Sigrún Davíðsdóttir's Icelog

Today, the Icelandic Supreme Court annulled the Reykjavík District Court acquittal in the Aurum case. This means that the District Court has to start all over again on the case. Those charged are Jón Ásgeir Jóhannesson and Lárus Welding who became Glitnir’s CEO when Jóhannesson and a group of investors bought over 30% in the bank in spring 2007. Two other Glitnir employees are also charged.

At the centre of the case is a loan from Glitnir to a shelf company, FS38 to buy a share in the retailer Goldsmith, owned by Aurum Holding, from Fons, owned by Pálmi Haraldsson, a business associate of Jóhannesson. Haraldsson was i.a. a co-investor in Glitnir with Jóhannesson, where the duo were close up and intimate with the management. So much so that Welding at some point, in an email to Jóhannesson, complained that he was being treated like a branch manager and not the CEO.

The particulars of this whole loan arrangement was that after various evaluations of Goldsmith, Glitnir lent ISK6bn to FS38; it so happened that of the 6bn ISK1bn landed on Haraldsson’s account with Glitnir and an equal amount landed on Jóhannesson’s personal account.

The FS38 loan saga was already familiar from the SIC report, published in April 2010, one of many SIC’s loan sagas related to the major shareholders of the three banks. The four were charged by the Office of the Special Prosecutor. When the case came up in the District Court it was presided over by two District Court Judges the third one being a Court-appointed external expert, Sverrir Ólafsson.

In June last year the Court acquitted all four charged in the Aurum case. Soon after, it transpired that Ólafsson was the brother of Ólafur Ólafsson, at the time already sentenced by the District Court in the so-called al Thani case. Ólafur is now serving a sentence of 4 1/2 years after the Supreme Court sentenced him last January (thereby adding a year to Ólafsson’s sentence in the District Court). Foreigners always think that in Iceland everyone knows everybody, which definitely was not the case with the Ólafsson brothers – special prosecutor Ólafur Þ. Hauksson denied he had known about the relationship (and yes, Ólafsson is a very common name in Iceland and the two brothers are not at all similar) nor had the Icelandic media picked this up.

Following the revelation, Sverrir Ólafsson said in an interview with Rúv that it was inconceivable Hauksson and the OSP had not been aware of whose brother he was. According to Sverrir the fuss was only to undermine the judgement. In this interview Ólafsson used harsh words about Hauksson, seen by many as somewhat unsuited for a judge, even a lay one.

Following the District Court ruling in the Aurum case the state prosecutor (a different authority from the OSP) demanded that the judgement should be annulled because of doubt of the impartiality of one of the judges. Today, this is exactly what the Supreme Court did, which means that now the case must start anew, probably adding at least another year and probably more to the story of this case.

In addition to this the Glitnir Winding up Board has sued Jóhannesson and others for damages caused by the FS38 loan. In connection to that case, and at the demand of Glitnir, Jóhannesson’s assets were subjected to an international freezing order by a London Court in May 2010 (see here, here and here). The Glitnir case is resting until a final judgement in the criminal case; as far as is known the freezing order is still standing. However, Jóhannesson is again an active investor, i.a. in the UK but investing on behalf of his wife.

Recently, there have been articles in Icelandic on the website Vísir and in the newspaper (distributed for free) Fréttablaðið owned by 365 Media, under the ownership of Ingibjörg Pálmadóttir, wife of Jóhannesson. These articles have been insinuating lies on behalf of the Special Prosecutor regarding Ólafsson, i.e. stating that Hauksson and others at the OSP did indeed know whose brother Sverrir Ólafsson was. Earlier, the paper had also sought to sow doubt of the al Thani judgement; the sentence in one of its articles, saying that when the Courts fail the media must take over, was much noted. No doubt, Jóhannesson and his allies will fight their case ferociously, not only in the Courts but also in the media in the Jóhannesson’s sphere of influence.

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