Sigrún Davíðsdóttir's Icelog

I’m just starting to read the Glitnir’s complaint, filed in New York, against Jon Asgeir Johannesson, his wife, business partners Palmi Haraldsson, Thorsteinn Jonsson, Hannes Smarason and ex-FL Group manager Jon Sigurdsson. It’s 79 pages and the beginning of the Introduction makes a compelling read:

“Between April 2007 and February 2008, the individual Defendents, a cabal of businessmen led by a convicted white collar criminal, Defendent Jón Ásgeir Jóhannesson … engaged in a sweeping conspiracy to wrest control of Iceland’s Glitnir banki hf … and fraudulently draw over $2 billion out of the bank to fill their pockets and prop up their failing companies. To finance these diversions, the Defendants relied heavily on funds which Glitnir raised through the sale of medium term notes … to investors located in New York and elsewhere in the United States. The Defendants never reapaid the sums they took from the bank.”

No coincidence that so many US lawyers turn to writing thrillers – what a description!

According to the press release the case includes:

*How a cabal of businessmen led by Jóhannesson conspired to systematically loot Glitnir Bank in order to prop up their own failing companies

*How Jóhannesson and his co-conspirators seized control of Glitnir, removing or sidelining experienced Bank employees – and abused this control to place the Bank in extreme financial peril

*How Jóhannesson, Welding and the other Defendants facilitated and concealed their diversions from the Bank by overriding Glitner’s financial risk controls, violating Iceland’s banking laws, and orchestrating a blizzard of convoluted stock “parking” transactions

*How the individual Defendants, with the complicity of Glitnir’s auditor PwC, raised  $1bn from investors in New York without revealing the truth about the Bank’s financial exposures to Jóhannesson and his co-conspirators

*How the Defendants’ transactions cost Glitnir more than $2bn and contributed significantly to the Bank’s collapse

After the collapse of the Icelandic banks Johannesson wrote an article to counter the rumours regarding his role in the demise, under the headline ‘Did I bankrupt Iceland?’ His answer was ‘no’ – it seems that in relation to Glitnir the winding-up committee begs to differ. And since Johannesson is the largest Icelandic debtor. His debts combined with those of his family run up to ISK250bn, roughly $2bn.

The very interesting angle of this new case is that the winding-up committee is also suing PriceWaterhouseCooper for ‘malpractice and negligence.’ That will no doubt send some shiver through the world of accountancy – in Iceland there is a profound sense that nothing of what went on had been possible hadn’t it been for the role played by the accountants.

There is a press conference on these matters in Reykjavik today at 14.30 local time (GMT).

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