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So, was it worth it?

DV served up a delicious little scoop yesterday in the form of a telephone conversation transcript between two Kaupthing insiders, one Halldór Bjarki Lúðvíksson from the bank’s Corporate Division, and Lilja Steinþórsdóttir, from Internal Auditing. In the phone call, the two discuss the involvement of Sheik Al Thani of Qatar, who purchased a 5% share in the bank just before it collapsed. This was, of course, used to bolster confidence in Kaupthing — after all, if a proper sheik thought it strong enough to invest in, it must be OK, and obviously share prices would be manipulated upwards. It goes without saying that smoke and mirrors were used in the transaction — offshore companies were created into which to transfer money, and then other offshore companies, and others still … all designed to hide the fact that Kaupthing was lending the sheik the dosh to buy the shares.

LS: OK, so why was Choice established, or what kind of company was it?

HBL: Um, this was yet another BVI* company.

LS: Yes, so is this just to hide the trail, or why is it done this way?

HBL: Yes, um, it’s to hide the fact that Óli [Ólafur Ólafsson, large Kaupthing shareholder] actually owned half.

LS: Oh, right.

HBL: The only way to flag this was for the company to be 100% owned by the sheik.

LS: For the sheik to own the whole thing.
[…]

LS: But what about those US dollars, what were they supposed to be for?

HBL: Basically that was just a kickback to the sheik, for being involved.
[…]

HBL: And so the sheik was promised 50 million dollars.

LS: Yes.

HBL: For immediate payout.

LS: Yes.

HBL: In order to, in order to, well, as a fee for lending his name to this.

So, according to this, the sheik received a kickback of USD 50 million just to lend his name to the deal — which would not have been a bad day’s earnings had the whole thing not blown up in their faces. However, I can’t imagine anyone paying even 50 bucks to use the name of Sheikh Mohamed bin Khalifa al-Thani these days — can you? Wouldn’t you just love to ask him: “So, Mr. Sheik MBKAT, was it worth it?”

* British Virgin Islands
[Phone transcript via Eyjan.]

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  • Michael Schulz June 8, 2010, 1:17 pm

    Well, Al-Thani may not need 50 bucks since he’s a billionaire and others pay him much more than even 50 million.
    But is it not true that the same Lilja Steinthorsdottir and
    Halldor Bjarkar Ludvigsson who had that chat via phone are today with Arion Banki in the same or similar positions as previously e.g. Internal Audit and Corporate Finance ? How is that possible I wonder?
    Didn’t George Santayana say: Those who do not remember the past are condemned to repeat it!
    Cheers,
    Michael

  • andy June 8, 2010, 1:46 pm

    If the hd of internal Audit is discussing this matter as it happened, then it is a fair bet that she is aware of other market manipulation. If she is an Icelandic accountant, would she have reported this to her Accountancy institute, or internally to her Money laundering Officer? Know your customer and ethics must be fun Icelandic ban training (if such courses exist?)

  • Joerg June 8, 2010, 8:18 pm

    I still remember this Al-Thani scam very well. In Germany Kaupthing did a lot to promote this as a proof of trust in the bank, in order to
    prevent its German depositors from withdrawing their money. This
    conversation transcript seems to indicate that the people involved
    were well aware about it’s fraudulent nature. Are they really still employed by Arion?

    As far as the Al-Thani clan is concerned, this scam did not hurt their reputation too much. Last year they were welcomed in Germany as investors in Porsche, buying 10% of common shares of the company and they are now present as member of the supervisory board of Porsche. Even if 50 Million USD is quite a lot for Iceland, for them it’s just peanuts.

  • JoeInVegas June 8, 2010, 10:29 pm

    Wish I could rent my name like that.
    And no laws were broken by all this, requiring arrests and prosecution? wow

  • alda June 8, 2010, 11:06 pm

    Thanks, all.

    I have to confess that I don’t know if they’re still working for the bank – i.e. for Arion. Anyone want to sift through the Arion website: http://www.arionbanki.is ?

    Joe — oh you better believe it’s illegal. This is what all those arrests and interrogations have been about in the last month or so. They probably can’t get at the sheik, but the others will be indicted, for sure.

  • alda June 8, 2010, 11:09 pm

    OK, I did it myself, and yes, they’re both still working there. No big surprises.

  • kevin oconnor,waterford ireland June 8, 2010, 11:53 pm

    Truly one of your most touching stories Alda, I figure that Everly whatshername has got this investigation the wrong way round she should just try to prove what these guys have not/did not do instead of trying to prove what they did do ha ha ha. Still working there brilliant, got themselves a real sheik sounding name as well all those letters,maybe I could get him a job with news of the world, well you see there’s this strapped for cash royal divorcee over in England and………