The former manager is accused of taking ISK 26 million (EUR 164,000) from the publicly-owned company and he faces up to six years in prison.

According to the charges, which were handed to the defendant just before the new year, the deductions began in November 2003 and carried on until September 2008. The accused was at the time manager of the Reykjavík Energy horticulture department; which deals with selling heat and electricity to geothermal greenhouse operators.

The former horticulture manager is accused of having given out 58 ungrounded invoices over the five year period. In many cases he is accused of personally producing documentation, receiving the invoices and granting payment on behalf of Reykjavík Energy.

He is not, however, accused of stealing the money for his own use. During most of the five year period in question, the manager was also the chairman of the Icelandic Horticulturists’ Association and the money he took, according to the charge sheet, was used to pay the wages of two women who were employed as directors of the horticulturists’ association. One of them received ISK 11 million of the money between 2003 and 2005; while the other got ISK 14 million between 2006 and 2008. Neither of the women is accused of any wrongdoing, RÚV reports.

The man in question was sacked from his job in autumn 2008, when the case first came to the attention of police. The case later transferred to the special prosecutor when his office merged with the police economic crimes unit.

Reykjavík Energy is demanding all the money back from the accused, with interest; while the special prosecutor is calling on the courts to make him pay all legal costs and serve up to six years in gaol, if found guilty.

Reykjavík Energy is deeply indebted and needed to be bailed out by the City of Reykjavík. It is a private company whose shares are entirely owned by local governments (mostly the City of Reykjavík). Its mandate is to serve the people of the capital region; but it was liberalised by politicians to such an extent that it was able to participate fully in the speculative investment and borrowing of the boom years, fully backed by an unsuspecting public. More on that story here and here.

The loan deal was signed in a ceremony at the Hellisheidavirkjun geothermal power station in south Iceland.

The money will be used to finance development of the highly volcanic Hengill area near the towns of Selfoss and Thorlakshofn and where Hellisheidavirkjun is already located. The first priority of the project is the completion of part five of the Hellisheidavirkjun project, due to come into service at the end of 2011 with production of 90 megawatts.

The rest of the loan will be used to finance half of a new geothermal plant to be built at Hverahlid, which will also produce 90 megawatts – most likely for the new aluminium smelter at Helguvik, RUV reports.

Eirikur Hjalmarsson, Reykjavik Energy Public Relations officer, told RUV that the loans are necessary because of the severe financing crisis that caused a near total drying up of funds a year ago which have the potential to slow down or stop projects.

It was therefore decided to look for loans on the domestic short-term market and a short term loan of ISK 5.5 billion since the banking collapse has been secured, but the terms are not considered sustainable. Hjalmarsson says that before the collapse Reykjavik Energy was always able to finance its projects with cheaper foreign loans.

The use of domestic short-term loans is much more than initially predicted, so financing decisions are being made directly by the board.

The board of Reykjavik Energy yesterday voted to accept Magma’s offer to buy 16.58 percent of HS Orka. The company will also purchase a 15 percent share from the Town of Hafnarfjordur.

The sale of Icelandic energy resources to foreigners has never happened before and has caused considerable controversy; especially as Reykjavik Energy is a publicly owned company. Some argue that foreign investment will bring new opportunities, experience and credibility to the Iceland’s huge renewables market, while others feel that energy independence is paramount and that public assets should not be sold to private firms – especially as Iceland is already a world leader and expert nation in renewable energy production.

Social Democrat representative in Reykjavik council, Dagur B. Eggertsson told mbl.is that the purchase contract has been carefully designed so that its details will only be available to politicians, public officials and councillors. He says that as Reykjavik Energy is a publicly-owned company, the public should be able to assess the contract personally.