Sigrún Davíðsdóttir's Icelog

After being fined for money laundering and other interesting chapters in the Banque Havilland story, it‘s come to this: Banque Havilland has lost its banking license. The story of David Rowland buying failed Kaupthing Luxembourg was always an intriguing one. This new chapter in Kaupthing‘s saga brings up earlies events. And it‘s a reminder how little has been done in Luxembourg regarding the Icelandic banks, the Lindsor case being a case in point.

In hindsight, two things regarding Kaupthing Luxembourg are interesting: the Kaupthing top managers were heavily involved in trying to keep the Luxembourg operation going and to sell it – and, when the criminal cases linked to Kaupthing surfaced in Iceland, it turned out that the dirty dealings were almost invariably organised and executed in Luxembourg.

Kaupthing Luxembourg was indeed sold, with a helping hand from Luxembourg authorities, which put in EUR320m loan, later repaid. Allegedly (lot of „allegedly“ in this story) former Kaupthing managers and big shareholders had tried to buy the bank in various ways but in the end, the buyer was David Rowland of Blackfish Capital.

Now, this saga of Kaupthing and its resurrection as Banque Havilland seems to have come to an end, according to a notice on Banque Havilland‘s website – the bank has been granted a suspension of payment by the CSSF after the ECB withdrew its banking license.

Financial warfare, breach of money-laundering and terrorism rules

After buying the failed Kaupthing, David Rowland, a businessman of a somewhat mixed reputation and friends with Prince Andrew set about moving the bank from corporate business to private wealth services. He kept the Icelandic staff until Kaupthing Luxembourg CEO was brought in for questioning in Iceland and later charged in more than one criminal case. Jean-Francois Willems, its present CEO, used to work at Kaupthing Luxembourg.

Havilland‘s first foreign investments were in Belarus and Iceland, fueling rumours that a new Kaupthing, i.e. with Icelandic ties, was in the making but that didn‘t really happen.

Given Rowland‘s reputation, some eyebrows were raised that in Luxembourg he was deemed to be a fit and proper person to own a bank. Under the Rowlands and some of his eight children – Jonathan, David‘s son was the CEO of the bank for years, other younger generation Rowlands also worked there – Banque Havilland courted controversy. In 2018, the Luxembourg regulator, CSSF, fined the bank EUR4m for non-compliance to law on money laundering and terrorism finance.

Only last year, the UK FSA fined the bank EUR10m for a rather crazy scheme, allegedly part of financial warfare agains Qatar. The FSA also ended three careers, of Edmund Rowland, who had been CEO of Havilland‘s London branch and two London colleagues, by banning the three of them from working in financial services, in addition to fining them.

The FCA considers that between September and November 2017, Banque Havilland acted without integrity by creating and disseminating a document which contained manipulative trading strategies aimed at creating a false or misleading impression as to the market in, or the price of, Qatari bonds. The objective was to devalue the Qatari Riyal and break its peg to the US Dollar, thereby harming the economy of Qatar.

Banque Havilland seems to have been set on distributing this document, but the scheme was never implemented. Yet, the FSA acted on it.

Now at the beginning of August came the final blow:

Banque Havilland S.A. (“Bank”) regrets that it has to announce the withdrawal of its banking license by the European Central Bank (“ECB”) as of August 2nd 2024 (“ECB Decision”) and the parallel request by the Commission de Surveillance du Secteur Financier (“CSSF”) to put the Bank under the regime of suspension of payments.

 The Bank has decided to challenge the ECB Decision but will not oppose the application of the regime of suspension of payments which is intended to protect the interest of all parties involved and ensure a structured process moving forward.

Kaupthing and the Lindsor case

As I’ve pointed out time and again, the Luxembourg authorities have been fully informed on all Kaupthing investigations going on in Iceland. Investigations ending in jail sentences for some Kaupthing managers and shareholders. Early on, it was decided that one case re Kaupthing would be investigated in Luxembourg, the so-called Lindsor case. Lindsor was a BVI company, owned by some Kaupthing employees.

As I’ve reported on earlier, Lindsor allegedly bought bonds from Skúli Þorvaldsson, a Luxembourg-based businessman and a large client of Kaupthing, and from key employees on the “bank collapse day” 6 October 2008. On that day, the Icelandic Central Bank issued an emergency loan to Kaupthing of €500m, then ISK80bn – of these funds, ISK28bn were used in the Lindsor transaction, effectively moving this sum to Kaupthing insiders and Þorvaldsson (see earlier blogs concerning the Lindsor case).

For years, it seemed that the Lindsor investigation was moving on in Luxembourg, and as far as is known, the case was fully investigated some years ago and the prosecutor was finalising the last hurdles to bring this case to court. Since then, nothing, as far as is known.

This new development in the Kaupthing/Havilland saga might lead to some interesting information becoming available. In the meantime, search Icelog for my earlier reporting related to Kaupthing Luxembourg and Banque Havilland (see for example here).

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