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The ties that bind. And make you incompetent.

So, the Office of the Special Investigator into the bank collapse carried out a series of raids yesterday in conjunction with the Serious Fraud Office in the UK [as Andrew mentioned in the comments to the last post]. The raids are aimed at brothers Ágúst and Lýður Guðmundsson, former owners of Kaupthing bank, and in particular their dealings around their holding company Exista. The Guardian reports on this here.

Exista has been under the microscope for a while now and please don’t ask me to explain the intricacies of the power struggles that have been going on around that company because I don’t understand even a fraction of it. Suffice it to say that there has been all sorts of shuffling of shares in this company into that company, and wheeling and dealing with stocks and equity, and the last I heard the two brothers were willing to relinquish their share in one of their companies to the bank that was its largest creditor ON THE CONDITION that they – the two brothers – remain at the helm of the company AND CAN NEVER BE FIRED.

[Is it any wonder the mind boggles? And do you now see what I mean when I say it is IMPOSSIBLE for a mere mortal being to keep up with all the insanity and crazy intrigues and power struggles and whathaveyou that we are presented with on a daily basis? Is it any wonder we sometimes just want to crawl into bed and pull the covers over our heads and wake up in about two decades when fricking Icesave has been paid off or, alternatively, we’ve become a British or Dutch colony?]

[I digress]

Likewise I am not equipped to give you the lowdown on the exact suspicions in this case, except that they have to do with the above-mentioned shuffling and loans taken from Exista without the approval of its creditors, and writing off  personal liabilities for loans. Something like that.

However, one of the suspected violations did catch my attention: that one Sigurður Valtýsson, one of Exista’s two CEOs, transferred his debts and shares in Exista amounting to ISK 160 million into a company registered in Tortola a short time before the bank collapse in 2008.

This Sigurður Valtýsson is the son of Valtýr Sigurðsson, Iceland’s State Prosecutor. Some of you may remember that Eva Joly threatened to resign from her post as advisor to the Special Prosecutor last year unless Valtýr Sigurðsson were removed from office, since – as the father of a suspect – he was incompetent to deal with matters surrounding the collapse. He responded with great indignation and refused to budge. The matter became a fairly sticky one for the Minister of Justice, who finally resolved it by creating a special State Prosecutor to deal with matters surrounding the collapse. Valtýr Sigurðsson, meanwhile, got to remain in office to deal with all the other stuff.

As it turns out, however, Mr Sigurðsson range of family ties is extensive. A few days ago he was forced to withdraw the charges made against the protesters who stormed Althingi last year [which I wrote about here] because one of the Althingi guards is the half-sister of Mr Sigurðsson’s wife, and as it happens she [the guard] has filed a civil suit against the protesters.

The matter, therefore, has been transferred to another State Prosecutor, who has yet to decide whether or not the protesters will be charged at all. Ah, the tribulations of modern Iceland.



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  • sylvia hikins January 27, 2010, 11:54 am

    ‘we’ve become a British or Dutch colony’… don’t lose any sleep over this Alda. With debt at 40% of GDP and still rising, the UK could be next in line for a currency devaluation, credit downgrade or even an IMF loan. In such a state the army can’t afford any more colonial expansion!!!! (Unless, of course, you discover some lucrative oil fields.)
    sylvia from viking wirral

  • Andrew January 27, 2010, 12:12 pm

    This article says that the operation is led by the Icelanders and the British seem to be just helping. Perhaps they’re trying to get some prosecutions before the Black Report comes out?

    “Icelandic authorities raid UK premises”


    Olafur Thor Hauksson, Iceland’s special investigator, said: “It is a very big operation with 30 people working on the cases here and four of our people are in the UK.”

  • James Wilde January 27, 2010, 12:44 pm

    “Sigurður Valtýsson, one of Exista’s two CEOs, transferred his debts and shares in Exista amounting to ISK 160 million into a company registered in Tortola a short time before the bank collapse in 2008.”

    This begins to look more and more like that film “The Untouchables” in which it was the US Internal Revenue who managed to get at least one of the mobsters jailed and subsequently extradited where the normal processes of law enforcement had failed.

    (The really ironic thing about this is that, according to one point of view, the taxation of ordinary citizens is against the constitution and the law allowing it from, I think, 1913 is illegal! So the only way to jail a mobster was the use of an illegal process.)

  • PeterRRRRRR January 27, 2010, 1:06 pm

    And don’t forget the ever-popular “Obstruction of Justice” charge. Not sure about Iceland and other countries, but, here in the US, this seems to be the fallback charge in cases when the actual “crime” committed is too complicated for a jury (or prosecutor) to understand.

  • alda January 27, 2010, 1:22 pm

    Just a minor update: apparently Ágúst and Lýður arrived in Iceland last night and have been subjected to non-stop interrogations all morning. The two CEOs are up next.

  • Joerg January 27, 2010, 1:34 pm

    I wouldn’t know what’s more terrifying – Iceland being a British/Dutch colony or Iceland being ruled by clans of incompetent greedy crooks, while all young and well educated people have left the country.

  • Eliza January 27, 2010, 2:58 pm

    It’s the curse of being such a small population, everybody is tied with one another in one way or another.

  • JB in San Diego January 27, 2010, 5:11 pm

    @ James Wilde: The “one point of view” that would find the 1913 income tax law illegal would be wrong. It was the 16th amendment to the US Constitution, supported by the idea that the wealth of citizens who make a fortune should help support the society that allowed them to make that fortune. If you choose to make a fortune and not pay taxes on it, you go to jail. Simple concept, and part of the highest law of the land.

  • Andrew (the other one) January 27, 2010, 5:20 pm


    The British and Dutch are mostly out of the colonial era by now (and have been for half a century), apart from a few places which want to remain colonies! But maybe the Icelanders need to call in some outside administrators to help them sort out the mess (Eva Joly being an example).

  • Joerg January 27, 2010, 10:23 pm

    Andrew, I was just dwelling for a while on Alda’s wake-up nightmare two decades from now. Maybe, by then the appetite for a new kind of colonialism will have been whetted again – if only for international aluminium companies and vulture funds.

    But I would agree, help from outside seems to be indispensable for Iceland’s recovery due to the interconnectedness of people involved in the mess. I’m again and again appalled by the lack of acknowledgement of wrongdoing and taking responsibility of Iceland’s political “elite”.

  • Sigvaldi Eggertsson January 27, 2010, 11:56 pm

    Eliza, Icelanders being more inter-related than other nations is a myth told by those who want to be able to stay in power by putting friends and relatives all important positions.
    Icelanders are no more related to one another than most other European nations, as has been shown in genealogical research in Britain and elsewhere.
    Icelanders, however, have kept better records of their relations, that´s all.

  • Rik Hardy January 28, 2010, 4:30 am

    Sigvaldi, I think you’re right about power-mad people putting their friends in useful positions, but, for the record, my Icelandic wife cannot go shopping without bumping into people she is related to.
    She is not at all surprised by this, but it often takes me aback, since this never happens in Britain, my birthplace.
    The smallness of this country means that in any profession, including, unfortunately, politics, you are going to keep having to deal with the same people over and over again, which is very tedious and encourages corruption enormously.
    Icelanders may not be biologically more interrelated than others, but they are certainly more intermingled, and that’s what stands in the way of real change when we get a mess like the current one.