Serious Fraud Office

http://www.guardian.co.uk/business/2010/jan/26/sfo-raids-icelandic-firms

Icelandic tycoons at centre of SFO raids

Serious Fraud Office carries out series of raids on offices of firms linked to Lýdur and Ágúst Gudmundsson

• guardian.co.uk, Tuesday 26 January 2010 20.37 GMT

Simon Bowers

The Serious Fraud Office and counterparts from Iceland carried out a series of co-ordinated raids today on the offices of companies linked to Icelandic tycoons Lýdur and Ágúst Gudmundsson, including the Lincolnshire headquarters of Bakkavor, one of Britain's largest chilled food suppliers.

Before the banking sector meltdown brought the small north Atlantic island's economy to its knees in October 2008 the Gudmundsson brothers, both of whom have homes in Belgravia, were among Iceland's most influential and wealthy entrepreneurs. The holding company Exista, in which they hold a near-45% stake, was the largest shareholder in Kaupthing, Iceland's biggest bank, before its collapse.

But yesterday's raids are understood to be focused on other alleged activities at Exista. Among the actions under scrutiny is the sale of a major stake in Bakkavor by Exista to the Gudmundsson brothers shortly after the banking meltdown.

Raids in the UK were conducted by the SFO and British police at four addresses, including Exista offices in Paddington, at the request of Icelandic prosecutors and do not relate to investigations being pursued by UK authorities. Inquiries were sparked in part by a dossier on Exista that was passed to criminal prosecutors by administrators to Kaupthing.

Intelligence exchanges between the SFO and the Office of Iceland's Special Prosecutor Ólafur Hauksson have been building for months, but searches at UK addresses mark a new level of collaboration. Hauksson said he expected more UK raids to follow, relating to other inquiries in Iceland.

Meanwhile, Hauksson's team today carried out simultaneous raids at eight addresses in Iceland linked to Exista. In addition to their own lines of investigation, Icelandic prosecutors were carrying out a formal search request from the SFO relating to their inquiry into past activities at British sportswear retailer JJB.

A joint venture between Exista and businessman Chris Ronnie jointly acquired a 29% stake in 2007 in a deal financed by Kaupthing. Ronnie was later appointed to the JJB board, quickly becoming chief executive. He was suspended last year after it emerged the stake had been seized by administrators to Kaupthing.

The SFO announced in September that it is investigating suspected criminal price-fixing and fraud in the sportwear retail industry. It is focusing its attention on Sports Direct as well as JJB. JJB has negotiated immunity in exchange for whistle-blowing co-operation.

Bakkavor, the launchpad for the Gudmundsson brothers, began as a sleepy fish roe processing firm. In a series of Kaupthing-brokered takeovers in the UK it swallowed Katsouris Fresh Foods — a company five times its size in 2001, and four years later bought Geest,making it one of the largest suppliers of ready meals, pizzas, desserts and sliced fruit to Britain's supermarkets. A year later Laurens Patisseries was acquired from serial entrepreneur Andreas Liveras.

http://www.guardian.co.uk/business/2010/jan/26/sfo-raids-icelandic-firms

Icelandic tycoons at centre of SFO raids

Serious Fraud Office carries out series of raids on offices of firms linked to Lýdur and Ágúst Gudmundsson

• guardian.co.uk, Tuesday 26 January 2010 20.37 GMT

Simon Bowers

The Serious Fraud Office and counterparts from Iceland carried out a series of co-ordinated raids today on the offices of companies linked to Icelandic tycoons Lýdur and Ágúst Gudmundsson, including the Lincolnshire headquarters of Bakkavor, one of Britain's largest chilled food suppliers.

Before the banking sector meltdown brought the small north Atlantic island's economy to its knees in October 2008 the Gudmundsson brothers, both of whom have homes in Belgravia, were among Iceland's most influential and wealthy entrepreneurs. The holding company Exista, in which they hold a near-45% stake, was the largest shareholder in Kaupthing, Iceland's biggest bank, before its collapse.

But yesterday's raids are understood to be focused on other alleged activities at Exista. Among the actions under scrutiny is the sale of a major stake in Bakkavor by Exista to the Gudmundsson brothers shortly after the banking meltdown.

Raids in the UK were conducted by the SFO and British police at four addresses, including Exista offices in Paddington, at the request of Icelandic prosecutors and do not relate to investigations being pursued by UK authorities. Inquiries were sparked in part by a dossier on Exista that was passed to criminal prosecutors by administrators to Kaupthing.

Intelligence exchanges between the SFO and the Office of Iceland's Special Prosecutor Ólafur Hauksson have been building for months, but searches at UK addresses mark a new level of collaboration. Hauksson said he expected more UK raids to follow, relating to other inquiries in Iceland.

Meanwhile, Hauksson's team today carried out simultaneous raids at eight addresses in Iceland linked to Exista. In addition to their own lines of investigation, Icelandic prosecutors were carrying out a formal search request from the SFO relating to their inquiry into past activities at British sportswear retailer JJB.

A joint venture between Exista and businessman Chris Ronnie jointly acquired a 29% stake in 2007 in a deal financed by Kaupthing. Ronnie was later appointed to the JJB board, quickly becoming chief executive. He was suspended last year after it emerged the stake had been seized by administrators to Kaupthing.

The SFO announced in September that it is investigating suspected criminal price-fixing and fraud in the sportwear retail industry. It is focusing its attention on Sports Direct as well as JJB. JJB has negotiated immunity in exchange for whistle-blowing co-operation.

Bakkavor, the launchpad for the Gudmundsson brothers, began as a sleepy fish roe processing firm. In a series of Kaupthing-brokered takeovers in the UK it swallowed Katsouris Fresh Foods — a company five times its size in 2001, and four years later bought Geest,making it one of the largest suppliers of ready meals, pizzas, desserts and sliced fruit to Britain's supermarkets. A year later Laurens Patisseries was acquired from serial entrepreneur Andreas Liveras.

FSA let failing bank move on High Street
The Financial Services Authority did nothing to prevent Icelandic bank Kaupthing from setting up British retail operations eight months before it failed because it thought taking personal deposits would be a positive move to boost the bank's faltering liquidity.

By Rowena Mason
Published: 9:10PM GMT 02 Jan 2010
The Icelandic bank set up British retail operations eight months before it failed
The Icelandic bank set up British retail operations eight months before it failed

The revelation comes as Icelandic president Ólafur Ragnar Grímsson balked at signing legislation, already passed by the Icelandic government, approving reimbursement of £2.3bn to the UK government for compensating 300,000 customers of the Icesave arm of Reykjavik-based Landsbanki.

The Serious Fraud Office is now formally investigating Kaupthing under the Fraud Act to see whether the launch of its high-interest Edge retail accounts misled British savers. UK customers deposited £2.5bn in the internet accounts between April 2008 and the bank's collapse 15 months ago.

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According to very senior sources at the regulator, the FSA had worries about the liquidity of Kaupthing's British subsidiary before Christmas 2007.

It did nothing to stop the establishment of the Edge accounts in the April, eight months before its eventual collapse, because the regulator thought it would help the bank's cash position.

It is understood that the British arm of Kaupthing came very close to surviving the crash that sank the Icelandic economy.

But the UK was eventually forced to freeze Kaupthing's assets in the days before its collapse amid fears that money could be transferred back to Iceland.

The FSA, which was in charge of supervising the bank's UK subsidiary Kaupthing, Singer & Friedlander, has refused to reveal whether it is investigating the collapsed institution.

It says it was "impotent" to prevent Kaupthing's takeover of the blue-blooded City investment bank Singer & Friedlander in 2005, despite warnings about the suitability of the new owners.

Earlier this month, The Sunday Telegraph revealed that the Serious Fraud Office had launched a formal investigation into Kaupthing's activities in London.

Tony Shearer, a former chief executive of Singer & Friedlander before it was taken over by Kaupthing, has written to FSA chairman Lord Turner to ask for a public inquiry.

"For the sake of everybody who lost money, we need to know exactly what happened between the takeover and its collapse," he told The Daily Telegraph. "The FSA is partly culpable because this all happened on its watch."

It is thought to be the only financial collapse in which British citizens have lost money.

More than 4,000 UK savers with Kaupthing in the Isle of Man are still waiting alongside commercial creditors to receive full compensation over £50,000 in a process that could take eight years.

Kaupthing collapsed last October, along with two other Icelandic banks, Glitnir and Landsbanki, leaving 300,000 British savers unable to access their money and institutions nursing billions in losses.

The crash was linked to the demise of a number of High Street retail brands, the merger of building societies, such as Yorkshire and Chelsea, and rises in council tax as a result of £1bn of losses at local authorities. Following the crisis, the Treasury had to pay out £7.5bn to compensate UK savers, although £2.3bn of this will be repaid by Iceland over the next 15 years.

The Serious Fraud Office is also looking at transfers made by the bank prior to its collapse.

One source said the aim of was to conduct a full inquiry on behalf of the hundreds of British charities, councils and offshore savers still waiting to be fully compensated a year after the crisis.

"Icelandic banker issued travel ban

By Alex on Dec 18, 2009 in Finance and Business, Iceland, MBL, Politics, Travel and Leisure, United Kingdom

kronur1The former Chairman of the Board at Byr Savings Bank in Iceland, Jon Thorsteinn Jonsson, has been issued with a travel ban due to the current investigation into Byr and the Exeter holding company being carried out by the Special Prosecutor. He is the only person to so far be barred from leaving Iceland by the Special Prosecutor.

According to Frettabladid, the state had good reason to issue the travel ban following the Special Prosecutor’s November house searches of Byr and MP Bank related to the case – not least because Jonsson has recently changed his legal residence address to London, making him highly likely to leave Iceland at any time.

Jonsson was arrested during the house searches at the end of November, like other people under investigation were also. He was then held longest of all, remaining behind bars for nearly 24 hours before release.

The travel ban lasts over the weekend and it is not yet known whether the Special Prosecutor will ask for another."

Ashley in Iceland probe
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Mike Ashley was today facing an investigation into his relationship with Iceland’s banks and rival sports retailer Chris Ronnie.

Ashley, founder and deputy chairman of Sports Direct and owner of Newcastle United FC, looks set to be dragged into a probe by the Serious Fraud Office (SFO) into the failed Icelandic bank Kaupthing. Ashley was a depositor with some of Iceland’s banks and reports said the SFO plans to look at whether he may have also taken out loans.

Investigators are also said to want to know if Ronnie, the former chief executive of rival JJB Sports, may have indirectly received some of the loans.

The SFO plans to look at what happened immediately before the demise Mike Ashley was a depositor with some of Iceland’s banks of Kaupthing and how some customers were able to withdraw funds days before its collapse.

In addition, it wants to examine the scale of loans, including those to property tycoon Robert Tchenguiz, who borrowed £1.25 billion to buy stakes in Sainsbury’s and Mitchells & Butlers.

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Synopsis of Serious Fraud Office's initial investigations in Iceland.