is plenty of liability open for those in risk department that approved such loans and the directors that approved it.
As the administration proceess continue shareholder or creditor already have a suit going. Much of what we know of this is already cases on Ólafur Thór (special prosecutor ) desk.
Those that are found guilty of criminial conduct will be punished, ie. fined and stopped from being a director, ..
But do not forget that Iceland is the place where politician found embezzling garden furniture and building materials from national theatre got prison time for the USD 20,000 he took ( as well as having to pay back).
( This was Árni Johnsen who got 2 years in jail — and also a man who ran club in the national theatre that bribed him got 3 months in prison for that bribery.)
Personally I´d love to see a public hanging. After all it is pretty clear who is to blame, even if none of them have the courage to admit their wrongdoings.
“How can it be lawful for an insolvent bank to write off debts owing to it?”
The bank wasn’t insolvent when it wrote-off those loans – and banks write-off loans all the time. However, it seems that only Icelandic banks are allowed to write-off loans to employees that were originally given to buy shares in the bank! It’s over 8 months since the event and no-one been charged, so the only reasonable conclusion is that it’s lawful in Iceland.
How can it be lawful for an insolvent bank to write off debts owing to it?
Under English law such action would clearly be opened up by the bank’s liquidator as an undervalue transaction or breach of directors’ duties to the companies.
Having said that – if the borrowers clearly had no money to repay then it could be written off as a bad debt.
Is there no liability on K Hf’s auditors or directors in respect of all this?
They will all getaway with it. Nobody will prosecute them because they are all connected to each other. Nobody will pay for their crimes except the powerless Icelandic people they manipulated. You can’t deny it, it was a brilliant heist and there is nothing you can do about it but whine, cry and pay. It is an equivalent of enslaving a nation by a few corrupt kleptocrats.
advice: our banks need several HUGE robberies so bankers/people will stop to play with others here.
Notice: that trick is a made of ours since ages. ^^
The most ancient one: http://en.wikipedia.org/wiki/Bank_of_Saint_George
ha ha ha this scandal makes corrupt rulers in the third world countries look like saints
“it is and always has been illegal in Iceland too”
Are you sure?! I read many months ago about those loans being written off and no-one has even been charged yet. If laws aren’t enforced, they effectively don’t exist.
>Don’t worry Jim – it is and always has been illegal in Iceland too.
I hope you’re right. Not because I have any personal stake in it, but it just ****** me off that they might get away with it.
Still, it’s not looking good so far.
http://www.icelandreview.com/icelandreview/daily_news/?cat_id=28304&ew_0_a_id=335658
Don’t worry Jim – it is and always has been illegal in Iceland too. I guess some people just always feel the need to push the boundaries until they snap. And now it falls on everyone in Iceland to mend the fences!
“everyone’s personal responsibility for share-buying loans would be written off if it became necessary”
I wish I could work for a bank like that! It’s a pity that policy is illegal in every other country. LOL…
They will walk free and probably not see any charges.
As a depositor in KSFIOM and looking to lose many thousands of pounds because of the shenanigans of these Kaupthing hf people and their KSFUK henchmen – could you please tell me who the directors of these 2 organisations were, and what actions will be taken against them by eg the Icelandic government and/or courts to require them to personally compensate the companies – hopefull to the full extent of their personal assets – for their breaches of duty to their companies/ at minimum and, if proven, fraud?
Quite incredible, and knowing the icelandic way of accounting these loans were probably going into the books as ‘assets’ and were used to attract even more capital.
Good work Icenews, keep it up:)