Sigrún Davíðsdóttir's Icelog

Today (April 17), thirty people – six of them from the Office of the Special Prosecutor in Iceland – have conducted house searches in Luxembourg on behalf of the OSP. The searches have been ongoing at the office of the Landsbanki estate and at two addresses in Luxembourg. According to special prosecutor Olafur Hauksson the searches are connected to nine cases, which surfaced in the media after searches in Iceland in January last year.

As reported on Icelog earlier, the cases under investigation are thought to relate to the following:

1. Alleged market manipulation related to shares in Landsbanki.

2. Loans to four companies Hunslow S.A., Bruce Assets Limited, Pro-Invest Partners Corp and Sigurdur Bollason ehf. to buy shares in Landsbanki.

3. Landsbanki Luxembourg’s sale of loans to Landsbanki only a few days before the bank collapsed in Oct. 2008.

4. The buying of shares by eight offshore companies that supposedly were set up to hold shares related to employees’ options.

The loans to the four companies follow a well-known pattern from the Icelandic banks: huge loans, no collaterals or only the underlying shares being bought in the bank itself – and no apparent intention to have the investors shoulder any risk. All on the bank. It’s always interesting to observe who the benefactors of such loans are since such loans often reveal special relationships behind the banks’ choice of investors.

As pointed out earlier, “Hunslow S.A. was registered in Panama in Feb. 2008. In November 2009 two Novator companies (Novator is the investment fund of Bjorgolfur Thor Bjorgolfsson who was a major shareholder in Landsbanki and Straumur investment bank together with his father) were registered in Panama with the same law firm as Hunslow. The same five directors are on the board of the two Novator companies and Hunslow but there are probably hundreds of companies registered at this one law firm.” This doesn’t prove anything but it’s an intriguing fact.

According to Stoed 2, which broke the news today, Hunslow is owned by Stefan Ingimar Bjarnason, an Icelandic investor, who apart from having profited from Landsbanki’s generosity just before its demise, isn’t a well-known name in Iceland. Bruce Assets is owned by brothers, both known investors in Iceland but no high-flyers, Olafur Steinn and Kristjan Gudmundsson. Only last year did they appear as surprisingly big borrowers at Landsbanki. Interestingly, they invested in companies where Bjorgolfsson was a major investor. The brothers hadn’t been noticed because the loans, in total ISK23bn, all went to offshore companies they owned. The loans to the brothers seemed to have been issued against no collaterals or guarantees. As far as I can see, Bruce Assets is neither registered in Panama nor Luxembourg, can’t see where it’s registered (but would like to know, in case anyone knows).

Prior to the collapse, Sigurdur Bollason was an investor who frequently appeared alongside Jon Asgeir Johannesson and Baugur-related investments. Bollason was a big borrower, without any apparent merit except for strong relations to the banks’ favored circle.

Pro-Invest Partners belongs to a certain Georg Tsvetanski, a long-time business partner of Bjorgolfsson. Tsvetanski is an ex-Deutsche Bank banker. In 2004, he set up the investment fund Altima Partners in the UK together with other Deutsche bankers who specialised in Eastern Europe and who had, during their Deutsche time, cooperated with Bjorgolfsson. Among these are Radenko Milakovic and Dominic Redfern. This group was from from early on involved in Eastern European privatization from 2000, led by or done with Bjorgolfsson: Bulgartabak (which they didn’t get), Balkanpharma (later merged with Actavis), Bulgaria Telecom and in the Czech Republic, Cesky Telecom and Ceske Radiokomunkace.

Early on, Tsvetanski was for while on the board of Pharmaco, the owner of Balkanpharma. As the CEO of the state-owned Balkanpharma he had been a strategic partner. There seems to be an untold story in the privatisation process. Now and then there have been Bulgarian spurts to investigate the matter but so far, it’s never been done. Bjorgolfsson and Altima have also co-invested in Bulgarian properties, through their Luxembourg fund, Landmark.* A rather spectacular golf club and resort, Thracian Cliffs, seems to be a Landmark investment. One of Landmark’s board members is Arnar Gudmundsson, who is at Arena Wealth Management, run by Icelandic ex-bankers, with a very uninformative website. At the end of September 2008, only a week before the bank collapsed, Tzvetanski got an overdraft of ISK4.5bn.

It seems that some of these Landsbanki loans, now being investigated, were issued in Luxembourg. Many of my sources have mentioned that the Landsbanki saga can’t be understood except by mapping out the Luxembourg loans – the source of the dodgiest loans. And that’s where the OSP is at today.

*There is a small galaxy of Landmark companies registered in Luxembourg and some are attached to offshore companies with Icelandic names, ia Keldur Holding Limited, a BVI company and Gort Holding, a Guernsey company. 

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