On Friday, Justice David Steel had two things to consider regarding the freezing order on Jon Asgeir Johannesson’s assets: did he believe that Johannesson had more assets than those he had already informed Glitnir of – and is Johannesson’s career and character such that he might possibly try to dispose of assets without informing Glitnir?
By upholding the freezing order Justice Steel answered these two questions quite clearly. No, he didn’t believe Johannesson had given a ‘full and frank disclosure’ of his assets – and yes, he did believe that Johannesson, a man of ‘low standard of commercial morality’ according to Justice Steel, might indeed try to dispose of assets and thus continue trying to avoid paying his humongous debt to Glitnir. This phrase, ‘low standard of commercial morality,’ is a marvellous example of English understatement and is indeed laden with potent meaning.
Since I broke the news in Iceland of the hearing on Friday I’ve heard from many Icelanders – and the message has been: what a relief to hear a judge speak so clearly of Johannesson and his character. Here was a venerable judge who absolutely didn’t mince his words and left no lingering doubt as to what sort of a businessman he thought he was dealing with – a businessman of ‘low standard of commercial morality.’
Those I’ve heard from are also content that the case has been brought out of Iceland, into another context, absolutely beyond any possible interference of interests and personal connection. I firmly belief that in spite of the dismal story of the Baugur case earlier (where most of the charges against Johannesson were thrown out but where Johannesson was indeed handed a sentence of three months in jail, albeit a conditional sentence) the Icelandic courts will be able to deal with eventual charges against bankers and their fellow business travellers in a fair and frank way – but the clarity of Justice Steel was refreshing and uplifting and will hopefully constitute an example for his Icelandic opposite numbers.
But it’s not just in Iceland that there is a lack of clarity when it comes to alleged fraud. In his statement before the US Senate’s Subcommittee on Crime in May the economist James Galbraith pointed out that on the day that the SEC charged Goldman Sachs with fraud a former Under Secretary of the US Treasury Peter Fisher couldn’t bring himself to mention the word ‘fraud.’ Instead, he used the word ‘naughtiness’ – as if a banker had been caught in spending the night with his secretary on the bank’s expenses account.
Clarity is also sorely needed when it comes to the flight of certain businessmen into secrecy jurisdictions – the web of offshore havens that the big banks have been pretty good at offering to their clients when they want to be really naughty. It’s to the great shame of both the UK and the US that the major part of these secrecy jurisdictions thrive in places connected to these two countries. But also here there is an ongoing detectable change: HSBC is under criminal investigations in the US for selling offshore tax services to their clients – and Deutsche Bank is under similar investigation in Germany, alleged to have assisted clients to avoid tax by trading emission allowances. The intriguing bit of the DB story is that DB bankers were warned beforehand of extensive raids but the investigators were a step ahead and were listening in on their phone calls.
The refreshing clarity that Justice Steel showed isn’t only desperately needed in Iceland but when dealing with white-collar fraud in general. In Johannesson’s case Justice Steel saw more than just some naughtiness – he spotted the low standard of commercial morality, not only an Icelandic trait.
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