Yesterday the website WikiLeaks* published TOP SECRET information about loans made by Kaupthing bank just before the Big Meltdown last October. The info is a 209-page inside document containing slides used at a meeting of the bank’s loans committee on September 25 last year.
The leaked document shows definitively that the bank made massive, high-risk loans to a select few, most notably the largest shareholders in the bank and associated parties. These loans had more than EUR 45M exposure to the client and were in many cases awarded without any collateral or covenants.
Also, it has come to light that there were large sums of money transferred out of the bank AND massive loan write-offs in the few days preceding the collapse. Thus all evidence indicates that the big players knew exactly what was about to go down and were taking appropriate measures to save their own asses.
According to visir.is, loans made to the core investors of Kaupthing [the brothers Ágúst and Lýður Guðmundsson], and companies owned by them, amounted to some ISK 300 billion [USD 2.3 bn / EUR 1.6 bn].
Robert Tchenguiz, a member of the board of Exista [owned by the brothers] received loans of some ISK 330 billion.
Ólafur Ólafsson, he who once flew in Elton John to perform at his birthday bash [and who is associated with shipping company Samskip], received a loan of some ISK 140 billion.
Companies associated with the Baugur family received a loan amounting to some ISK 320 billion at the current rate of exchange.
AND THERE ARE MORE.
Seriously, I have a hard time getting my head around the iniquity practiced here. These were people who collected deposits from hard working individuals like you and me and used them as their own private money pit. As though nothing were more natural than to vacuum up funds from trusting people Europe-wide and just use it to play with. To buy toys with. Like jets. Or yachts. Or aging pop stars. GOD!!!
AND AS IF THAT WEREN’T ENOUGH…
As soon as the information became available on WikiLeaks, Kaupthing’s legal department went into overdrive trying to get the info removed. They started by threatening the site holders with a lawsuit. The site holders responded by giving them the finger, to wit:
No. We will not assist the remains of Kaupthing, or its clients,
to hide its dirty laundry from the global community. Attempts by
Kaupthing or its agents to discover the source of the document in
question may be a criminal violation of both Belgium source protection
laws and the Swedish constitution. Who is your US counsel?
Not to be undone, Kaupthing today applied for an injunction against RÚV [Iceland's national broadcaster] which was planning to cover the matter during its evening news hour [RÚV broke the news of the WikiLeak documents yesterday]. Unbelievably THE INJUNCTION WAS GRANTED just before the news was to go on the air. For some reason it was only aimed at RÚV, not at the other Icelandic media, although the latest is that Kaupthing has threatened injunctions against them, too, if they do not remove all discussion of the matter from their sites.
Particularly baffling in this is that New Kaupthing bank is not the same bank as the one that collapsed – the bank that applied for the injunction today is a bank OWNED BY THE PUBLIC SECTOR and it is hard to see why it goes to such great lengths to keep this information hidden from its owners – the Icelandic public. To the point of legally banning the national broadcaster – also owned by the people – from discussing matters of such great public importance.
Seriously. It does not compute, and my head hurts just thinking about it.
WEATHER
Yeah yeah. Pretty nice and everything. Everyone’s out getting drunk at some outdoor festival or other this weekend while YT sits at home pulling her hair out just thinking about the insanity in the world. It’s sunny and bright now, 11°C [52F]. Sunrise was at 4.35 am and sunset at 10.41 pm.
* Did you know about this website WikiLeaks?? I didn’t. But I think it’s the greatest thing I’ve heard about in a long time. Check it out!
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I´m sorry WHAT? File an injunction to prevent the story even being reported by a public broadcaster?
The inanity is, the vehemence with which they (and your point is a good one – in this case, isn´t NK “us”?) are attempting to cover this up just would seem to fan the flames.
There seems to be a whiff of North Korea surrounding the Icelandic media. But I would guess, there can’t be a better promotion of the information provided by WikiLeaks than this kind of attempted censorship.
At least it’s interesting to see in detail, where the money has gone.
Have I understood this correctly? You are saying that Kaupthing doled out around ISK1 billion billion to its principle shareholders when, but before the crash became inevitable?
And now the publicly owned vehicle which has inherited Kaupthing’s woes is threatening the media who want to publish what looks like evidence?
Maybe I’m out of touch but who gains by withholding this report?
This story as it stands is mind boggling in the numbers involved.
You don’t have freedom of the press in Iceland? On what grounds were the injunctions granted?
Surely Jail Must beckon for this, if not for this then I dont suppose anybody will ever go.Oh what the heck its only money just grin and bear lots of Taxes etc for the next 20 plus years. A spoon full of ICESAVE helps the medicine go down, medicine go down….. medicine go down in a most delightful way.
How about this!?
Icelandic bank chief in £500m of hot water
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5956509/Icelandic-bank-chief–in-500m-of-hot-water.html
“Just over six months ago, Björgólfur Gudmundsson was the chairman of a multinational bank, owner of West Ham United Football Club and listed as a billionaire on Forbes’ Rich List. This weekend he has been declared bankrupt with debts of almost £500m (96bn Icelandic krona) − far outstripping any personal insolvency ever seen in the UK. “
Believe me, the Icelandic public will never accept this injunction. There is much fury here, as we speak.
As for the loans, I neglected to mention that the biggest loans were all incredibly high-risk. That’s part of the madness surrounding this.
jim – yes, those numbers certainly do boggle the mind. Imagine the insanity of those who owned the banks – their utter removal from all reality. Using them as their own private source of funding without any regard for the ramifications if all failed.
Lisa – it was granted on the grounds of bank secrecy laws – that the leak violates those. It’s in effect for one week, and if there is a request for an extension it will go to court. Some legal experts say it wouldn’t hold up in court because the circumstances are so unusual – the conflict with public interest is too great.
In Iceland, as elsewhere, it just goes to prove the golden rule: Those that have the gold make the rules
heh, good luck to Kaupþing’s lawyers – WikiLeaks has thrown off some quite a bit bigger sharks!
Truly unbelievable!
As to “These were people who collected deposits from hard working individuals like you and me and used them as their own private money pit”…what else is new? The name Bernie Madoff ring a bell? Scammers, thieves, swindlers and fraud artists are as old as human society. I hope they rot in hell for a long time.
But what is truly astounding is the injcunction. The stalinization of media proceeds apace, it would seem. If it stands, RUV is no better than Pravda and the government no better than Comrade Brezhnev
The name Bernie Madoff ring a bell? — it might for you, but wouldn’t have the same resonance for most Icelanders.
At least one person finally is able to see the reality
But I disagree about Brezhnev. At least he didn’t pretend of doing everything on the name of “democracy”.
To the Kaupthing lawyers (looks like they read this blog).
Guys, you missed some basic stuff when study laws and other bullsh*t in your f**** law schools. One of the the rule you missed says “What have been seen can not be unseen”
Welcome to the Time after Google. You still can shut down a TV station but the internet is out of your reach. And I think many other common things will be out of the reach for you soon – only those allowed to be kept in the cell. Cheers.
PS. This also fully applies to the clients of these lawyers
Wow, I did not manage to read the rest of this article, since I started crying (and I am in a Starbucks in California at the moment — not the best place to cry) when I saw the dollar total of those loans at the last minute. Dollar amounts that Icelandic taxpayers are now supposed to cover. This is what happens when you have half of the idea of the FDIC — deposits are covered — without the other half — actual regulation. It is so upsetting.
>The name Bernie Madoff ring a bell?
On a lighter note, are any of the players involved in Iceland as amusingly named?
Now that the Global Financial Integrity Task Force in Washington DC is shining a spotlight on Kaupthing’s dodgy dealings on the Isle of Man, here’s hoping they will be all over this! As for Bernie Madoff, the USA Judge sent a strong message to the world when he sentenced that thief to 150 years in jail. Time for those Icelandic fat cats to pay the piper and pay dearly, I hope.
I really shouldn’t be butting in with an opinion, since I’m a foreigner, but I will anyway. This is outrageous(*), and to all the Icelanders working to fix things, tell yourself what our current President’s supporters said: “Yes we can”.
(*) To be more precise, @#%! outrageous.
“These were people who collected deposits from hard working individuals like you and me and used them as their own private money pit. As though nothing were more natural than to vacuum up funds from trusting people Europe-wide and just use it to play with.”
Sorry but that is EXACTLY the definition of a bank. Everyone who believes what their ad brochures say or thinks a bank is a trustworthy institution has not paid enough attention in school. What’s going on is scandalous but only insofar that the understanding of decency keeps most other banks from doing it under the public eye. This and EXACTLY this is going on every god damned day and has been the basis for the entire banking sector for decades. I myself am not surprised, this is not saying that I’m not angry at what these people do but merely have been waiting for exposition for years.
Why break laws to expose wrongdoing? There apparently are valid restrictions regarding the release of banking information. Surely you wouldn’t want your banking info shared with the public, right?
You’re are misleading by saying the bank asked for “remove all discussion”. The email referenced asked that the document link be removed, nothing more. Granting an injuction in such cases is commonplace – the document appears valid and it’s public release would likely result in violation of existing law. Injunctions aren’t permament obviously and give the judge time to review the arguments.
Sure the bank might be trying to cover it’s ass, but that doesn’t mean it’s okay to “give them the finger” and violate law in order to expose their violations of law.
> Sorry but that is EXACTLY the definition of a bank.
Yes, it’s called fractional-reserve banking. A bank lends out more (many times more) than the deposits it collected. It’s a limited license to create money out of thin air granted by government. A long time ago, this was called fraud. Now it’s just normal banking. Supposedly, fractional-reserve banking facilitates economic growth through easier access to credit. But once in a while it goes badly wrong, like in this case.
The missing link might be CIA. This is the end product when your country is taken over by criminal and traitorous CIA bastards. Icelanders leeched dry. I wonder why the icelanders won’t hold a public lynching for them, or have they ran the country?
What do you need to do you Icelanders to get the people who made the loans and those who took them behind bars?
You’re absolutely right to go on exposing this sort of fraud. Well done.
Does anybody know where these guys are living now?
Alda, I haven’t lived in Iceland for a while (though my family still does) but isn’t Bernie Madoff a household name – for all the wrong reasons – pretty much anywhere in the world? IIRC, his Ponzi scheme shenanigans were widely reported in Mbl and all Icelandic media
My understanding is that the information provided in the leaked document aren’t really that new. They are a confirmation of something, which has been a subject of public speculation for a long time.
I think, the information provided in the document belongs to the Icelandic public. They have to deal with the consequences of the dealings around the collapsed banks, so they have the right to know about it.
Bank secrecy is not the highest of all and definitely not in this case. There has been enough foot-dragging on the pretext of bank secrecy.
It definitely needs more whistleblowers to further the investigations, the quicker the better.
“pulling her hair out just thinking about the insanity in the world”
What “insanity”? It is absolutely logical: Calculated theft, driven by greed, done by sociopaths. That is, your average big corporation and upper management.
Ah… slight misunderstanding.
The slideshow is not about loans made at the last minute, it is an overview of all loans where Kaupthing bank had more than EUR 45M exposure to the client. These loans had been building up for a few years.
It’s also called “pyramid”, Mike.
And this is the real problem – I mean current “financial” system. In fact – it’s a huge financial pyramid. And looks like we are witnessing its collapse (with unpredictable results)…
Charles. This is a matter of ALL Icelandic public – legally, politically, economically etc. – so this is info we (public) are supposed to know. There is nothing private left in it now (unless mentioned guys agree to pay all stolen money back – but I doubt they will).
This injunction is illegal in the first place. If you missed –
“The injunction was ordered by the Reykjavík District Commissioner, one Rúnar Guðjónsson. As it happens, the son of the Reykjavík District Commissioner, Guðjón Rúnarsson, is head of the Icelandic Financial Services Association and one of the top spokesmen for the failed banks….
Another son of the District Commissioner is Frosti Reyr Rúnarsson, who just happens to be the former head of Kaupthing’s securities brokerage division and one of the recipients of Kaupthing’s infamous bullet loans.”
So what we have here?
1) a claim of “old” Kaupthing about some laws being broken (but were they?).
2) a decision of an “independent” judge two closest relatives of whom are direct participants of the matter (is such decision valid?)
From my point – this leak is a report about actual crime so as any report about crime is acceptable.
PS. I have no problem if my bank info would be available for public (except my passwords to my account of course). But I think “public” doesn’t care about my bank info.
I know Littla Hraun is overcrowded but perhaps they should release some low level drug dealers to make room for these folks.
Fascinating blog by the way.
“Supposedly, fractional-reserve banking facilitates economic growth through easier access to credit. But once in a while it goes badly wrong, like in this case.”
“Once in a while?” Haven’t you ever wondered why banks own enormous glass towers in the center of every city in the USA?
John Smith: are you sure it was the CIA? Maybe it was……the JOOZ!
Conspiracy theories aside, like someone else said: this is greed and corruption run amok. Perhaps it’s a good thing that this level of corruption is now being unearthed in Iceland. It will take a while but now some healing can start taking place
Charles Oppermann said, “Surely you wouldn’t want your banking info shared with the public, right?”
If my bank went tits-up and left me holding the bag? You better fucking believe I’d want ALL documents exposing potential financial malfeasance released, so that we can learn what happened, hold the scoundrels accountable, and change the financial laws so it doesn’t happen again.
Given that Iceland’s banking system is a pretty big case of “tits-up,” sounds like more leaks are necessary.
the existing system won’t bring these people down. you need something like the A-Team or a privately funded ‘nazi hunters’ type organization.
Great work – This needs to be out in the open. All those who have suffered from the bank collapse deserve natural justice. Those who took nthe money need to be shamed and pursued.
Thank you for your input, everyone!
Tóti – thanks for the clarification – I’ve made a note at the end of the post.
It appears that the broadcaster, the bank, and the courts are not in fact owned by the public no matter what the official documents say.
How long do people like these bankers think they can continue with games like this? Eventually it will all go to ruin, and the public will revolt. Remember the French Revolution. It could happen again.
As far as I can tell, pretty much all Banks are frauds.
I think Credit Unions are better but I could be wrong.
Was there any doubt that this is what happened in the first place — that the knuckleheads pilfered the banks for what they could just before “insolvency” was publicly declared? I suppose there’s hard public proof now. Here’s hoping the investigators get on the ball and follow up with some criminal charges now and temporary asset freezes are implemented by a judge soon before the chickens flee their coops !
I just saw that even Slashdot (technology news) is reporting this story and linking to your article:
http://news.slashdot.org/story/09/08/02/166221/Censorship-Struggle-Underway-In-Iceland
Sounds like the judge that granted that injunction got a loan of his own, or a promise of one at least…
searching the net to see if others are covering this and Im suprised that the big media has NOT picked it up. noone. not cnn, new york times, boston globe, bbc, guardian, le monde… Possibly because Reuters and AP are keeping shut, there’s nothing on their sites either… And this is real news!!
Well, there are THREE positive outcomes from this kreppa.
1. The famous Russian mafia is no longer the main suspect in the current problems
2. The “crisis” in small Iceland exposed in full that the current world financial system is no longer a “heart and blood vessels” of the current economy. It’s a cancer.
3. The current political system of so called “western” democracy is incapable of fixing problem No. 2 as it’s integral part of the “financial” system.
But the most important issue now – no, not to catch and punish “bad” guys or change some laws or set up new “commission” to control banks (or whatever) – the most important is what should we do with the current system of governing of our society as a whole.
Because Iceland case proved that all traditional “mechanisms” failed – “independent” press, “independent” courts , “public servants” aka politicians and “democracy” as a whole.
And Iceland – again – could play a vital role in this no matter how funny this might sound …(to be continued)
I am finally feeling the anger that awaits me (currently abroad) and my family (virtually all in Iceland) for a decade or more while we repay the lavishness in which they lived their lives. Iceland has always been an expensive place to live, more so now, but only if your using the kronurs under your matress.
My Amma was living off of the interest of banks shares my Afi left for her so she would be taken care of. Now she’s looking at selling her apartment and car. Where is the Justice in this?!
I hope the fearless leaders left in the banking industry with blood on their hands get roosted out and shamed in public. The banks kept feeding the hands that they felt owned them and as for the injunction to public information, it looks as if the media and Reykjavik Magistrate may have some bloody bathtowels on the floor as well.
Unfathomly irreprehensible actions amongst people whom are not fit to be called “Islendingar” today.
I didn’t believe you martin, but you were right.
This morning I see that the Telegraph, Guardian and FT have picked up on it, so all is again well in the world of the press.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5968231/Kaupthing-leak-exposes-loans.html
http://www.guardian.co.uk/business/2009/aug/04/iceland-bank-kaupthing-internet-leak
http://ftalphaville.ft.com/blog/2009/08/03/64981/kaupthings-wikigeysir/
Exact same thing happened with the banks in Ireland, Allied Irish Bank gave loans to a mysterious Golden Circle of investors who then bought AIB shares in a last ditch effort to keep the share price afloat. Share price determines shareholders equity which determines credit rating which determines ability and borrowing rate. The people who were given ( or I’ll bet were asked to take) these loans weren’t in it to make money but to try and keep the bank going with accounting trickery, I wouldn’t call it theft but definitely deceit (however the bonuses paid in the good years are indeed theft)
This UBS report from April 2008 is quite good
http://tinyurl.com/nxf5u4
The ownership structure on page 17 is hilarious
Getting people to take loans to artificially keep up the price of shares in the bank (or any other company for that matter) is against Icelandic law as I understand it. They’re defrauding others in the marketplace, who might buy shares at the artificially inflated price.
It seems like most or all the Icelandic banks did this, at least both Kaupthing and Glitnir.