Sigrún Davíðsdóttir's Icelog

Landsbanki ResCom makes a move against ex-managers and PwC

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At a long-awaited creditors’ meeting today, Landsbanki ResCom and Winding-up Board told creditors of investigations done by Deloitte on loans and the last months in the running of Landsbanki. They have come up with quite a bit of things that have been reported to the Office of the Special Prosecutor.

Since early this year there have been rumours about the Deloitte investigation and what it was un-earthing. At first, it seemed that Deloitte would write a report that would be published. That’s not the case so far and exactly what Deloitte discovered isn’t quite clear but a few things have emerged.

The week up to the collapse of Landsbanki the bank itself bought its own shares worth ISK40bn. In the preceding months it bought its own shares for ISK10bn. Definitely something suspicious about this since there was evidently no market for the shares. Whoever wanted to sell couldn’t find a buyer. The feeling here is that some were luckier than others. No names have surfaced but it’s easy to allege that here the bank would have bought shares of some of the major shareholders and clients.

The Resolution Committee and Winding-up Board have already initiated actions for damages against three former managers of the bank, Sigurjon Arnason, Halldor Kristjansson and Elin Sigfussdottir,  concerning events during 2008 that caused losses for the bank and its creditors of ISK 30-35 billion. The losses arose from two events: by not enforcing a bank guarantee of ISK 18 billion, provided to secure debts of the investment company Grettir, owned by Bjorgolfur Gudmundsson, one of the bank’s two major shareholders (the other being Bjorgolfur Thor Bjorgolfsson his son): The other loss stems from loans granted to Straumur Investment Bank, where father and son were the largest shareholders, at the beginning of October 2008.

According to news in Iceland tonight these loans were without a guarantee. However, there were plenty of other loans without guarantees, i.a. to Baugur and to Straumur. The question is why some loans are more conspicuous than others. In the Icelandic business paper Vidskiptabladid tomorrow there will be allegations that a Landsbanki investment fund broke its own rules by buying a bond from Gudmundsson. The OSP might be investigating this issue.

On Ruv news tonight it was also claimed that the ResCom and the Winding-Up Board will be holding Landsbanki’s auditors, PwC, responsible for giving a wrong perception of the bank’s financial standing at the end of 2007 and then later in 2008. Glitnir Winding-Up Board is i.a. suing PwC in New York for their role in Glitnir. A legal action might ensue.

The interesting thing here is that the ResCom neither seems to implicate the bank’s board nor its other major shareholder Bjorgolfur Thor Bjorgolfsson.

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Written by Sigrún Davídsdóttir

December 1st, 2010 at 11:58 pm

Posted in Iceland

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