Financial investigators raid houses in Iceland and UK

[Cees Binkhorst]

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Wel de daders een mogelijkheid bieden in Engeland te leven mét de
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Wat is de rol van Morgan Stanley en Citigroup die, de dag vóór de
bevriezing door de IJslandse autoriteiten, de uitverkoop van assets
faciliteerden?

Groet / Cees

Financial investigators raid houses in Iceland and UK
http://www.icenews.is/index.php/2010/01/27/financial-investigators-raid-houses-in-iceland-and-uk/
Posted on27 January 2010.

The special prosecutor’s office in Iceland yesterday carried out house
searches in co-operation with the UK’s Serious Fraud Office. There were
eight house raids in Iceland and four in the UK relating to the dealings
of Exista hf.

Exista is being investigated due to its sale of Bakkavor in autumn 2008
and its cancellation of personal guarantees on employee loans taken out
to buy shares in Exista.

Exista itself released a statement saying that the Serious Fraud Office
is investigating share transactions from when Exista owned part of the
British high street chain JJB Sports.
--------------------------------------------------
INTERIM REPORT – January - September 2008 (page 7)
The collapse of Kaupthing and the sale of assets
Following extremely harsh action taken by the British authorities
against Kaupthing’s subsidiary in the United Kingdom, the Icelandic
Financial Supervisory Authority intervened in the operations of
Kaupthing Bank on 9 October 2008, based on the authority contained in
new legislation on unusual circumstances in the financial markets. That
intervention made a profound impact on Exista’s financial position, but
because its holding in Kaupthing is only secured to a limited degree,
the Group was able to respond to dramatically changed circumstances.
After the end of the third quarter, the Group sold substantial assets.
On 7 October, Exista sold its entire 19.98% holding in Sampo Oyj. The
shares were sold in a book building offering to a number of
institutional investors at EUR 11.50 per share. Morgan Stanley and
Citigroup acted as joint bookrunners. As a result of that transaction,
neither Exista nor any of its subsidiaries owns any shares in Sampo. On
9 October, Exista sold its holding in Storebrand ASA, amounting to 8.69%
of the company’s total share capital, to Gjensidige Forsikring BA. The
shares were sold at NOK 20 per share. After that sale, neither Exista
nor any of its subsidiaries owns any shares in Storebrand. Finally, the
Board of Directors of Exista decided to sell the stake in Bakkavör
Group, which amounted to 39.63% of total share capital in the company,
to Lýdur Gudmundsson and Ágúst Gudmundsson, founders and managers of
Bakkavör Group, through their company ELL 182 ehf. The price is ISK 9.79
per share, the last closing price for Bakkavör Group shares prior to the
sale. The transaction is subject to the approval of lenders.


Iceland falls out of love with its billionaires
Heroes no longer: the tide has now turned on Iceland’s super-rich.
http://www.telegraph.co.uk/

By Rowena Mason
Published: 10:06PM BST 19 Oct 2008

Iceland’s new billionaires were once the heroes of its rags-to-riches saga.

Tales of fast cars, yachts and penthouses, accounting scandals and
Russian money did not seem to hamper the country’s love affair with its
self-made men.

But as Iceland’s financial system collapsed under a banking system ten
times the size of its economy, the nation’s romance with the very
wealthy came to an abrupt end.

Only now have citizens of the volcanic island begun to suspect they have
been sitting on a gigantic pyramid scheme, built by the men celebrated
for bringing the country its riches.

“Everyone is asking: where are they now?” says Katrin Sigmundsdóttir,
ruefully pushing two children in a pram up Reykjavik’s main shopping
street. “I am going to struggle to pay the mortgage this month. There
are no more private jets at the airport and no billionaires to be seen.”

Public anger has centred on three families and their involvement in
Iceland’s three biggest banks, Glitnir, Landsbanki and Kaupthing, which
were all seized and placed in receivership by the government. The bank
boards assured the world they had cash to survive the credit crisis, but
it turned out Iceland’s institutions were the most over-leveraged in Europe.

Among the banks’ main backers and board members were the men who led
Iceland’s charge for financial supremacy in the eighties and nineties:
shipping and brewing moguls Björgólfur Gudmundsson and his son, Thor
Björgólfsson; retail magnates Johannes Jonsson and his son, Jón Ásgeir
Jóhannesson; and frozen food entrepreneurs Lydur Gudmundsson and his
brother, Ágúst Gudmundsson.

Treated as celebrities in their homeland, Icelanders credit them with
wresting financial control of the island from its ruling conservative
elite – once called the Octopus in reference to its strangulating grip
on political life. Many say it was their entrepreneurial spirit, not the
government’s policies, that dragged the country from being the second
poorest in Europe to the fifth richest nation in the world.

“It was all arrogance and hubris,” said one weary economic adviser,
stopping for a cigarette outside Reykjavik’s lakeside parliament
building after an evening of crisis meetings. “The boards ran the banks
like aggressive entrepreneurs. What made them believe they could be
inflated to this size? Now the state has to clear up this mess the banks
and their backers have made.”

Iceland’s biggest businessmen built these empires as risk-takers by
swooping on undervalued European companies, but several years ago, they
began to turn their attention towards the country’s burgeoning banking
system. With interest rates in double digits, it was easy to attract
foreign savers and the banks borrowed readily from abroad – until the
credit markets froze and it became difficult to re-finance their
enormous debts.

The first dollar billionaires to emerge from the tiny island of 300,000
inhabitants were Björgólfur Thor Björgólfsson and his father, West Ham
FC owner Björgólfur Gudmundsson. Björgólfur, who has convictions for
false accounting and estimated wealth of $1.bn (£635m), built up his
fortune in shipping.

His son, known as Thor, sold Russian brewery Bravo to Heineken and
created a pharmaceuticals empire netting him riches of more than $3bn
(£1.7bn). The pair went on to found an investment company, with a 32pc
stake in the country’s biggest investment bank, Straumur, and a 45pc
stake in the second biggest bank, Landsbanki. Björgólfur was chairman of
Landsbanki and Thor is still chairman of Straumur.

Another key player is Jón Ásgeir Jóhannesson – known as the “popstar
businessman” on account of his shaggy golden mullett – who took over the
Bónus bargain supermarket business from his father Jóhannes Jónsson.
This was the starting point for Jón Ásgeir’s Baugur retail empire that
conquered most of the British high street, including Hamleys, House of
Fraser and Oasis, and owns much of Iceland’s media. Details of his
playboy lifestyle were revealed by his former mistress during a trial
that found him guilty of false accounting, prompting Baugur to relocate
to the UK.

He spotted an opportunity to make money from banking when his investment
vehicle, Stodir, took a 32pc stake in the country’s third largest bank,
Glitnir. When the government’s decision to nationalise the
under-capitalised Glitnir sparked the current crisis, Jón Ásgeir’s
long-running feud with the Icelandic central bank was resurrected. The
businessman had previously accused officials of trumping up embezzlement
charges – a crime of which he was later cleared – and recently he
described the forced sale of Glitnir as “the biggest bank robbery in
history”.

Lastly, Lydur and Ágúst Gudmundsson are co-founders of the Bakkavör food
group, which makes ready-meals for Tesco, Asda and Marks & Spencer. The
brothers, less prone to the exuberant lifestyle of their fellow
billionaires, had a net worth of around $2bn (£1.2bn) last year.
Together they founded investment vehicle Exista, which had a 23pc stake
in the country’s largest bank, Kaupthing. Lýdur was vice-chairman of the
bank.

Each will have lost small fortunes when their stakes were wiped out
during the nationalisations, but few Reykjavik residents have sympathy
for those they partly blame for breaking the banks.

A presenter on an Icelandic TV channel was the first to air this
resentment in the only interview Jón Ásgeir has given since the start of
the crisis. “Why won’t you sell your penthouse apartment in New York and
your yacht?” he asked. “Sell the assets, give the proceeds to the
government and take responsibility for this.” Jón Ásgeir maintained he
is no longer financially secure for life and played no part in the
risk-taking strategy of the banks. But he failed to convince many
Icelanders.

“We are angry with the billionaire owners who ran the banks and pretty
much everything else in this country and have now disappeared in times
of trouble,” says editor Bjarni Brynjólfsson, in the English-language
Iceland Review.

“We are angry with the authorities who did not step in and demand some
securities from the conglomerate banks to prevent this economic meltdown
from happening.

“We are angry with ourselves for being foolish and for not having
listened to the voices that warned us about the recklessness of the banks.”

If people are incredulous at the banks, they are equally incensed by the
inaction of the Central Bank, governed by former prime minister Davíd
Oddsson, who presided over years of deregulation. ”lafur Ísleifsson,
professor of economics at Reykjavik University, says he cannot
understand why the Central Bank did not act sooner.

“The Central Bank has done too little too late,” he said. “The banks
were taking intolerable risks. The government did the right thing by
passing emergency laws, but by failing to act soon enough, it has risked
people losing their jobs and homes.”

Icelanders also recognise that they enjoyed a rocketing standard of
living as the banking sector boomed. Reykjavik’s roads are still full of
black 4x4s and the high street islined with designer shops. Women decked
in brash sunglasses clutching lap-dogs emerge from boutique hotels.

“All the people are very angry with the billionaires for living the
high-life, with women, Hollywood celebrities and socialising with Roman
Abramovich, while the banks got into debt,” says Jon Jonsson, a Reykavik
businessman. “There has been ridiculous spending, like Jón Ásgeir
driving his Bentley and his wife’s luxury car nicknamed the White Pearl.
But ordinary people also had the big cars and three or four platinum
cards. Now our banks and our whole society has collapsed and we will pay
the price.”

The country’s prime minister, Geir Haarde, warnes that this price could
be reduced standards of living for a decade and reliance on the
traditional fishing industry. “What we have learnt from this whole
exercise over the last few years is that it is not wise for a small
country to try to take a leading role in international banking,” he
admits. Yet every Icelander who uses words like “terrified”, “shocked”
and “anger” says so with a half-smile and a shrug.

“We are taking it philosophically because Icelanders always swing
between riches and poverty,” says one local reporter, a business
graduate from the University of Reykjavik. “We have loved our
billionaires and our taste of the high life, but my grandfather lived in
a mud shack and my grandmother went hungry when there weren’t enough
fish. We are proud people and we will cope.”

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