Sigrún Davíðsdóttir's Icelog

OSP’s next move: Straumur, MP Bank and the Central Bank

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Today, the Office of the Special Prosecutor is conducting house searches at ALMC, previously Straumur Investment Bank and at a small private bank, MP Bank, with operations in the Baltics and Ukraine. Some OSP staff is holding a meeting at the Central Bank of Iceland but no documents have been seized.* One person has been arrested so far, Jon Thorsteinn Oddleifsson, previously a manager with Landsbanki.

It’s too early to say if these latest moves are connected to the Landsbanki investigation but that’s most likely. Straumur’s major shareholders were Bjorgolfur Gudmundsson and his son, Bjorgolfur Thor. In the report of the Althingi Special Investigative Commission there are many examples of Straumur’s intimate connection with Landsbanki, i.a. loans without collaterals going both ways. Straumur’s CEO William Fall was brought in by the major shareholders to add a more international dimension to Straumur, which also operated in London. Fall left Straumur shortly before it went bankrupt and is now on the RBS senior executive team as a global head of financial institutions group.

*After first mention of only a meeting with some CBI staff it’s now clear that the OSP has seized some documents at the CBI. The searches might be connected to the extensive use of so called ‘love letters’: the banks, in this case Landsbanki, issued bonds to smaller financial institutions that pledged them with the CB and passed the loans on to the three big banks. This was taking place towards the end when it proved increasingly difficult for the banks to find fundings outside of Iceland – depends on how it’s estimated but these dealings basically bankrupted the CBI.

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Written by Sigrún Davídsdóttir

January 20th, 2011 at 12:09 pm

Posted in Iceland

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