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Parliament in chaos as new documents on Icesave appear

The vote on the Icesave issue, which was due to start at 10 am this morning, was postponed last night as new documents surfaced that had hitherto been kept secret.

The documents are from British law firm Mischon de Reya and apparently they outline an advantage that the Icelandic authorities might have in negotiations with UK authorities in the Icesave matter, due to the UK’s takeover of Landsbanki’s Heritable bank in autumn 2008.

The freezing of the assets of Heritable was a huge deal at the time, as UK authorities used anti-terrorist legislation to do so and placed the Icelandic Central Bank on a list of terrorist organizations that included Al-Qaeda. The CB was soon removed from the list, but Landsbanki itself remained on there for months.

Icelandic authorities and indeed many Icelanders were deeply offended that a supposedly friendly nation and NATO ally would group it with a list of terrorist organizations without any prior warning. It also caused a run on the last remaining Icelandic bank – Kaupthing – causing it to collapse a few days later. [Whether or not it would have collapsed anyway is a subject of debate – however, it was at the time the one Icelandic bank thought to be able to withstand the collapse. But that was then – this is now.]

The Icelandic authorities commissioned reports from two British law firms on the Icesave matter, and those reports arrived just before Christmas. When the report from the aforementioned Mischon de Reya arrived it transpired that there were further documents that had been kept secret – i.e. the report mentioned meetings that had not been documented. In fact, the whole Icesave matter has been riddled with a lack of transparency and rumours of secret documents and meetings.

Those extra documents, which allegedly were also new to the Icelandic authorities, finally arrived yesterday, accompanied by a letter from the law firm, which states:

As we told the Icesave committee and the Ministry of Finance at around this time, such court proceedings against the FSA [British Financial Supervisory Authority] could be politically sensitive for the British government and could therefore be a potentially useful tool to gain traction against the British authorities in the final negotiations on the Icesave matter.

[NB – this is my translation of an Icelandic text that appeared on Eyjan.]

The details are still a bit unclear, but it is being floated around that the head of the Icesave committee had requested that the law firm keep various documents secret from Iceland’s Foreign Minister Össur Skarphéðinsson when he was briefed on the status of the Icesave matter last spring. The Minister, however, has said he does not buy that explanation.

What we do know is that the voting has been postponed, parliament has dissolved into a flurry of meetings and consultations, and the Icesave issue will probably not be resolved before the end of the year, as planned.

WEATHER
Similar to what it has been – cold and clear and very pretty from the window. Right now a very frigid -8°C [18F]. The sun rose at 11.21 and will set at 3.39.

Comments

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  • Gloria December 30, 2009, 4:02 pm

    Whoa! You Icelanders have my sympathy and good wishes, but you must know that to outsiders, the entire Icesave situation is a far better intrigue than any detective novel could be. But perhaps that is true for you insiders as well? No matter who the villains are (beyond David Oddsson, in general), it does seem unreasonable that Iceland’s taxpayers should compensate greedy investors of other nations who should have known it was too good to be true. Where is their accountability?

    In any case, happy new year, Alda. May 2010 bring an end to Icesave so you and your fellow Icelanders can get on with other things.

  • Bromley86 December 30, 2009, 6:28 pm

    >The freezing of the assets of Heritable was a huge deal at the time, as UK authorities used anti-terrorist legislation to do so and placed the Icelandic Central Bank on a list of terrorist organizations that included Al-Qaeda. The CB was soon removed from the list, but Landsbanki itself remained on there for months.

    That’s been the problem with the whole anti-terror issue. Icelanders were angry, confused and easy to manipulate.

    In this particular case, Heritable wasn’t even frozen. As a UK company, the appropriate legislation was the “Northern Rock Act”:
    http://en.wikipedia.org/wiki/Banking_(Special_Provisions)_Act_2008

    And, what’s more, that happened *after* the effective nationalisation of Landsbanki and the shutting out of UK customers.

    >It also caused a run on the last remaining Icelandic bank – Kaupthing – causing it to collapse a few days later.

    On the Kaupthing front, from that High Court case, there appears to have been a lot of frantic action behind the scenes before the UK froze Landsbanki or transferred Heritable. Have a look at “The relevant facts” (point 12 onwards) from that judgement on the transfer of Kaupthing:
    http://www.bailii.org/ew/cases/EWHC/Admin/2009/2542.html

  • Gwrhyr December 30, 2009, 6:36 pm

    Let’s hope the Icelandic politicians can use whatever leverage they can find to get Iceland a better deal than they would have been able to manage without this information.

    The fact that secrets keep coming out and that so much is still unknown about this crisis due to a lack of transparency is mind-boggling and wrong in a world where most people trust their political and societal institutions.

  • BRADSTREET December 30, 2009, 7:25 pm

    On behalf of the UK, I’d like to apologise about the anti-terror thing, but I’m afraid that the Blethering Tartan Turnip didn’t consult me about it (as he doesn’t about so many things). I just want it to be over for you, and for all of your people, so that you can start to get things right again. There’s nothing worse than beings suspended, without resolution, between various different choices.

  • James December 30, 2009, 9:04 pm

    I’m coming to the conclusion that Icesave can’t be resolved within the lifetime of our universe. It will soon be too complicated for mere human minds to comprehend.

  • sylvia hikins December 30, 2009, 10:01 pm

    I agree with Bradstreet- many of us in the UK were deeply upset and shocked that the UK Government used anti-terrorist legislation against you to freeze assets, and which became the final nail in your banking coffin. We also exported Thatcherite economics which created the rationale for the eventual collapse of your so-called ‘free market’ and its free-wheeling oligarchs. So procrastinate, uncover all the facts, use what leverage you can to get the best deal possible for the Icelandic people (or should I say the present children of Iceland who will be paying for this fiasco for years to come). At some point though, you will need closure. In order to do that you must deal with all the ‘snollygosters’ (‘shrewd, unprincipled people’) both within and beyond your shores who were part of that slimy past and who still seem to assume they can be part of your re-constructed future. At the first opportunity they will be levering themselves back into positions of power and influence. Get rid of the lot of them! Then proudly re-build.
    sylvia from viking wirral

  • James December 30, 2009, 10:02 pm

    The protestors’ red flares outside parliament today look dramatic:
    http://www.youtube.com/watch?v=dtymTgS_elY&fmt=18

  • Joerg December 30, 2009, 10:52 pm

    As the Icesave mess is already keeping hordes of lawyers busy producing lots of papers with disagreeing views on the matter, I’m just wondering, how the general public might be able to cast a well-founded vote in case the President didn’t sign the law, should it ever pass Alþingi. The longer it takes the more complicated it gets.

  • Bromley86 December 30, 2009, 11:58 pm

    33 for, 30 against. Now we’ll have to see what Prez sez.

  • glyndwyr January 5, 2010, 3:57 pm

    I have little sympathy for iceland with this. It wanted to be taken seriously and was perfectly happy to take lots of international money, selling themselves as a stable modern country, now they have to take responsibility for failing to regulate their banks like everyone else.