Sigrún Davíðsdóttir's Icelog

Further questioning on Glitnir

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The Office of the Special Prosecutor in Iceland has continued questioning people related to Glitnir. According to Icelandic media, there has been focus on Saga Capital’s role in the Glitnir deals connected to Stim. Saga’s CEO Thorvaldur Ludvik Sigurjonsson appears to be not only a witness to but an actor in these deals.

Sigurjonsson held a Stim bond of ISK1bn that by the summer of 2008 would have been worthless since the underlying shares in FL Group had lost value. Sigurjonsson then asked Glitnir if the bank could sell the bond. It’s unlikely there were any buyers but Glitnir bought the bond for ISK1,2bn. At the time, the bond is alleged to have amounted to 40% of Saga’s assets, making it clear that a loss of this magnitude would have been the end of Saga.

Since Saga had been a party to Stim, owning 25% of the company, the question that floats in the air is if its participation in Stim was yet another example of the speciality of the Icelandic banks: offering those close to the banks to participate in deals they would never lose money on as the banks took all the risk. It’s been alleged in the media that when Saga bought this Stim bond part of the deal would have been that Glitnir bought the bond back when Saga wanted to sell.

Behind all this are the major shareholders of Glitnir, i.a. Jon Asgeir Johannesson and Palmi Haraldsson. Johannesson has said that he knows absolutely nothing about Stim. He said today that he called special prosecutor Olafur Hauksson on Tuesday, asking if he wanted to question him but that Hauksson refused. No doubt, Hauksson sticks to his own path, unperturbed by callers who want to get things over and done with. It now seems that Larus Welding, who became the CEO of Glitnir as Johannesson and Haraldsson became major shareholders in spring 2007, will be questioned on Friday. Others will have to wait their turn.

Asked how things were going Hauksson said that the fact that each questioning takes a while was an indication that people have indeed had information to give. So far, no one has been remanded to custody as was the case when Kaupthing’s ex-managers were questioned in spring. Hauksson is adamant that each investigation follows its own pace and what was done earlier re Kaupthing wouldn’t necessarily be appropriate for the Glitnir investigation.

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Written by Sigrún Davídsdóttir

November 18th, 2010 at 12:50 am

Posted in Iceland

One Response to 'Further questioning on Glitnir'

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  1. 2 years in, and still searching for evidence? Probably does not matter as Icelandic law and judiicial system will be incapable of providing respite.

    I had a conversation in Dec 2008 with an Icelandic lawyer in a Big 4 practice and asked, having been part of the initial Kaup investigation, what the penalty was for share ramping. Basically he said it was unprovable in Iceland. We were not allowed to identify all the politically exposed accounts that had been lent money to purchase Kaup shares and Kaup tried to prevent access to the special internal loan register for Kaup key executives. These guys (like ours) have learnt nothing, do not see the cumulative consequences of their trading actions and corporate methodologies.

    This will peter out.

    Andy KJ

    19 Nov 10 at 9:07 am

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