More public outrage as details come spilling out of the Kaupthing loan book

Public outrage continued today over the injunction ordered against RÚV [the Icelandic state broadcaster], aimed at stopping it from processing the details of the Kaupthing loan book.

Bizarrely, an injunction has not been ordered against other media – only the state broadcaster, although the other media have been sternly instructed by Kaupthing to ignore the WikiLeaks report, OR ELSE. At the same time everybody knows this injunction is a farce – the information has already been downloaded by everyone and his dog here in Iceland and besides, it’s still readily available online.

Some people are doing an excellent job at processing the information in the WikiLeaks article – including the excellent Dagblaðið NEI. It points out, among other things, that Kaupthing, which at the time of its privatization in the early part of this decade was estimated to be worth ISK 20 billion [USD 159 million], loaned its TEN LARGEST CLIENTS a grand total of ISK 1,500 billion [yes, you read that right] in the subsequent few years that it operated as a private banking institution.

Many of the largest recipients of loans from Kaupthing were shareholders in the bank, while the collateral for the loan were shares in the bank itself. [And if you're like me, this is the point where you're tempted to stop reading because the mind starts turning somersaults. Is it any wonder they need a team of highly-specialized experts to unravel all the endless knots and tangles in this sorry scenario? This is only the beginning!]

Meanwhile, the largest individual loan recipient was one Robert Tchenguiz, who I wrote about briefly in this post, which I’ll just revisit for a moment, if you’ll indulge me:

Tchenguiz was a shrewd and hard-nosed businessman who was flying high at the height of the financial boom. He owned assets throughout the UK and, indeed, Europe – including Iceland [in Exista, the largest shareholder in Kaupthing].

However, in late 2007 his luck began to turn, he started suffering heavy losses, amounting to hundreds of millions of pounds Sterling. By the time the credit crunch hit in late 2008 it is unlikely that Tchenguiz would have been able to secure credit anywhere – except from his pals at Kaupthing.

Indeed, Kaupthing kept lending Tchenguiz large amounts – tens of billions of ISK – right up until its collapse in October 2008. The British press even reported that he’d lost a cool billion pounds the day before Kaupthing collapsed. At the same time, it was virtually impossible for Icelandic companies to secure loans from the bank.

In February, New Kaupthing bank initiated court proceedings against Robert Tchenguiz to recover “an overdraft” of 643 million pounds Sterling [ISK 135 billion] which he had received from Old Kaupthing prior to the collapse. Evidently the collateral for the “overdraft” was in “indirect investments and other types of air” [according to NEI.].

Tchenguiz’s brother Vincent Tchenguiz also received a loan from Kaupthing, albeit not as generous as the one granted to Robert: it only amounted to EUR 208.7 million at the time of the collapse. In the slides published on WikiLeak, the notes accompanying the granting of the loan state that Vincent is an “individual well known to Kaupþing and its senior management. These facilities provide liquidity to enable him to make other investments.” Ah. Glad he checked out well, then.

Meanwhile, the debts owed to Kaupthing bank last fall by these two brothers ONLY thus amounted to ISK 232 billion. That works out to ISK 725,000 [USD 5,777] per Icelandic citizen, ISK 2.9 million [USD 23,107] per four-person family. To be fair, there may be some assets owned by the two that will go towards lowering the debt … but considering the fact that Kaupthing has already had to launch court proceedings to recover the “overdraft” awarded to Robert T. I wouldn’t put my money [ha!] on it being too much.

THIS my friends, is the sort of information covered in the report leaked to WikiLeaks that Kaupthing bank insists the Icelandic public should not be informed about. And yet it is we, the Icelandic public, who have to shoulder the entire burden of the collapse.

Sure, I know the law is the law, and that this violates bank secrecy and all that shit. To which the only reasonable answer is: THEN THE LAW MUST BE CHANGED. This information is essential for the public to know. If there is to be any sort of restoration of peace and acceptance in this country, this sort of information MUST be accessible to the public. Period.

ANOTHER LOVELY DAY
Sunny and relatively warm, although already methinks I can feel a bit of an autumn chill in the air. Right now it’s 11°C [52F] and it feels like a wind is picking up. The sun came up at 4.44 am and set at 10.21.

Tagged as: Dagbladid NEI., Kaupthing, Robert Tchenguiz, Vincent Tchenguiz, WikiLeaks