Dealing with themselves

Bjarni Olafsson at Morgunbladid is taking the lead in explaining the corrupt business practises that have characterized Iceland lately. Yesterday he told us how Samson made 800 million ISK being on both sides of the table. Today he brings up one of the most famous “screw the shareholders” cases in Iceland, when Jon Asgeir Johannesson bought Voruveltan, the company behind 10-11.

From Bjarni’s article:

On October 7th 1998, Jon Asgeir bougth Voruveltan for 1,15 billion ISK. Parts of Voruveltan were later sold to Fjarfar, a company which he owned himself. Islandsbanki (now Glitnir) and Kaupthing bought parts as well.

When Baugur, then a public company bought Voruveltan on May 21st 1999, Jon Asgeir owned 25%, Fjarfar 45% and Kaupthing and Landsbankinn owned 30%.

Baugur bought Voruveltan for 1,48 billion and therefore 1,04 billion went to Jon Asgeir. Baugur paid 325 million ISK more than Jon Asgeir had paid a few months earlier. After deducting costs Jon Asgeir and the investment company Gaumur made at least 200 million in profit. Gaumur was owned by Jon Asgeir and his family in 1998-1999.  (Note: You might remember Gaumur’s beginnings in Tortola)

Baugur didn’t get all the assets that came with Voruveltan when Jon Asgeir bought it though. Voruveltan’s properties were sold to the Litla Fasteignafelag, a realty company indirectly controlled by Jon Asgeir in December 1998. Litla Fasteignafelagid paid 217 million for the properties, but sold them to Stodir, one of Baugur’s subsidiaries six months later for 357 million. Afterwards Litla Fasteignafelagid merged with Gaumur which made 140 million from the exchange.

So Jon Asgeir and Gaumur made at least 340 million ISK in profit at the cost of  Baugur’s shareholders.


4 Responses to “Dealing with themselves”

  1. 1 Kjartan December 12, 2008 at 5:07 pm

    Interesting that they didn’t deem this to be worthy of research before. Say, for example, when it was going on, before the same people managed to sink Iceland…

  2. 2 drafnsson December 12, 2008 at 5:34 pm

    There is a theory which states that because Morgunbladid is technically without an owner its reporters are finally free to … report.

    It’s a good theory.

    The curious case of 10-11 and Voruveltan has been written about before in various media. The difference might be that now people care to pay attention.

  3. 3 Kjartan December 12, 2008 at 6:30 pm

    Yes, let’s enjoy it while it lasts.

    I do remember actually the reports about 10-11 at the time but isn’t sensationalist comment posting all about overlooking facts so as to not ruin your argument anyway 😉

  4. 4 drafnsson December 12, 2008 at 8:59 pm

    Sorry 🙂

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