Sigrún Davíðsdóttir's Icelog

Bjorgolfur Gudmundsson had quite a story to his name, before buying the lion’s share of Landsbanki, as the Icelandic state sold its share in the bank in 2002. He had created and sunk a shipping company, Hafskip, in the 80s. An affair that got him imprisoned, in front of his young son Bjorgolfur Thor, and landed him in jail for fraud. No doubt, a traumatic experience for both of them.

Just as in the Icelandic sagas, reputation is a leit-motiv in the lives of father and son. Their version of the Hafskip saga was how the almighty in the Icelandic business community in the 80s took a revenge on the challenging intruder, even though Gudmundsson’s wife does indeed stem from one of the historically so powerful Icelandic families. Others beg to differ, saying the investigation and the Hafskip ruling was unequivocal: there was serious fraud committed within Hafskip.

With money and respect stemming from the Landsbanki ownership, as well as controlling the now failed investment bank Straumur, father and son hired people to write their version of the Hafskip saga. Unfortunately, their book was published in autumn of 2008, not quite the right timing for contemplating the past as their Icelandic power house, Landsbanki, collapsed. Moreover, the Icelandic bank crash, yet again, left not only Gudmundsson’s reputation in tatters – he went bankrupt just a few months later – but also the reputation of his son.

An important point of reference for Bjorgolfsson has always been his Danish great-grandfather, the businessman Thor Jensen (1863-1947). Jensen moved to Iceland as a youngster, rose to fame and riches and had twelve children, one of whom became a prime minister. In a society where power runs in families, the off-springs of Thor Jensen have been at the core of power, closely connected to the Independance Party (C). Bjorgolfsson’s wish to associate himself with his illustrious forefather even went so far as to buy Jensen’s ‘mansion,’ on an Icelandic scale, that Jensen built by the little pond in the centre of Reykjavik.

Bjorgolfsson bought the house in a much disputed sale from the Reykjavik city council, in the summer of 2008. It is still thought to be owned by a Novator company, owned by Bjorgolfsson but it’s been empty since he bought it. Not quite, yet, the mood in Iceland to see Bjorgolfsson take up residence there in style and glamour. His house in Notting Hill in London and his country house in England are well out of Icelandic view.

In 2007, a Danish documentary film-maker, Ulla Boje Rasmussen, apparently got the idea to make a film about Thor Jensen. This film, Thor’s Saga, then expanded to encompass his great-great-grandchild, Bjorgolfsson, and will soon be premiered in Denmark. The film is funded by the Danish and the Icelandic Film Institute, in collaboration with TV2 Denmark and the Icelandic Ruv. Bjorgolfsson has, allegedly, had no part in the project.

On Sept. 7, the film will be launched in Copenhagen with a panel debate where Bjorgolfsson will participate. This will be of great interest to those who followed the demise of the two banks where father and son were in control of, Landsbanki and Straumur, with the father as the chairman of the former and his son the chairman of the latter. Bjorgolfsson has not be much seen or heard in Iceland though he did appear in the documentary Maybe I should have, where he storms out when asked how he feels about Icelanders seeing him as a criminal. The debate is organised by the Nordic Council, at the request of Boje Rasmussen, with the Borsen Executive Club. It’s Scandinavia’s largest PR company that organises the film’s PR, Geelmuyeden and Kiese, quite an honour for a documentary film.

The idea is to get an Icelandic politician to participate. The organisers hope to get minister of economy Arni Pall Arnason on the panel but his participation has not been confirmed. Another distinguished participant is Danske Bank’s chief analyst Lars Christensen,who in March 2006 wrote the famous, or infamous from the point of view on Iceland at the time, report on the Icelandic banks. The debate is convened by Anders Krab Johansen, Borsen’s editor.

As readers of Icelog know, the Icelandic Parliament published a 2600 pages report last year, written by an investigative commission. Its conclusion on father and son was damming, as can be seen in the executive summary. Ia, the report pointed out how the two got loans out of Landsbanki and Straumur, way beyond any rhyme and reason and how the connection between the two banks indicates bad governance as demonstrated by loans between the two banks with no collaterals. Bjorgolfsson has recently actively been refuting the report’s conclusions on his Icelandic website. In a statement to the SIC, former minister of finance Arni Matthiesen claimed that Bjorgolfsson had lied to him and others at emergency meeting in October 2008.

Bjorgolfsson’s activities in St Petersburg and later in Bulgaria have raised questions. There was colourful article in the Guardian on his Russian enterprises, Die Welt used unnamed sources to connect Bjorgolfsson with the Russian mafia and Euromoney published a thorough article on the new owners of Landsbanki in 2002, doubting how fit and proper they were to run a bank.

Bjorgolfsson has had some ties to Denmark. He invested in the property group Sjælso Gruppen in 2006, together with his father and Straumur (then called Straumur Burdaras), and in Property Group through Straumur. Already in 2009, I was informed that Bjorgolfsson had sold his shares in Sjælso. As with other Novator entities, the ownership structure was complicated, further complicated by name changes.

A theme to be discussed at upcoming debate in Copenhagen is what can be learnt from the crisis in Iceland and how to secure the finance sector against similar calamities in the future. One of the findings of the SIC report is how Samson, the holding company owned by father and son and a third investor, their St Petersburg partner Magnus Thorsteinsson, were in breach of the Landsbanki sale contract re the financing of the purchase as well as breaching a ban on Samson to engage in other activities than holding the Landsbanki shares.

With this in mind, and on the whole the damning conclusions in the report re Landsbanki and Straumur governance and the questionable lending to by these banks to father and son, the short answer to this questions is to make sure that major shareholders of financial institutions stick to their contracts and to good and transparent governance. – Bjorgolfsson no doubt takes a different view on the SIC findings and any conclusions drawn from the report.

After the failed attempt to rewrite the Hafskip story it will be interesting to see if Thor’s Saga is an attempt to rewrite the recent history of Bjorgolfsson and Gudmundsson – and how successful the film will be.

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