The Office of the Special Prosecutor in Iceland has charged Jon Asgeir Johannesson former CEO of Baugur and a major UK retail investor for his role in a Glitnir loan of ISK6bn (now £40m) in summer 2008. Johannesson is charged for exerting undue influence on Glitnir CEO Larus Welding and Bjarni Johannesson who was in charge of connection to Johannesson’s companies. A third Glitnir employee, Magnus Arnar Arngrimsson is also being charged. The charges related to the three Glitnir employee regard breach of fiduciary duty.
This case, called the Aurum case because the collaterals for the loan were shares in Aurum, formerly Goldsmith, the UK jewelry chain. This was essentially a series of transactions, which in the end brought ISK1bn in cash onto Johannesson’s account with Glitnir and the same amount to his business partner Palmi Haraldsson, who is not charged. According to the charges, the purpose of the loan was to find a way to settle Johannesson’s overdraft with Glitnir, in addition to cash and to enable Haraldsson to get money as well. The OSP is asking for the maximum sentence, a six year prison. Johannesson denies all wrong-doing. In the charges it is stated that both Johannesson and Welding live in the UK.
The tendency here, according to the OSP, is the same as in so many other questionable loans to the major shareholders: the loans were very favorable to the borrower and equally unfavorable to the lender.
The Aurum case has long been known to the Icelandic public, ia from the SIC report and from loan agreements, which had landed in the public domain. Earlier Icelogs on this case can be found here. A link to the charges, in Icelandic, is here. Oral hearing is scheduled to start January 7.
In addition to this case, the OSP has brought charges against Kaupthing managers in the so-called al Thani case. So far, Landsbanki managers or major shareholders of Landsbanki have not been charged.
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