Sigrun Davidsdottir's Icelog

What is Deutsche Bank hiding in Iceland?

2017-11-03 (All day)

Deutsche Bank has studiously tried to hide some transactions with Kaupthing in 2008 – and in December 2016 probably thought it had succeeded when it agreed to settle for €425m to Kaupthing and two now bankrupt BVI companies set up in 2008 by Kaupthing. The story behind these deals figured in two Icelandic court cases and one of them, the so-called CLN case, has now taken an unexpected turn: the Supreme Court has ordered the Reykjavík Country Court to scrutinise the transactions as it reopens the CLN case. But what is Deutsche Bank hiding? “It’s not unlikely that an international bank wants to avoid being accused of market manipulation,” said Prosecutor Björn Þorvaldsson in Reykjavík District Court on October 11. ....

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Icesave – another round

2014-02-10 (All day)

The Dutch Central Bank and the British Financial Services Compensation Scheme have brought a case against the Icelandic deposit guarantee fund, TIF, at the Reykjavík District Court, Héraðsdómur Reykjavíkur. The Dutch and the British seek a confirmation that TIF was liable for the EU minimum guarantee of €20.000 (which when currency exchange etc is taken in to account amounts to €20.877 for Iceland) and/or TIF should pay out, with interest, in total ISK556bn, €3.55bn. The Dutch are claiming ISK104bn, €660m and the UK ISK452bn, €2.88bn. The case was brought to court already at end of November last year but has only surfaced now in a press release from TIF. ...

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Iceland: 5 years on, nationalism is growing inside capital controls

2013-10-07 23

Thinking back to five years ago, Iceland was forced to take the right decisions, not saving the big banks. But that was perhaps the easy decision: after all, the major part of creditors in these banks were foreigners. Later on, frantic attempts were made to save the very Icelandic banks, i.e. Saga Capital, VBS and some saving societies. Now, the idea is to tax estates where foreigners are ca. 90% of creditors whereas other failed financial companies are not taxed. “Fuck the foreigners” was a policy after the collapse – and it still seems to be the only policy five years after the collapse. .....

Part of the budget proposals, put forth last week, is that estates of the failed banks should be taxed. .....

The intention seems clear enough. It would indeed be much more clear-cut if the definition was plainly to tax “estates where major part of creditors are foreign.” ....

Update 9 Oct: Comment just added to Sigrun's blog by anrigaut

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The latest on the al Thani case

2013-04-13 23

Instead of starting the oral hearings in the al Thani case – where the Office of the Special Prosecutor in Iceland has charged three former Kaupthing managers and the bank’s second largest shareholder – as planned Thursday morning, April 11, the hearings were postponed until further notice. This happened after the defense lawyers of Sigurdur Einarsson and Olafur Olafsson took the unprecedented step not to heed the judge who refused to accept their resignation of the case. In court, prosecutor Bjorn Thorvaldsson pleaded that the two lawyers would receive penalties for willfully causing delays to the case. The judge will consider any such step after the case had finally been heard. ...

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The only secret from October 6 2008: a CBI loan of €500m to Kaupthing

2013-03-08 (All day)

"Although plenty is known about the collapse of the three Icelandic banks, given the SIC report, there is still one major unknown chapter in this saga: a loan of €500m granted by the Central Bank of Iceland to Kaupthing on October 6 2008, due to be repaid four days later. It is clear that about half of this loan will never be repaid. Now a parliamentary committee is investigating the loan. The only documentation of the loan is a recording of the phone call between David Oddsson then governor of the CBI and prime minister Geir Hard but so far the CBI is not assisting.


On October 27 2008 the CBI put out a press release saying that on October 6 it had, after conferring with the prime minster, issued a loan of €500m to Kaupthing in order for the bank to meet its obligations to UK authorities related to the bank’s UK subsidiary.


The €500m might have been enough to salvage Kaupthing Singer & Friedlander – the preceding week the FSA had demanded that £400m be paid as a guarantee since money was flowing fast out of the bank – but the €500m never seemed to reach the UK authorities.


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Hvitsstadir, Kaupthing managers and a tale of cosy relationships

Posted 13/11/2012 - 12:18 by anrigaut

2012-11-12 (All day)

"... An intriguing story that I have only recently unearthed regards an Icelandic company, Hvitsstadir, privately owned by five Kaupthing managers – Sigurdur Einarsson, Hreidar Mar Sigurdsson, Magnus Gudmundsson, Steingrimur Karason and Ingolfur Helgason – set up in 2003 to buy farmland next to a salmon river in Borgarfjordur, ca 150 km from Reykjavik. The entire Hvitsstadir enterprise was financed by loans from two small saving societies, Sparisjodur Myrasyslu and Spron, their business being heavily connected to and intertwined with Kaupthing. ..."

Comment by Tony Shearer:
"Once again Sigrún you have dug out something that the regulators, prosecutors and other authorities have failed to publish. Regularly more offences of the major banks are brought to light, such as money-laundering, sharp tax practices, mis-selling and so on. Because the UK authorities have chosen not to publish a report on what the banks (large and small) did get up to and what the regulators and the Treasury missed (or concealed), the lessons cannot be learned. So we are condemned to suffer when the same mistakes are made again in the future.
Taxpayers, depositors and management who did the right thing are all entitled to some vengeance and retribution. But we also need it so that the lessons are learned; and that those who think they can defraud taxpayers and depositors are aware that the consequences are serious. ..."

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The commercial motives in the Kaupthing loans to the Tchenguiz brothers

2012-05-28 23

"This is really the question Lord Justice Thomas and Justice Silber have to answer when they rule on the judicial review granted into the arrest of Vincent and Robert Tchenguiz, house searches and raids conducted by the Serious Fraud Office. The brothers are testing separate reviews – their cases are different – and the answer won’t necessarily be the same for both of them.

In the UK media much has been made of the SFO’s blunders in its investigation of the brothers’ connection with Kaupthing, which also touches key Kaupthing characters like the bank’s chairman Sigurdur Einarsson. The SFO has already acknowledged certain mistakes and excused to Vincent – the part concerning Robert hasn’t been touched upon. This hasn’t sheltered the SFO from being taunted by the media and rumours swirl that the investigation will be called off.

James Eadie QC, representing the SFO, introduced his skeleton last week by underlining the complex structure of the Robert Tchenguiz companies. There was R20, a counsel to the Tchenguiz Discretionary Trust and yet also somehow owned by the TDT and then there are companies administrating the TDT, also advised by R20. The Tchenguiz Family Trust, owned by Vincent, is a separate entity and yet somehow connected as well. When Kaupthing collapsed, Robert owed €2bn to Kaupthing – a staggering 25% of Kaupthing’s loan book had been lent to Robert.

Eadie pointed out that three fundamentals are a necessary prerequisite to normal banking:

1) Loan-to-value ratio, ie the collaterals have to cover the lending

2) Internal processes for proper lending; the lending has to be properly dealt with

3) No lending to insolvent companies

In Kaupthing, Eadie claimed, all these three fundamentals were broken. ... "

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