Sigrún Davíðsdóttir's Icelog

The Landsbanki Winding-Up Board is suing the top management of the bankrupt bank, board-members and insurers for damages caused by not stopping the bank’s operations on October 3 2008 when, according the the WUP, the bank was de facto bankrupt. In total, the WUB claims the damages amount to ISK45bn (€282m).

Those who are sued are CEOs Sigurjon Arnason and Halldor K Larusson, board-members Andri Sveinsson, Kjartan Gunnarsson, Svafa Gronfeldt and Thorgeir Baldursson, in total for £89m, in ISK, euros and dollars. In addition, 25 companies that insured the bank’s management are being sued by the WUP to pay together with these indivivuals, in total £91m. In addition, Jon Thorsteinn Oddleifsson, who was head of treasury, is sued for ISK11bn (€69m). Bjorgolfur Gudmundsson, the bank’s chairman, who, together with his son Bjorgolfur Thor, was the bank’s biggest shareholder, is not being sued. He is bankrupt and consequently unable to pay any damages.

The claims are based on money going out of the bank on its last day of operation October 6 2008, in total ISK35bn (now €219m). This money went onto the accounts of MP Bank, Straumur and Landsvaki, one of Landsbanki’s own money market funds. The dates are important because this means that according to the WUB the bank was already bankrupt when the British authorities closed down the bank.

The claims have beein presented to those who are being sued but have not yet been made public. It’s likely that the claims contain quite a bit of interesting information on the bank’s ownership. Father and son owned 41.5% in Landsbanki at the time it collapsed but the feeling is that they did in effect control a much larger part of the bank.

According to the SIC Report at least 12.5% of the bank’s shares were held in Landsbanki’s own offshore companies, controlled by the bank. The companies was apparently to hold employee option but were never used for that purpose. Other entities owned by the bank might have owned shares in the bank, in addition to shares owned by Straumur Investment bank, where father and son were the major shareholders and the son chairman of the board.

A group of small investors in Landsbanki, who are preparing to file a private suit against Bjorgolfur Thor, might find some interesting ammunition in the WUB claims.

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Tim Ward QC in London has been selected to act on behalf of Iceland in the pending Icesave case at the EFTA Court. He will work with an Icelandic team, under the auspice of the Ministry of Foreign Affairs.

Ward has a tough case ahead of him, also in explaining to his Icelandic colleagues, and later to the nation, the course and nature of this case. Objectively seen, ESA has a strong case and Iceland’s possibilities of winning the case seem limited. Remains to be seen.

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As the reshuffle and the new Cabinet is introduced on the webpage of the Ministry of Foreign Affairs:

A new Cabinet was unveiled in Iceland on 31 December. During the reshuffle former finance minister Mr Steingrímur J. Sigfússon was named Minister of Fisheries and Agriculture as well as Minister of Economic Affairs. Mrs Oddný G. Harðardóttir was promoted into Cabinet as  Minister of Finance. Mr Jón Bjarnason, Minister of Fisheries and Agriculture, and Mr Árni Páll Árnason, Minister of Economic Affairs, stepped down from the Cabinet. Other ministers retained their posts.

New Cabinet of Iceland:

• Jóhanna Sigurðardóttir, Prime Minister (PA)
• Steingrímur J. Sigfússon, Minister of Fisheries and Agriculture and Minister of Economic Affairs (LG)
• Össur Skarphéðinsson, Minister for Foreign Affairs (PA)
• Katrín Jakobsdóttir, Minister of Education, Science and Culture (LG)
• Katrín Júlíusdóttir, Minister of Industry Energy and Tourism (PA)
• Svandís Svavarsdóttir, Minister for the Environment (LG)
• Ögmundur Jónasson, Minister of the Interior (LG)
• Guðbjartur Hannesson, Minister of Welfare (PA)
• Oddný G. Harðardóttir, Minister of Finance (LG)

With the new cabinet in place, Prime Minister Jóhanna Sigurðardóttir said: „The new cabinet marks the positive turning point that women now outnumber men in the government for the first time and a woman has also been appointed finance minister for the first time in Iceland. It gives me particular pleasure to end the year 2011 by achieving this important milestone for gender equality in Iceland.”

(PA: the People’s Alliance; a socialdemocratic party) (LG: Left Green)

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In Iceland, the economic outlook isn’t too bad: a rising economic growth with unemployment falling. An enviable outlook, compared to many European countries. Yet, Icelanders are still in a bleak crisis mood – many are still struggling with the loans tied to foreign currencies that shot up after the collapse of the krona during and after 2008. The loans have in particular hit those who bought their first property in 2005-2008, in effect the 30-40 year old while other Icelanders are now again spending the Icelandic way: sales of most goods and services, from clothes to travels abroad rose in 2011.

All in all 2012 in Iceland might be even better than 2011 but that depends on the rest of the world. If the crisis and political frost in the eurozone continues, the effect will be felt in Iceland and the outlook might change.

The Government, a coalition of the Left Green led by the People’s Alliance, social democrats, ended the year with a reshuffle. The now ex-minister of fisheries and agriculture Jon Bjarnason (LG) ran a vocal EU opposition to the Icelandic EU membership talks and tensed the atmosphere in the Government. His stance is shared by his party but less vocally expressed by his fellow party-members in Government.

After criticising Bjarnason in harsh words earlier this winter, it was clear that minister of finance Steingrimur J Sigfusson and prime minister Johanna Sigurdardottir were ready to let Bjarnason go. Their strong words but no action made them seem impotent and weak. Sigfusson’s dilemma was that Bjarnason’s anti-EU position, in accordance with the party’s manifesto, made Sigfusson look too pro-EU and thus too close to the social democrats who are in favour.

Finally, between Christmas and New Year, the two party leaders had gathered political force and the time for action was ripe. Earlier election promises to cut down the number of ministries were executed. Apart from Bjarnason, Arni Pall Arnason minister of economy and trade was let go – or sacrificed, depending on the point of view.

Sigfusson was finally able to come to grips with his own party and make the shuffle without a mutiny from Bjarnason’s allies. In her party, Sigurdardottir had problems to the last moment: at the meeting in the parliamentary group where the PM set out her plan she was met with harsh resistance. It wasn’t until Arnason said he backed her, though losing his post as a consequence, that the others accepted the new plan.

In the media Bjarnson didn’t try to hide his anger and made it quite clear that his departure would be celebrated in Brussel. Whether he is seen as such a heavyweight there is uncertain but the ministerial staff might be quite pleased to see him leave. It’s difficult to imagine that Bjarnason will ever return as a minister.

Arnason was more diplomatic though he wasn’t at all happy to leave. He might have only a short break. Sigurdardottir will turn 70 in October and at some point she exits the political scene. Arnason could be a strong contender as a new leader. The Government is weak, with a majority of vote, after defections from LG during the last year and might last only because the other parties aren’t too keen on election before time. Some new parties are in sight, many voters are fed up with the four old parties but it’s still unclear what parties will rise out of the discontent and uncertainty of the voters.

The next election is due in spring 2013 and the political parties will be in election mode from next autumn. This might tempt the Government to unplanned spending, now that the IMF programme in Iceland has come to an end.

By next election it is almost certain that the social democrats will have a new leader. Bjarni Benediktsson leader of the Independence Party might face an uncertain future. He is seen by many to be tainted by investigations into the affairs of Milestone, a major shareholder in Glitnir before selling to Baugur and FL Group in 2007. Benediktsson and his relatives were in business with Milestone owner Karl Wernersson and Milestone is being investigated by Office of the Special Prosecutor.

Interestingly, Ireland voted out it political leadership after the Irish banking crash. This has only partially happened in Iceland. In 2008, the social democrats were in Government led by the conservatives. Some members of Althing, compromised by business connections took time off after the crash but have since returned. Most strikingly, the social democrat Bjorgvin Sigurdsson, minister of trade and banking in 2008, is still in Althing. His excuse at the time was that his fellow ministers had kept him in the dark. His party and his voters seem to have accepted this excuse, not questioning, like the SIC report does, whether he was really doing his job or competent enough.

The reshuffle has changed the governmental power structure. Sigfusson has created a new super-ministry, the most powerful ever seen in Iceland. It comprises fisheries, agriculture, trade, banking, economy but not his old ministry, the ministry of finance. He leaves the ministry of finance to a social democrat, Oddny G Hardardottir, who becomes the first female minister of finance. This move indicates that the stabilising of the economy is done. Sigfusson’s new goal is to strengthen the growth of economy. Hardardottir appears to be only an interim solution – Katrin Juliusdottir, the previous minister of industry, is thought to be destined for the ministry of finance after her maternity leave.

In his New Year address to the nation, president Olafur Ragnar Grimsson indicated he would not run for re-election in August this year, a topic of intense speculation. However, he didn’t say it very clearly. The question is whether he, the master plotter, is holding the door open for those who wish to beg him to stay. He has been in power for 16 years, a long time, but can sit at long as he is elected and wants to sit at Bessastadir.

There is nothing strange about him wanting to step down but the rumour is that he doesn’t want to be president if Iceland loses the Icesave case at the EFTA Court, a case that wouldn’t be there if he hadn’t sent the last agreement to a referendum. He has said it’s not for experts and foreigners to decide on Icesave. He might want to be out of office to lead against following the court decision. So far, no one has declared him/herself a presidential candidate.

At Christmas, many Icelanders living abroad return to the homeland. Since many of those who were earlier prominent bankers or businessmen now live abroad, Reykjavik was full of rumours of who was spotted where. A friend spotted a powerful ex-banker shopping with his coat collar turned up. A famous lawyer celebrated his birthday just before Christmas where many of the once so powerful business elite turned up, as did the president. One of the tabloids wrote of Hannes Smarason, of FL Group fame, and Magnus Armann, a Baugur business partner who still owns a property company in Berlin, working out together at the World Class fitness centre. Some things just don’t seem to change in Iceland – Christmas is celebrated as always.

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The German Commerzbank is in the news for two reasons: there are rumours that the German government might be about to take it over – and German prosecutors have, according to the Wall Street Journal, indicted five men on charges of laundering $150m for Leonid Reiman, Vladimir Putin’s minister of communications 1999-2008. Four of them are bankers from Commerzbank and known to have advised Reiman. The fifth man is the Danish lawyer Jeffrey Peter Galmond (whose saga WSJ has followed closely), who isn’t only connected to Russian oligarchs but also to some of the Icelanders who got very rich very quickly.

Galmond is a Danish lawyer who went native in St Petersburg of the 90s when mayor Anatoly Sobchak (1937-2000) was the city’s most powerful man. The mayor was a sort of mentor to both Putin and Reiman who came to outshine the mentor.

At the same time, an Icelandic father and son, Bjorgolfur Gudmundsson and Bjorgolfur Thor Bjorgolfsson were building up their fortune. Their St Petersburg story was told in two articles in Euromoney in 2002, when the two, together with their co-investor from Russia Magnus Thorsteinsson, were buying the Icelandic Landsbanki. These three were hired by a company set up by an English businessman, Bernard Lardner and his Icelandic partner Ingimar Ingimarsson. In a new book by Ingimarsson he tells the story, earlier told in Euromoney, but in greater detail.

Lardner had a successful financial career behind him, first as a brilliant financial analyst in London, later as an investor, interested in countries going through privatisation, such as in South America and St Petersburg.

After selling a phone company the two set up, Lardner and Ingimarsson ventured into soft drinks with machinery that Gudmundsson was selling in Iceland. To run their Baltic Bottling Plant, Gudmundsson recommended his son. Bjorgolfsson quickly learnt Russian and was in charge of the operations.

As time went on, Lardner and Ingimarsson didn’t quite trust the Icelanders. Preferring stronger ties to the Western soft drink industry they decided to hire an Englishman from the soft drink industry to run the operation. But before it happened they learnt, in late 1995, that Gudmundsson now owned BBP. This came as a bit of a surprise to them since they didn’t know they had sold it. The Russians who owned 25% of the company didn’t seem to mind. Both Ingimarsson and Lardner experienced unpleasant pressure and threats.

Lardner quickly decided that there wasn’t much they could do. Ingimarsson tried both the Russian and the Icelandic courts. Though rulings went in the favour of Ingimarsson and Lardner there was no way of enforcing them. In the end, the company they once owned was empty – the assets had moved elsewhere and the three Icelanders had developed a highly profitable brewery, later sold to Heineken.

Heineken’s spokesman says to Icelog that when Heineken bought the brewery it conducted due diligence. But that was seven years after Gudmundsson claimed to have bought BBP and many new companies had come into being.

On his Icelandic website, Bjorgolfsson disputes Ingimarsson’s story, calls it fiction and promises to refute this fiction when he has had the time to look at old documents. He also writes on the website that Galmond has never represented him but that two lawyers working for Galmond have. Also that he has never met Reiman.

According to Ingimarsson, Galmond was Bjorgolfsson’s lawyer in the court cases related to the Baltic Bottling Plant and was later involved in the sale to Heineken. In Danish media Bjorgolfsson has been mentioned as a client of Galmond, as have companies connected to Jon Asgeir Johannesson, Baugur and other smaller Icelandic companies. Claus Abildstrom, Galmond’s partner, sat on the board of Magasin du Nord after Baugur bought the company in 2004.

Now back to Galmond. Around 2000 the Danish lawyer appeared on the Russian business scene as a Western investor, just what Russia needed. In 2001 he bought a stake in the Russian mobile company Megafon. But a prelude to this acquisition transpired in a German civil case in January 2008 involving Commerzbnk. The bank’s annual reports 1996-2001 showed certain assets to belong to the bank when they were actually held in trust for Galmond. Commerzbank was ordered to pay €7.3m.

Galmond’s ownership of the Megafon shares came under scrutiny shortly after he bought them when the Russian oligarch Mikhail Fridman claimed this was indeed his stake. This dispute has kept courts in the Netherlands, Sweden, Britain, Switzerland, the British Virgin Islands and Bermuda busy over the years. These cases have unveiled that Galmond wasn’t just an ordinary investor but a straw-man for Reiman who was forced to resign in the end.

In spring 2008 this fierce battle came to an end, or some sort of a resolution, when Alisher Usmanov bought the Megafon stake from Galmond. Usmanov is one of the oligarchs who have made London their home and he was, incidentally, a Kaupthing client and a Kaupthing shareholder in 2008: just before the collapse of Kauphting it had decided to lend him respectively €1,1bn and $1.2bn.

Just as the court case Berezovsky vs Abramovitch gives an idea of Russia in the 90s, the Megafon cases have shown the craft of money laundering and other Russian operations during the first decade of this century.

In 2004 Galmond’s company, IPOC, had to issue a guarantee to a Swiss court of $40m in one of the innumerable Megafon court cases. The court couldn’t accept the money without checking its origin. It didn’t quite trust the Ernst & Young report IPOC provided and got a PwC accountant in London to scrutinise IPOC’s information. The PwC accountant came to the conclusion that the intricate web of IPOC companies was sheltering a money-laundering scheme.

This fascinating report, that I have read, is indeed a handbook for money laundering detection. It gives a careful description of signs of money laundering, describes both the general theory of money laundering and its practice in IPOC. A payment that to the untrained eye seems just a payment from one company to the other is something entirely different to the expert who uses Financial Action Task Force methodology.

One example is very high consultancy fees. Anything strange there? After the Olympus case we know that yes, abnormal consultancy fees can hide irregularities. The expert points out that if the company that gets paid for consultancy doesn’t have any staff to carry out the consultancy, ie is only a shell, then that’s possibly a sign of illegal flow of money. Another example is inter-group loans where loans are given to shell companies with no operations that could profit from loans.

It’s interesting to keep in mind that mobile companies are very well structured for money laundering because it’s easy to set up false transactions on a large scale and move funds between countries. A telecom company in Bulgaria buys international calling time, ie access to international cables, from a broker in Bermuda, which the Bulgarian company owns. Somewhere in the world there is a server that functions as a VoIP caller. It calls over a rented line to Bulgaria and sets up connections to different places around the world, all going by the cable access bought via Bulgaria from own Bermuda company. No one can track the scam and by the way, the company can also hold on to VAT instead of paying it to Bulgaria and countries it calls to. This is an easy and efficient way of moving large amount of money quickly, digitally and untraceably, all over the world.

But back to Galmond. The court case in Switzerland showed he laundered money, with Bermuda companies involved. Bermuda authorities aren’t known to be hyper-sensitive to the origin of the money sloshing around in Bermuda companies. But because money laundering in the IPOC Bermuda companies was virtually proven in a Swiss Court Bermuda decided to liquidate IPOC companies in Bermuda. In 2008, IPOC pleaded guilty of furnishing false information and perverting the course of justice in the BVI, with the BVI authorities confiscating $45m from IPOC companies. And so on.

Inter-group loans, loans between related parties and high consultancy fees were all prominent in the companies owned by the Icelandic high-fliers before the collapse of the Icelandic banks. The major shareholders of the Icelandic banks all had companies that were set up in intricately complicated ways, stretching between many secret jurisdictions. As the SIC report shows the documentation in the banks and the companies left much to be desired.

This doesn’t mean that these companies were huge money laundering schemes. Not at all. But it’s interesting that a lawyer, known to be have run money laundering companies, also had well-known Icelandic clients. The rumours about money laundering and Russian connections in the Icelandic banks never died out. I’m not jumping to any conclusions but the fact is that prominent members of the Icelandic business community used a lawyer who is a proven expert in money laundering and closely connected to powerful Russians.*

*I have been told that the US Federal Reserve released a report (before 2008) on money laundering in the world where the Icelandic banks were mentioned. Unfortunately, I have never seen this report – I’m told it was classified and consequently it doesn’t appear amongst the Feds published material. If anyone has a copy,  I would be most grateful to see it. 

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This summer, Simon Bowers and I wrote an article for the Observer, ia on a spectacular yacht that Bjorgolfur Thor Bjorgolfsson had planned to have built. As mentioned in an earlier log, Bjorgolfsson made a legal complaint regarding this article and his lawyers, Schillings, have been in correspondence with Guardian’s lawyers. Simon and I earlier corrected one number, as can be seen in a footnote to the article.

There is now also a short letter from Bjorgolfsson attached to the article on the website and this letter has also been printed on the Observer’s letter page as to what he felt was wrong with the article.

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Some things happen slowly and this is one of them: after a long process the EFTA Surveillance Authority is taking Iceland to the EFTA Court for breaching European rules regarding the depositor guarantee scheme. This is what the press release says (and further information under this link):

“The EFTA Surveillance Authority has today decided to take Iceland to the EFTA Court over its breach of the Deposit Guarantee Directive[1].

According to the Directive, Iceland was obliged to ensure payment of a minimum compensation of  EUR 20.000 per depositor after Landsbanki and its Dutch and British branches, called Icesave, collapsed in October 2008. More than three years after the bankruptcy of the bank, Iceland has still not complied with its obligation.

The Deposit Guarantee Directive seeks to enhance consumer/depositor confidence in the banking system in the event of banks going bankrupt. The banking system depends on trust and consumer confidence and the Directive is a key instrument in that respect.

In May 2010, the Authority issued a letter of formal notice to Iceland, giving the Government the possibility to justify its position. After carefully examining Iceland’s reply in May 2011, the Authority issued a reasoned opinion on 10 June 2011. The purpose of this reasoned opinion was to give Iceland a final possibility to comply with the Directive.

Iceland has now replied to that reasoned opinion, but remains in breach.

“The Authority’s position is unchanged. Iceland must comply with its obligations under the EEA Agreement. It must ensure compensation of all depositors under the conditions prescribed by the Deposit Guarantee Directive and without discrimination,” reiterates Mrs Oda Helen Sletnes, president of the EFTA Surveillance Authority.

The Authority notes that the bankruptcy estate of Landsbanki has started to pay out the claims of depositors. However, according to the information provided by Iceland, those claims will not be paid in full before the end of 2013.

“One of the main purposes of the Directive is to avoid depositors having to have recourse to bankruptcy procedures. More than three years after the deposits became unavailable, the claims have still not fully been reimbursed. This only serves to underline the importance of compliance with the Deposit Guarantee Directive,” says Mrs Sletnes.

The case will now be brought before the EFTA Court. Iceland will have the opportunity to present its position.  If the EFTA Court finds that there is a breach, Iceland will be required to take immediate actions to comply with that judgment.”

For those interested, Icelog has written on ESA and Icesave a number of times. Here is a collection of earlier logs on this subject.

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These days, the administrators of Landsbanki Luxembourg, led by Madame Yvette Hamelius, are sending bailiffs around in Spain and France to take over properties against which Landsbanki made equity release loans. These loans have already been reported on by English media in the UK expat community since many of those hit by the Landsbanki loans are English.

Typically, the bank would lend against the value of the property. The borrowers, often pensioners living in valuable property without much cash at hand, would get 20% of the loan in cash whereas Landsbanki invested 80%. The bank promised that the investment was good enough to pay off the loan. In theory, this could perhaps work. In practice it didn’t, the investments were unsound and resulted in losses and the small print hid the horrors of fees and interest rates. About 400 people took out these loans. Plenty of them, also hit by falling real estate prices, can’t pay, which is why Madame Hamelius is now making use of bailiffs to recover the outstanding loans.

The three main Icelandic banks are now being investigated for fraud by the Office of the Special Prosecutor in Iceland. Equity release loans were not prevalent in Iceland and cases, identical to the Spanish and the French stories, haven’t surfaced there. But if the Landsbanki equity release loans are partly an example of faulty advise there are similar cases. The Icelandic High Court has recently ruled in several cases where people had borrowed money from Glitnir to increase their stake in Byr, a saving society.* The Court ruled that those borrowers did not need to repay their loans because the bank hadn’t fully informed them of the risk and also because the bank had put pressure on these people to take out the loans.

It is interesting to keep in mind that administrators in the Icelandic banks have all spent a considerable amount of money to investigate the respective banks. It’s a fact, ia clear from the SIC report, that much of the dodgy loans and deals going on in Landsbanki did indeed go through Landsbanki Luxembourg. The question is if the Landsbanki Luxembourg administrator is doing anything to investigate eventually fraudulent activities in the bank. It should be in the interest of the creditors of the bank to make sure that these issues are investigated.

It should also be of interest for the Luxembourg authorities that the bank is investigated. A failure to do so won’t do much good for the reputation of this secrecy jurisdiction at the heart of Europe. As it is now, the borrowers of Landsbanki Luxembourg now driven to despair because of these loans will certainly not be recommending anyone to do business with banks in Luxembourg because they feel badly let down by the Luxembourg authorities.

The administrators make use of EU regulation on collaterals from 2005. However, the recovery of collaterals rests on the assumption that everything in the bank’s operation complied with rules and regulation. When this case came up in the Icelandic media in March 2009 the Landsbanki Luxembourg manager Gunnar Thoroddsen claimed the loans had been no different from similar loans offered by other banks.

The question is if this well and truly was the case and if the bank’s operations were sound. Was Landsbanki solvent in 2008? Did it have the full credential to issue these loans in these two countries? Did the investments Landsbanki supplied against these loans meet the investment framework of the loan agreements and the standards that this type of investments should meet? – These are some of the questions that the Luxembourg authorities, the lawyers of the borrowers and the administrators should be looking at.

The SIC report sows doubt as to the solvency of Landsbanki, as well as Glitnir and Kaupthing, from late 2007 until its collapse in early October 2008. Landsbanki had grave funding problems during 2008 and focused heavily on the equity release loans in France and Spain during that time.

The loans issued to borrowers in France and Spain were issued through Landsbanki Luxembourg. Questions have been raised if Landsbanki Luxembourg had the proper credentials to issue the loans in these two countries. Icelog sources have pointed out that questions have been raised if those acting on behalf of Landsbanki in Spain had the full credentials to operate in finance.

The nature of the investments also raised serious questions. I have heard from Landsbanki borrowers in Spain, who have investigated the matter, that the set-up of the investment – part investment, part insurance and fees to two companies – was such that it could indeed never have provided the cover promised to the borrowers.

It also seems that the invested funds were, at least to some extent, used to buy shares in the bank itself and possibly in other Icelandic banks. Shares in Kaupthing have been mentioned. The question is if this was in compliance with the information given to the borrowers. In the SIC report there are examples where ia the banks’ money market funds were used to invest in shares of the banks though that seems to go against the investment schemes for these funds.

Landsbanki wasn’t the only bank issuing equity release loans and not only Landsbanki customers are now feeling the pain. But due to the above – questions of solvency, legality of the operations and the set-up of the investments – the Landsbanki case raises different questions.

A famous French singer, known as Enrico Macias, has brought his case to a French court, saying he borrowed €8m but is being pursued by the Landsbanki administrator with a claim of €43m. Recently, the court demanded that Landsbanki place €50m as a guarantee, a record sum at a French court according to French media. The ruling in this case is being followed closely by other borrowers of Landsbanki Luxembourg.

It’s been pointed out that some clients of Landsbanki might have used these loans for tax purposes. That is another story and shouldn’t detract attention and focus on the legality of the Landsbanki operations in Spain and France.

*Why would Glitnir be interested in lending to Byr stake-holders? Because at the time the same group – Baugur and others related to Jon Asgeir Johannesson and Palmi Haraldsson – were in control of these two financial institutions. The Byr story has been told earlier on Icelog.

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Yesterday, Landsbanki’s Winding-Up Board paid out ISK432bn (€2,7bn) to priority creditors of Landsbanki. This amounts to a third of the priority claims. Most of this money goes to the Deposit Insurance Guarantee Schemes in the UK and the Netherlands.

Here is the press release:

“The Winding-up Board of Landsbanki Íslands hf. has made the first partial payments to priority creditors in the winding-up of Landsbanki Íslands hf. The partial payments are based on an authorisation in the sixth paragraph of Art. 102 of the Act on Financial Undertakings. Among those receiving payment were creditors in the nine deposit cases in which judgements were recently pronounced by the Supreme Court of Iceland. In tandem with making the payments, the Winding-up Board deposited in special escrow accounts an equivalent percentage of all equally ranked claims which are still disputed or where resolution of disputes is not yet concluded.

The total amount disbursed was equivalent to ISK 432 billion, which is close to one-third of the recognised priority claims. Payment was made in a basket of the main currencies which were available, i.e. euros, pounds sterling, US dollars and Icelandic krónur. Further information is available on the creditors’ restricted area of the bank’s website.”

Minister of Economy and Trade Arni Pall Arnason claims that Iceland doesn’t owe the Dutch and the British anything.

Is this the end of the Icesave dispute? I doubt it. The Dutch and the British might take a different view, not to forget ESA.

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NMA tv is a *Chinese website that specialises in cartoon versions of news stories. They have their own cartoon take on the Huang Nubo story that you can watch here.

*As pointed out in the comments, NMA is Taiwanese, not Chinese – and that adds a twist to this story. Thanks for the comment.

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