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Mea non culpa

It was painful to watch Valgerður Sverrisdóttir, who was Minister of Finance and Industry for the Progressive Party at the time when the banks were privatized, cross-examined on Kastljós this evening.

It is now generally agreed that the outrageous corruption that proliferated inside the banks ca. 2002-2008 began with their privatization. As I’ve written about before, the head of the privatization committee resigned abruptly in the midst of the process, claiming that the heads of the two coalition parties – Independence and Progressive – were interfering unduly in the privatization. Originally the condition for the privatization of the banks was supposed to have been distributed ownership, but suddenly the two coalition leaders – Davíð Oddsson and Halldór Ásgrímsson – wanted to hand-pick the buyers.

Landsbanki was delivered to Björgólfur Jr. and Sr. at the behest of the Independence Party. The other bank – Búnaðarbanki, which later became Kaupthing – was sold to a consortium called the S-Group, which was close to the Progressive Party.

The S-Group were allegedly in talks with a foreign bank to lend them the funds to acquire Búnaðarbanki. However, info surrounding this foreign bank [which first was supposedly French, then German] was all rather vague. In the end, the small German financial institution [that had suddenly replaced the original big French bank] sent a “representative” to be present at the signing of the contracts. Later it was revealed that the German financial institution never recorded any shares in Búnaðarbanki in its financial statements, i.e. it never owned any of the shares. It was a ruse to make it look like the S-Group fulfilled all conditions, which included having a strong financial backer.

So anyway, Valgerður Sverrisdóttir was heavily involved in the privatization process. In fact, as Minister of Industry she signed the contract for the sale even though she had been told a short while earlier that the German bank was a scam and privatization conditions had not been met. In Kastljós this evening, the interviewer, Helgi Seljan, tried to get her to say she had made a mistake by signing on the dotted line, even after she knew the whole thing was a big swindle. And she just … COULD … NOT … GET … THE … WORD … OUT. She could NOT admit she had made a mistake. It was everyone else’s fault. In this particular case, according to Valgerður, the fault of the foreign consulting firm that advised them on the sale. [When all else fails, blame a foreigner.]

It was also hard not to cringe when Helgi asked her exactly how Davíð Oddsson had made it known that he wanted the privatization to go his way, and not the way that had originally been agreed. She squirmed in her seat, fumbled with her water glass, tried so hard to maintain her carefully crafted facade. And failed.

There were 147 individuals called in for questioning by the committee behind the Black Report, and NOT ONE of those 147 was willing to shoulder ANY responsibility for the collapse of the Icelandic economy. Not one.

On the whole, though, there is widespread satisfaction in Icelandic society with the report that was published yesterday. It appears to be a very well-crafted document, very thorough and direct, yet suitably objective. Most importantly, it is credible — the authors were very clearly not out to please anyone or to perform any sort of whitewash. On the contrary, they seem to have performed the task with integrity and respect.

When one realizes this, one also realizes just how much anxiety there was around here that the report would somehow be a failure. And what an immense and overwhelming relief it is to realize that it’s actually better than people dared to hope. It’s like Egill Helgason wrote on his blog today, Icelanders have become so accustomed to things being half-assed that when they turn out to NOT be half-assed we’re all overjoyed. That’s kind of what it’s like around here today.

[photo from RÚV]

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  • sigga April 14, 2010, 12:39 am

    Given her comments today am wondering whether the consultancy firm if I recall right – HSBC will be putting in a liable claim in the UK. Loved the way that she side shuffled the fact that she did not read the reports from the consultants about being able to “massage” the information about the potential buyer to suit the requirements. Or was it because she doesn’t read English sufficiently well….

  • Einar Karl Friðriksson April 14, 2010, 12:45 am

    The ex-minister left me speechless. She comes as close as any politican to pretty much admitting that the “privatization” was a fraud, a political hi-jacking of state-owned banks. And we thought those kind of things only happened in Russia…

  • Easy April 14, 2010, 2:21 am

    And now what?? are we just so very happy to officially know that they screwed us?

  • rod April 14, 2010, 8:33 am

    It is clear that the original privatisation was seriously flawed and if this person had any self-respect she would admit it.

    However, even if the there had been a wide ownership base at the outset, it might have happened that the wide boys would have ended up in control anyway by buying up small packets of shares and creating large holdings. That is the method by which the Russian oligarchs got where are today.

  • Maja April 14, 2010, 8:39 am

    Wow, but it’s not surprising really. Isn’t it the number one rule in politics to always find someone else to blame. There really is a sore lack of Taking responsibility for your own actions in all the world today.

  • Joerg April 14, 2010, 9:15 am

    You don’t seem to be able to pin a fraudster down in Iceland, even if he or she has been caught red-handed. There seems to prevail a general attitude of irresponsibility, socialising the blame, deflecting it to foreigners or just plainly accusing the investigator of partisanship. I suppose, it’s still a long way to go until people internalise that their actions have consequences for themselves. Hopefully, this report provides a beginning for this process.

  • Virgile April 14, 2010, 10:16 am

    Love the ” When all else fails, blame a foreigner.”. We should create a price for the most insidiously racist comment of the year. Valgerður is definitively a winner !

  • snowball April 14, 2010, 11:56 am

    interesting to see a name like alisher usmanov among the top borrowers of kb.

    „Alisher Usmanov, potential Arsenal chairman, is a Vicious Thug, Criminal, Racketeer, Heroin Trafficker and Accused Rapist“ a quote from the former british embassador to uzbekistan about alisher usmanov

  • Mike Richards April 14, 2010, 8:08 pm

    Hi Alda,

    With a new eruption underway the only logical explanation is that the Old Gods are angry with modern Icelanders. I suggest you throw a banker into the crater – it might not help, but it can’t do any harm now can it?