Landsbankinn loved to party, with the Independent Party

The Althingi ombudsman has reprimanded Geir Haarde for hiring Bjorn Runar Gudmundsson from Landsbankinn to head the new position of managing director of Office for Economic and International Finance.

This is as people are noticing the pattern within Landsbankinn where Independent Party members were shoe-ins for top positions. Sigurjon Arnason CEO, Atli Atlason Head of Human Resources and Viggo Asgeirsson Head of Marketing. Thorlindur Kjartansson and Erla Osk Asgeirsdottir were the most high-profile of a host of members of the Association of Young Independent Party Members and members of deiglan.com, a webzine linked closely with the party.

The director of the board was Kjartan Gunnarsson, who was also managing director of the Independent Party. The owners were Bjorgolfur Thor and Bjorgolfur Gudmundsson who were handed the bank by David Oddson and Geir Haarde in the privatization of 2003 in spite of having the lowest offer. It caused such disappointment with one of the members of the privatization committee that he resigned. It was a well known fact in the banking world that you had to be a member to have a better chance of a good job at Landsbankinn.

Other banks were wary of the relationship. It came as a shock one day in 2005 to see Landsbankinn and the Student Loan Organization announce a new service in the bank where students could get student loans without someone guaranteeing them. Managing the student products at Kauphting I called the Student Loan Organization and asked why other banks on the free market had not been offered this opportunity from the official agency. The answer revealed that they had tried to let other banks know about it. The way they did it guaranteed that they wouldn´t. Landsbankinn got a photo opportunity with the head of the Student Loan Organization, an Independent Party official and the head of the Student´s Association at the University of Iceland, the wife of the marketing manager of Landsbankinn…and Independent Party member. The fund´s annual report even celebrates this milestone agreement with the bank and touts its meaning for students. Other banks had all copied the service by then, but Landsbankinn got the bragging rights in the market of being first.

Why this public institution did not announce such big news with all the banks did not come as a surprise.

We should also remember after the closing of markets on June 19, the government announced extensive new plans in the housing and financial markets. Landsbanki CEO Halldor Kristjansson sent an email to members of the board of the Association of Banks and Financial Institutions which proved that he knew about the plans before they were announced.That same day Landsbankinn traded heavily in housing bonds, making a handsome profit.

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