Bankrupt Baugur Group

The District Court of Reykjavik today announced that Baugur Group will not be allowed any more extensions and therefore this formerly high-flying retailer is facing bankruptcy. 

It is believed that the debts of Baugur and related businesses runs into thousands of billions of ISK. 

So it turns out that Jon Asgeir Johannesson wasn’t a bigger business-genius than the rest of us. He just happened to gain control of a couple of banks in an unregulated economy. And through the ownership of his banks he managed to distort real competition, hinder real innovation and disrupt real entrepreneurs in the process, while sinking a whole nation into an ocean of debt.

Eva Joly on the scene of the crime

 

The Government of Iceland has appointed Norwegian-French Magistrate Eva Joly as a special adviser on the investigation of cases linked to the country’s economic collapse.

Norwegian born Joly specialised in financial affairs during her studies in France. In 1990 she joined the High Court of Paris as an investigating judge. She quickly made a mark with her tireless crusade against corruption, taking on, among others, former minister Bernard Tapie and the bank Crédit Lyonnais. Her most famous case was that of France’s leading oil company – Elf Aquitaine. In the face of death threats, she carried on the case to uncover several cases of fraud. She was named European of the Year by Reader’s Digest in 2002.

Mrs. Joly now works as a special advisor to the Norwegian government on money laundering and campaigns for tougher international action against fraud.

From Iceland.org

 

The 65-year-old Joly, who first emigrated from Norway to France as an au-pair, told an open meeting Tuesday at Reykjavik University that the scope and scale of her inquiry would be hampered without additional resources. 
“(The investigators) have to be sufficiently many, and they need funds to continue investigations,” she was quoted as saying by media. “They will need specialists and competent people to assist with the investigations. 
“Today there are four individuals with the special prosecutor and it is a joke,” she said. 

From EasyBourse

A 5 million krona gap

Are you a foreigner who is still scratching your head regarding the price-indexation?

In plain and simple terms, in the last two years I have paid around 2,5 million ISK to the bank for the home loan. In the same two years, the home loan has grown by 2,5 million ISK.  This basically means that I have seen 5 million disappear into the home loan. 

Still scratching your head? I don’t blame you.

How to rip off a nation 101

Students at the University of Reykjavik should be in for a treat. Former Landsbanki CEO Sigurjon Arnason and Baugur financial wizard Tryggvi Jonsson are now both teaching at the university. 

The university’s owner is the much maligned Icelandic Chamber of Commerce, where the list of board members reads like a who is who of people who orchestrated the ruin.

“Makes me want to crawl into a corner and die”, was the verdict of one student.

Good friends at Kaupthing

Fifty-three percent of Kaupthing’s loans were granted to ten individuals/businesses. Nine of those ten were registered in the UK, one in Luxembourg. 

In the months leading to the crash, Kaupthing lent 478 billion ISK to its owners, Agust and Lydur Gudmundson of Exista, Olafur Olafsson and Robert Tchenguiz or companies owned by them through Luxembourg or the UK. 

To put that number into perspective, it is around the same amount as the total loans at the Icelandic Home Loan Fund.

Regulating the new financial sector

Financial regulation is a now-or-never proposition as the sector’s lobbying power is greatly diminished. This column argues that we should embrace robust regulation now, risking over-regulation. Correcting mistakes later would be better than risking another era of “self-” or “soft-touch” regulation.

From Willem Buiter in Voxeu