Last Friday, a parliamentary committee that was appointed to rule on the legitimacy of foreign investment in Iceland, announced that it was perfectly legal for Magma Energy of Canada to own Icelandic utilities company HS Orka.
Brief recap for anyone who doesn’t know about this case. Last year, a decision was made to sell [privatize] a share in utilities company HS Orka, which provides heating for the entire Suðurnes region of Iceland [the peninsula on which Keflavík international airport is located] to a Canadian company called Magma Energy. All dealings around the HS Orka privatization stank of corruption and the decision spurred massive protests. One of the most obvious deviations in the matter concerned the fact that Magma Energy had set up a “subsidiary” in Sweden in order to be able to purchase the share. This was done to get around Icelandic law, which stipulates that only Icelandic firms or firms from the EEA area can own shares in Icelandic energy companies. The law, obviously, is designed to protect Iceland’s resources, which should be used to benefit the people who own them, not some overseas corporation that will exploit the profits for its own gain.
Unsurprisingly, the Independence and Progressive parties [the duo that brought Iceland to the brink of ruin and ushered in the economic collapse] plus a handful of oligarchs were intimately involved in the deal. I’ve written about this here and here, among other places.
At the time, Magma claimed it only aspired to own a share in HS Orka. Indeed, Magma CEO Ross Beaty, told The Grapevine in September 2009 that he had no intention of acquiring a majority stake in HS Orka. Many of us here found this claim highly suspect, and rightly so, for in May this year Magma increased its share in HS Orka to 98.5 percent.
The last hope for those of us who strongly oppose this deal was that the committee on foreign investment would rule that Magma’s little strategy to set up a shelf company in Sweden was such a blatant violation of Icelandic law that the sale would be annulled. But NO, the committee decided last Friday that the sale should stand, and that Magma had been within its legal rights to acquire HS Orka [and, note bene, gain exclusive rights to Iceland’s geothermal energy fields on Reykjanes for up to 130 years*]. Not to say the decision was unanimous — the committee was divided on the issue, with three members out of five giving the go-ahead. Those three members represented the Independence Party, the Social Democrats [who currently hold the Ministry of Industry] and the Progressive Party. The two who were opposed represent the Left-Greens and the Movement.
The anger flared up instantly. Icelandic bloggers and Facebook users were infuriated. Then, on Saturday, Lára Hanna Einarsdóttir and Teitur Atlason, two of Iceland’s foremost bloggers, publicized something that totally incinerated the public discourse.
At Lára Hanna’s behest, Teitur, who lives in Sweden, took a stroll down to Magma’s alleged “office” in Gothenburg. There he was met by a woman named Mona Jonasson, a lawyer with the legal firm where Magma Energy is registered. They had the following conversation:
TA: Is this the address of Magma Energy Sweden?
MJ: That’s right, welcome. Are you looking for Johann Rapman? He’s on holiday.
TA: Is there someone else who can speak on behalf of Magma Energy?
MJ: Jonas Hallberg. He’s on holiday. Can I help you?
TA: I’d like to know what sort of company this is. Does this company [Magma] have any sorts of operations here, or staff? Or is it just registered here, through Canada? What exactly do you do?
MJ: A-ha. These are questions for the board. This is not Magma’s office, but we’ve worked for them.
TA: This is not Magma’s office?
MJ: No, no. But as lawyers we’ve helped Magma.
TA: So you’ve only helped Magma. This is not Magma’s office or anything like that. Do you know where Magma’s office is?
MJ: No. You’ll have to check the registration.
TA: I’ve done that. The address is listed as being here. My question is, are you here at the legal firm possibly helping Magma to be registered in Sweden?
MJ: Only Jonas or Johann can answer that.
Incidentally, Teitur took photos on the scene that show, among other things, that Magma is not listed in the lobby or anywhere else on the premises.
This is the first actual confirmation that Magma Energy does not really exist in Sweden. [NB Lára Hanna also publishes a link on her blog to Magma’s corporate profile page — again, no Swedish subsidiary listed]. Once that was out, people were furious. How could it be that this matter had gone through numerous committees etc. and no one had thought to actually visit the offices to see if Magma had real operations in Sweden? Others, meanwhile, shrugged and asked what the big deal was — everyone already knew that Magma was a shelf company. This did nothing to add to or dispel that fact.
However, I guess just the blatant proof was enough for some.
Margrét Tryggvadóttir from The Movement immediately requested a meeting in parliament’s Industry Committee to discuss these “new” findings. However, just a few hours later, a second bomb was tossed into the fray: Magma sent forth a press release stating that the Ministry of Industry had actually advised Magma to establish the shelf company in Sweden in order to circumvent the Icelandic legislation.
The disbelief and outrage around the country was palpable. People were livid, and wondered who exactly had provided that kind of advice. Was it the current Minister of Industry [Katrín Júlíusdóttir] or the former [Össur Skarphéðinsson — currently Minister of Foreign Affairs]? The current Minister for the Environment, Svandís Svavarsdóttir, immediately stated that she wanted an investigation into the allegations. RÚV interviewed Katrín Júlíusdóttir yesterday, who vehemently denied the charges, saying that “no documentation exists” within the Ministry of Industry to support the claim. When asked whether she could rule out that this had been discussed at meetings, she said no, she could not rule it out, but that it had not been done at meetings that she, herself, had attended.
The meeting in the Industrial Committee will likely be held today. One can only hope that something transpires because this matter is so incredibly debilitating, makes you feel so powerless to do anything to stop the blatant peddling of our resources into private hands, that it’s almost too much to take.
[* The mind positively boggles. That’s as if someone had made a deal in 1880 that a foreign company could have exclusive rights to Iceland’s resources until today.]