Weak authority

Elin Jonsdottir worked as a lawyer at the Financial Authority for four years. She highlights the institution’s problems in Morgunbladid.

– Understaffed
– High turnover of staff
– Increased responsibilities and assignments were not met with a proper increase in staff
– Staff faced hostile receptions in the banks

“I remember meetings where you used to sit by long tables in big meeting rooms and against you sat a large group of the bank’s lawyers and managers, all red in their faces of anger because the Financial Authorities were meddling in their business.”

The lawyers would regularly cite laws regarding governmental interference.

“The balance of power in those cases is not what was had in mind when those laws were created, as they were supposed to protect individuals against the government”.

The salaries of the staff stopped being competitive against the banks years ago so key employees were hard to retain. The fee paid by financial institutions for supervision purposes did not grow according to the growth of the banks.

The story of Bjorn Ingi Hrafnsson

– Early in the decade, a journalist at Morgunbladid, founder of a company “Caramba”

– Assistant to Foreign Minister then Prime Minister Halldor Asgrimsson of the Progressive Party while the banks are privatized. Landsbankinn is handed to Independent Party loyalists, Bunadarbankinn is handed to Progressive Party loyalists and becomes Kaupthing.

– Nothing much happens at Caramba until 2005 when it suddenly has assets worth 60 million ISK in Kaupthing shares. Quite a turnaround for a government worker.

– A year later Caramba posts a profit of 29 million and assets of 32 million, mostly in Exista(largest shareholder in Kaupthing) stock. A nice addition to a governmental salary.

– The same year, becomes city council member in Reykjavik and forms an 8-strong majority with the Independent Party as the only Progressive Party member in the council.  There are 15 members in the city council and the Independent Party had seven.

– Becomes the main player in the fiasco regarding Reykjavik Energy Invest where he and major Vilhjalmur Vilhjalmsson signed off major exclusive rights to hydro-energy projects abroad with Reykjavik Energy, a company owned by the city to an entity owned by FL Group and Bjarni Armannsson, former Glitnir CEO. The deal was introduced by FL Group to investors in London but when the rest of the city council annulled the deal and much protest in Icelandic society, FL Group posted a record loss for an Icelandic company of over 60 billion ISK. Was this a ploy to save FL Group?

– Abandoned working with the Independent Party and formed a new majority with the minority. It lasted 100 days when the Independent Party managed to lure the Liberal representative into forming a yet another majority.

– Promptly quit his post and has since been employed as the Editor in chief of Markadurinn, Frettabladid’s business section. Frettabladid’s owner was a large owner of FL Group, Jon Asgeir Johannesson.

– Markadurinn is deflated while the biggest Icelandic business news ever take place and doesn’t come close to the reporting done by its rivals. Writes columns saying that the truths behind the crash must be revealed and devotes spreads to conversations at expensive lunches with economists about this and that. Becomes the host of a talk-show on Channel 2 where he interviews political leaders and businessmen like Kaupthing’s former Chairman of the Board.

– Meanwhile most readers want to know what happened behind the scenes when the banks were privatized and when Reykjavik Energy Invest was supposed to be handed to FL Group.

– Caramba’s annual reports for the last two years are not available.

Unemployment

And now we’ve reached the magical number, 10.000.

The rate is 5,3% and rising

A good solution for everyone involved

Morgunbladid reveals today that in notes from a meeting at Glitnir on September 30 last year, CEO Larus Welding advocated that shares from Stodir (Formerly FL Group) would be bought out of two of their funds, Fund 1 and Fund 9. He revealed in the meeting that this solution was backed by both the prime minister and finance minister.

Why was this solution needed? Glitnir had advised its customers to put their savings into those funds, while neglecting giving  information the impact of Stodir shares on those funds. Glitnir’s majority owners also happened to be the owners of Stodir, a company in dire need of cash after posting an Icelandic record in losses the previous year.

Why did the ministers care so much? For some reason this man was a board-member in those funds.

Illugi Gunnarsson on the right with David Oddson

Illugi Gunnarsson, Independent Party spin-doctor and first term member of parliament. Former assistant of the prime minister and baffingly a board-member at Glitnir’s funds.

Geir Haarde says that Glitnir told the ministers about the intent and they had not opposed. Arni Mathiesen rejects the notion that the government had asked for this buyout.

Cuts and spending

The Minister of Health, Gudlaugur Thor Thordarson of the Independent Party announced a 1.3 billion cut in the health sector yesterday.

Hospitals will close and health-institutions which have served citizens across the country will be cut from 23 to 6.

The number of jobs in the health-sector will be cut, there will be fewer research facilities and hospital divisions cut.

Further cuts of 5.4 billion will be needed.

The employees of St. Josefs Hospital which will be closed arrived at the press conference where Gudlaugur announced the cuts in full work-uniform. That was very cool.

One blogger thought it interesting that the minister had picked the Hilton hotel to announce the cuts. Hopefully the ministry got a good deal from the hotel since it is watching its budget.

Meanwhile an entity owned by the city of Reykjavik and the state is in talks with the company which it partnered with to build the Music and Conference hall mentioned here couple of days ago. The company, Portus is unable to pay 800 million ISK needed to continue the building. It is estimated that it will cost 10 billion ISK to finish the building and it will be the city and state who will need to provide the funds.

Those 10 billion spent on a fancy building in times of trouble  sure put the cuts in the health-sector into perspective.