General Discussions

  • ng
  • 11/10/08 31/12/20
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Posted: Fri, 10/10/2008 - 05:39

Any general chat about what is going on that doesn't fall into any other categories.

IMPORTANT: How to post links to related News on other sites

As of 21/Oct/08 we have a searchable news archive. Site editors (and anybody else who wants to help) now have the mammoth task of find and re-posting all relevant links that were posted in forums and re-posting as a news item into the archive.

It would be appreciated if you didn't make the task even bigger than it currently is.

Please post news items using the Create new News item link near top of right side-bar.

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Iceland debt kings’ assets revealed

  • glen07
  • 21/10/08 n/a (free)
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  • Thu, 12/08/2010 - 23:51

http://www.icenews.is/index.php/2010/08/12/iceland-debt-kings-assets-rev...

Iceland debt kings’ assets revealed

Posted on12 August 2010. Tags: assets, banks, debt, Iceland, money, tax

Karl Wernersson, the former owner of Milestone – an Icelandic investment company, has around ISK 1 billion (USD 8.42 million) in excess of debts – which is more than any other of Iceland’s 20 biggest bank debtors.

Morgunbladid published this week an account of the assets of the nine of those 20 people who need to pay capital gains tax.

Car Rental Services in Iceland

After Karl Wernersson, the next highest assets above debt belong to the couple Jon Asgeir Johannesson and Ingibjorg Palmadottir with roughly ISK 650 million (USD 5.47 million).

The assets above debt of Kristinn Bjornsson (who was an owner of Straumur Bank through his investment company, Gnupur) are ISK 267 million and Bjorgolfur Thor Bjorgolfsson has ISK 184 million over debt.

Six more of the banks’ 20 biggest debtors also had to pay capital gains tax. They are Agust and Lydur Gudmundsson of Exista; Jakup Jacobsen – connected with the Rumfatalagerinn discount stores; Samskip’s Olafur Olafsson, Thorsteinn Jonsson from Vifilfell and Sigurjon Arnason, former director of Landsbanki.


IFAs likely to escape any KSF IoM fallout

  • glen07
  • 21/10/08 n/a (free)
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  • Thu, 12/08/2010 - 23:50

IFAs likely to escape any KSF IoM fallout
International Adviser
By International Adviser 29-Jun-2010

UK IFAs facing legal complaints from offshore bond clients who lost money in the collapse of KSF Isle of Man appear increasingly likely to escape penalty.

View a printer-friendly version of this article»
Based on initial findings of the Financial Ombudsman Service in a case relating to the fall of the Isle of Man-based Icelandic bank, it appears many adviserswill be vindicated in their classification of KSF IoM as ‘low risk’.

In a letter to an IFA, whose ‘low risk’ client had sought compensation based on the loss of a deposit in the bank – which was wrapped inside a Clerical Medical International offshore bond, the FOS said that because credit agencies had given KSF IoM a high rating, the advice wasessentially sound.

According to one report, the ombudsman service also said that because the adviser’s terms of business only dictated he give one-off advice, rather than requiring him to constantly monitor the ongoing suitability of past advice, he could not be held to account for failing to identify or act on any later changes in the situation.


Great to see so many

  • IceCrusher
  • 14/10/08 25/10/11
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  • Tue, 27/07/2010 - 03:49

Great to see so many commenting and replying to the matters in hand, the site is coming back to life again!
Ice


Robert Tchenguiz loses battle for £137m Somerfield proceeds to

  • glen07
  • 21/10/08 n/a (free)
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  • Mon, 26/07/2010 - 12:36

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7852432/...

Robert Tchenguiz loses battle for £137m Somerfield proceeds to Kaupthing
Robert Tchenguiz, the property investor, has dropped his battle against collapsed Icelandic bank Kaupthing over £137m in proceeds from the sale of his stake in supermarket Somerfields.

By Rowena Mason
Published: 6:30AM BST 25 Jun 2010
Robert Tchenguiz loses battle for £137m Somerfield proceeds to Kaupthing

After the bank began to call in loans in 2008, Mr Tchenguiz launched legal action in London and the British Virgin Islands to prevent the money being seized. A case was due to be heard this week but the two parties have now settled out of court.

Johannes Runar Johannsson, a member of the committee running Kaupthing's affairs, said: "This is a very satisfactory outcome for Kaupthing Bank. The resolution committee of the bank believes that the terms of the settlement are in the best interest of Kaupthing and therefore its creditors."

It follows Kaupthing's seizure of Mr Tchenguiz's stakes in high street restaurant and pub groups Slug and Lettuce, Yates, Mitchells & Butlers and La Tasca, plus holdings in J Sainsbury.

The bank sued Mr Tchenguiz in Reykjavik for repayment of a £650m overdraft granted to his investment vehicle Oscatello, which now also belongs to Kaupthing and is being wound down.

Mr Tchenguiz was a director of Kaupthing's biggest shareholder, Exista, and the bank's largest borrower with loans of almost €1.7bn (£1.4bn), which were used to finance his companies' private investments. A report by the Icelandic authorities later found Kaupthing's exposure to Mr Tchenguiz was against the bank's rules.

"It is hard to see that lending, to the extent that Tchenguiz's companies received it during times of liquidity crisis, was decided with the bank's best interests in mind," it said. "Rules about large risk exposures were not followed."

However, earlier this year, Mr Tchenguiz fought back, claiming Kaupthing owes him £650m based on allegations that there were serious problems at Kaupthing before it failed.

The bank is now under investigation by Britain's Serious Fraud Office and Iceland's special prosecutor over claims of market abuse, excessive loans to related parties and fraud.

It collapsed in October 2008, leaving 160,000 British savers unable to access their money. The UK Treasury paid £2.5bn to bail out the UK customers of the bank's high-interest Edge internet accounts and is still waiting to be repaid. Total claims against Kaupthing are equivalent to about five times Iceland's gross domestic product, stemming mostly from Germany.


Tchenguiz loses battle

  • barrona
  • 17/11/08 31/05/09
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  • Mon, 26/07/2010 - 12:49

Perhaps it should be mentioned that all the UK based depositors received their money back with almost indecent haste from the UK government, but the IoM depositors with excess of 50,000 on deposit are still waiting, almost 2 years on, for their deposits to be returned!


Summary of KSF UK Appeal re Set-Off

  • IceCrusher
  • 14/10/08 25/10/11
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  • Sun, 25/07/2010 - 09:26

KSFIoM and KSF UK held a number of interrelated accounts and 'set-off' is very important to us in the determination of assets. The appeal was upheld, which is basically a poor result for creditors who also owed money to KSF UK, but a good result for the general body of former depositors in the UK bank. I would conjecture that the more money the UK bank gets back, then the more likely it is that all creditors (including KSFIom) will get a bigger share.
Ice

In re Kaupthing Singer & Friedlander Ltd (in administration)
[2010] EWCA Civ 518; [2010] WLR (D) 119

CA: Mummery, Hughes, Etherton LJJ: 11 May 2010

After the set-off of cross-claims as between a company in administration and one of its creditors, the balance payable by a creditor to the company under r 2.85(8) of the Insolvency Rules 1986 in respect of a future debt was not to be a sum discounted to present value under r 2.105 but was to be an equivalent undiscounted amount.

The Court of Appeal so stated in allowing the appeal of Margaret Elizabeth Mills, Alan Robert Bloom, Thomas Merchant Burton and Patrick Joseph Brazzill, the joint administrators of a bank, Kaupthing Singer & Friedlander Ltd (in administration), from the decision of Norris J dated 2 October 2009 [2009] EWHC 2308 (Ch); [2010] Bus LR 428 holding, inter alia, that, after the set-off of cross-claims as between the bank and one of its creditors, the balance payable by the creditor to the bank under r 2.85(8) of the Insolvency Rules 1986, as amended, in respect of a future debt was a sum discounted to present value under r 2.105.

An administration order had been made in respect of the bank, whose main assets were the funds that it held for depositors. Some of those depositors were themselves indebted to the bank, their loans not being repayable immediately. The bank’s administrators gave notice, pursuant to r 2.95 of the Insolvency Rules 1986, of their intention to make a distribution. Under rr 2.85(1)(3) of the 1986 Rules, where the administrator had given such notice an account was to be taken, as at the date of that notice, of what was due as between the company in administration and each of its creditors in respect of their mutual dealings and the sums due from one party were to be set off against the sums due from the other. By rr 2.85(7)(8) any future debts were discounted, in accordance with r 2.105, to a present value for the purpose of the set-off.

The question on appeal was whether any balance due from the creditor to the company was to be paid in the discounted amount (as the creditors contended) or in an equivalent undiscounted amount (as the administrators contended).

ETHERTON LJ said that the judge’s conclusion, that the balance payable by the creditor to the company under r 2.85(8) in respect of a future debt was a sum discounted to present value under r 2.105, produced a result which was extraordinarily beneficial to the creditor in question and highly detrimental to the general body of creditors.

In his Lordship’s judgment it was not a policy objective of the procedures for administration or the liquidation of an insolvent company to remove or diminish the indebtedness of those liable to the company. On the contrary, one of the principal objectives was to preserve, and where possible to maximise, the value of the company and its assets.

The provisions for insolvency set-off were intended to promote speedy and efficient administration of the assets so as to enable a distribution to be made to creditors as soon as possible and in a manner which achieved substantial justice between the parties to the set-off and, so far as practicable, equality in the treatment of creditors. The purpose of insolvency set-off had nothing to do with the release of liabilities owed to the company save to the extent necessary to achieve those objectives.

Prior to 2005, where a creditor was indebted to an insolvent company in respect of a future debt, there was no provision or mechanism for compulsory early payment to the company or discounting of the debt to present value or set-off. There was no reason whatever to think that the introduction of a mechanism for set-off of future debts, and the discounting of such debts for that purpose, was for any other reason than the usual objectives. In particular, there was no coherent or rational policy reason to release the creditor from a substantial part of the creditor’s indebtedness to the company when, and to the extent that, such release was not necessary to achieve a set-off of cross-claims.

Contrary to the approach of the judge and the submissions of the creditors, his Lordship considered that it was perfectly possible to interpret rr 2.85(7) and (8) of the 1986 Rules, without straining their language, so as to produce a sensible meaning, in accordance with a sound policy objective and general principles of insolvency administration. R 2.105(2) provided for the discount of a future debt to current value, by application of the statutory formula, “for the purpose of dividend (and no other purpose)”. That was consistent with the purpose of r 2.85, which, as appeared from the express provisions of r 2.85(1), was triggered by, and was for the purpose of, the making of a distribution. His Lordship saw no difficulty in reading the words “for the purposes of this rule” in r 2.85 as confining the effect of the incorporation of r 2.105 to what was necessary to calculate what should be paid by way of dividend to the creditor, and, for that purpose, the making of the insolvency set-off, and as not touching upon what remained due to the company after the insolvency set-off had taken place.

HUGHES and MUMMERY LJJ agreed.
Appearances: Robin Dicker QC and Tom Smith (instructed by Freshfields Bruckhaus Deringer LLP) for the administrators; Richard Fisher (instructed by CMS Cameron McKenna) for the depositors.
Reported by: Ken Mydeen, Barrister.


PwC Demands Dismissal of Glitnir Lawsuit

  • glen07
  • 21/10/08 n/a (free)
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  • Sat, 24/07/2010 - 01:09

http://icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_i...

PwC Demands Dismissal of Glitnir Lawsuit

The lawyers of the auditing firm PricewaterhouseCoopers (PwC) believe that the lawsuit of the winding-up committee of Glitnir Bank against the firm, which the committee filed in New York, is a violation of an agreement between Glitnir and PwC in relation to Glitnir’s tender of commercial papers in the US.

The headquarters of Glitnir, now Íslandsbanki, in Reykjavík. Copyright: Icelandic Photo Agency.

Therefore PwC’s lawyers submitted a demand for the case’s dismissal at the New York court yesterday, Fréttabladid reports.

PwC is being sued along with seven individuals, known as Jón Ásgeir Jóhannesson’s “gang”. Glitnir’s winding-up committee is demanding ISK 260 billion (USD 2.1 billion, EUR 1.6 billion) because of the tender, which the winding-up committee believes had the sole purpose of collecting money for Glitir which the Jóhannesson seven could then claim for themselves.

PwC’s lawyers claim that in an agreement between the firm and Glitnir, the bank agreed only to file charges against the firm regarding legal disputes in Iceland. Therefore the case should be dismissed.


Bjorgolfur Thor completes debt deal

  • glen07
  • 21/10/08 n/a (free)
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  • Sat, 24/07/2010 - 01:05

http://www.icenews.is/index.php/2010/07/23/bjorgolfur-thor-completes-deb...

Bjorgolfur Thor completes debt deal, wants to keep house

Posted on23 July 2010. Tags: Actavis, Bjorgolfur Thor Bjorgolfsson, ccp, credit, debt, money, novator, samson, verne holding

Icelandic businessman Bjorgolfur Thor Bjorgolfsson laid huge emphasis on keeping ownership of his Reykjavik house on Frikirkjuvegur when refinancing ISK 1,200 billion of debt recently. The house was build by his great grandfather a century ago.

Bjorgolfur Thor’s sizeable debts have been added to by some joint debt transferred from his father, Bjorgolfur Gudmundsson when he was declared bankrupt. Bjorgolfur Thor says that none of his own debts have been or will be written off.

Bjorgolfsson and his investment company Novator have been undergoing extensive debt refinancing and partial pay offs recently – among others to Deutsche Bank, Barclays and the resolution committees of Glitnir, Landsbanki, Straumur and Kaupthing. The debt amounts to ISK 1,200 billion (USD 9.79 billion), Visir.is reports – the majority of which connected to Actavis, which announced its successful refinancing yesterday.

The refinancing deal sees Bjorgolfur Thor remain a shareholder in Actavis, the Polish telecommunications company Play, CCP and Verne Holding. But all his personal assets are included in the deal, according to a statement. The returns on his assets and their value if and when sold, will go towards debt payment.

The one point of conflict is over the house at Frikirkjuvegur which has personal significance to the businessman, as it was build by his great grandfather, Thor Jensen. The house is part of the total asset package; but Bjorgolfur Thor is desperate to keep it.

Bjorgolfur Gudmundsson, Bjorgolfur Thor’s father, was declared bankrupt last summer and ISK 11 billion of his debt was transferred to his son over their joint company, Samson Holdings. The pair were personally responsible for ISK 40 billion of that company’s debt.

A statement said that Bjorgolfur Thor has long been fighting hard against personal bankruptcy and the new deal with key creditors now means it will be possible to build up and sell assets at a fair price to pay off debts. He believes bankruptcy to be a poor option for himself and for his creditors.


Iceland could be able to pay us out if we push.

  • arny
  • 15/10/08 31/05/09
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  • Wed, 21/07/2010 - 07:54

A friend has sent me a Telegraph article. I can't find it there. Google the title. Would letting the banks fail have led to economic collapse?
It seems that they are recovering quickly!


http://www.icenews.is/index.p

  • glen07
  • 21/10/08 n/a (free)
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  • Sun, 11/07/2010 - 00:59

http://www.icenews.is/index.php/2010/07/10/jon-asgeir-pays-cash-to-glitn...

Jon Asgeir pays cash to Glitnir estate

Posted on10 July 2010.

Icelandic businessman Jon Asgeir Johannesson has paid the banrupt estate of Glitnir Bank USD 15 million, or around ISK 2 billion.

Head of Glitnir’s resolution committee, Steinunn Gudbjartsdottir confirmed the payment in an interview with RUV. Glitnir is attempting to extract some two hundred billion kronur from Jon Asgeir and his close associates.

The Bank believes the former biggest shareholder still has plenty of assets at his disposal, sourcing an email sent shortly before the bank’s collapse that he had at least 40 billion kronur in British banks.

A London court yesterday confirmed Glitnir’s request to freeze Johannesson’s assets iternationally. The judge said he did not believe the defendent’s claim that he is down to his last million pounds (ISK 189 million).


Wanted Icelandic banker's lawsuit dismissed

  • arny
  • 15/10/08 31/05/09
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  • Sat, 10/07/2010 - 08:06

Iceland Review 20.05.2010


London business figures embroiled in Kaupthing fraud investigati

  • arny
  • 15/10/08 31/05/09
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  • Sat, 10/07/2010 - 08:01

Article in The Guardian 6 June


Thanks Arny - Guardian article re Kaupthing fraud investigation

  • glen07
  • 21/10/08 n/a (free)
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  • Sat, 10/07/2010 - 09:33

http://www.guardian.co.uk/business/2010/jun/06/kaupthing-deutsch-bank-ic...

London business figures embroiled in Kaupthing fraud investigation

Serious Fraud Office team thought to be to be scrutinising Deutsche Bank's role in alleged suspect trades

A branch of Iceland's Kaupthing Bank in Reykjavik Iceland's Kaupthing Bank is alleged to have used its own funds to manipulate credit derivatives. Photograph: Bob Strong/Reuters

A Serious Fraud Office investigation into Kaupthing, the failed Icelandic bank, is understood to be pursuing a number of allegations of market manipulation involving investment vehicles controlled by some of the bank's largest clients, including several high profile UK business leaders.

It is alleged that in the weeks and months before Iceland's financial system went into meltdown, certain trades improperly used at least €500m (£413m) of Kaupthing funds in an effort to manipulate credit derivatives. Bank bosses hoped this would restore crumbling confidence in Kaupthing's solvency in the months before the bank collapsed in October 2008.

The SFO, which announced a wide-ranging probe into Kaupthing last December, is believed to be closely scrutinising the role of Deutsche Bank, which is said to have been advising Kaupthing throughout 2008 and allegedly played a role in facilitating suspect trades. Investigators want to establish whether or not Deutsche Bank or its employees may have acted improperly by pushing trades through.

A spokesperson for Deutsche Bank said: "We are co-operating with the authorities in seeking to establish the facts in this matter." The bank declined to comment on details of the allegations.

Also caught up in the investigation is Conservative party donor Tony Yerolemou, who is the London-based food manufacturing entrepreneur behind the Cypressa food brand. Others who have become embroiled in the saga include high street fashion entrepreneur Kevin Stanford and his former wife Karen Millen.

There is no suggestion of dishonesty on the part of Stanford, Millen or Yerolemou, all of whom had close ties to Kaupthing – the latter being a non-executive director at the bank. They are not thought to have known the trades might amount to market abuse on the part of Kaupthing.

Working closely with Icelandic counterparts and the Financial Services Authority, the SFO is focused on offshore investment vehicles, nominally controlled by at least five of the bank's largest clients, including the three British entrepreneurs. Investigators are looking at whether these vehicles were used by Kaupthing executives to manipulate the price of certain derivatives that offered insurance against Kaupthing bonds defaulting.

In the credit derivatives market the price for insuring these bonds against the possibility of the bank going bust had been climbing sharply for certain periods in 2008, sparking wider concern about Kaupthing's solvency. Bank executives were desperate to reverse rising insurance premiums as these were increasingly being highlighted as a warning light flashing over the bank, damaging investor and depositor confidence.

However, the bank could not act alone. Clearly Kaupthing could not offer to insure against its own insolvency because, in such an event, it would not have the funds to pay out on the insurance policy. Instead Icelandic bank bosses arranged for loans to be extended to investment vehicles controlled by trusted Kaupthing clients and these sums were used to write the insurance contracts, known as credit default swaps (CDSs).

Investigators are poring over communications between Deutsche Bank and senior figures at the Icelandic bank, including London-based former executive chairman Sigurdur Einarsson and former chief executive Hreidar Mar Sigurdsson.

Both Einarsson and Sigurdsson deny wrongdoing. The former Kaupthing chairman has insisted the CDS trades under investigation were Deutsche Bank's idea – a claim the German bank is understood to deny strongly.

A letter from Einarsson, containing his explanation of the CDS trading strategy, was leaked to the Icelandic media last year. In it he said: "On a proposal from Deutsche Bank it was decided to put to the test what would happen if the bank itself would start buying these credit default swaps. It was, however, not a simple issue, as the bank cannot buy credit default swaps on itself. Therefore [we] resorted to getting clients we trusted well and had long-standing relations with based on trust and loyalty to engage in these transactions on behalf of the bank … The transactions were made with the interests of the bank as a guiding light and fully in accordance with laws and regulations."

The effect was for investment vehicles – financed by Kaupthing loans, and at least nominally controlled by some of the bank's largest clients – to take on risk associated with the bank going bust. Kaupthing loans were being use to write insurance against Kaupthing bonds defaulting.

A 2,300-page Truth Commission report for the Icelandic parliament, published in April, said: "In the fall of 2008, Kaupthing ... loaned its key clients roughly €500m for the purpose of selling credit default swaps on Kaupthing itself. The clients themselves took no risks but they would have made substantial profits if the bank would have withstood ... difficulties."

It added: "By selling these CDSs the bank was in a way paying up its long-term debts. The buyer of these credit default swaps, on the other hand, was Deutsche Bank or its foreign clients. Yet again had an Icelandic bank bought a foreign bank out of Icelandic risk troubles, and the loans and the risk had been repatriated."

One source said it was unclear whether Deutsche Bank employees had been fully aware of the relationship between the investment vehicles that conducted the CDS trades, on the one hand, and Kaupthing, on the other.

Deutsche Bank has emerged as the largest single claimant against the assets of failed Kaupthing and is said to be owed almost 900bn Icelandic Krona (£4.8bn) through close to 50 different claims. The bulk of that sum is understood to relate to claims in Deutsche Bank's capacity as custodian bank on behalf of third parties.

Iceland's Truth Commission obtained details of emails sent by Deutsche Bank staff to Kaupthing which, according to its report, demonstrated that the German bank had been offering advice on how to influence the CDS price on Kaupthing bonds from early 2008. The Icelandic bank had become concerned because the price was indicating a relatively large and growing risk that Kaupthing could collapse – a risk assessment out of line with the more favourable scores from traditional credit rating agencies.

One memo in February 2008 from Deutsche Bank to Kaupthing was entitled: "Why the CDS curve is where it is and what can we do to take it back to normal levels". A second Deutsche Bank email in June allegedly discussed the idea of a trade in Kaupthing derivatives. The Truth Commission report states that this email argued such a trade could be an effective way to affect the market price for Kaupthing CDSs. The email allegedly suggested the timing would be critical if it was to get "most bang for the buck".

Kaupthing bosses have said they believed the price for insuring against the bank going bust was being manipulated by hedge funds trying to "short" the bank. They said false rumours were circulating about the bank.

Kevin Stanford

Best known for co-founding retailer fashion chain Karen Millen, which took the name of his then wife and business partner, pictured right, Stanford is one of the most prolific entrepreneurs in UK high street fashion, involved in investments including All Saints, Mulberry, Moss Bros, Debenhams, French Connection and Woolworths. His relationship with the now failed Icelandic bank started in 2000 and Kaupthing took a stake in Karen Millen the following year. The business later merged with Oasis, a rival chain that had been acquired by Icelandic investment group Baugur together with Kaupthing. This combination became known as Mosaic Fashions and went on to acquire several other chains. Despite being separated, Stanford and Millen continued to regularly operate as silent backers of each other's investments. Stanford eventually became the second largest borrower from Kaupthing's subsidiary in Luxembourg, receiving loans of €362m. He is also said to have been granted a €100m loan from Kaupthing in Reykjavik to fund the acquisition of shares in the bank. In the last two years Stanford's investments have suffered and he has been forced to make major concessions to Kaupthing's administrators.

Tony Yerolemou

Co-founder and former chief executive of Katsouris Fresh Foods, a family run business in west London making ready meals and dips for Tesco and other supermarkets, The group includes the Cypressa brand, which had been built up over decades. He is best known in the UK as a Conservative donor. In 2001 Katsouris was sold to the tiny Icelandic firm Bakkavor, specialising in exporting fish roe. The family received £70m in cash and £32m in Bakkavor shares. Cyprus-born Yerolemou took a seat on the board of the Icelandic firm. Debt financing for the deal — at the time the largest ever for an Icelandic firm — had been provided by Kaupthing and HBOS. In 2007 Yerolemou was appointed to the board of Kaupthing as a non-executive director. Some of his investments were under strain in 2008 and the recent report by Iceland's Truth Commission suggested some of his business interests, financed by Kaupthing, appeared to be in negative equity. The commission's report questioned whether he met a "fit and proper" test required for him to sit on the bank's board. By the autumn of 2008 Yerolemou was the fourth largest borrower from Kaupthing's Luxembourg subsidiary, receiving loans of €157m. Like many clients of the Icelandic bank, he owned shares in it, which were pledged as collateral against Kaupthing loans.


Robert Tchenguiz loses battle for £137m Somerfield proceeds to

  • glen07
  • 21/10/08 n/a (free)
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  • Wed, 30/06/2010 - 11:06

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7852432/...

Robert Tchenguiz loses battle for £137m Somerfield proceeds to Kaupthing
Robert Tchenguiz, the property investor, has dropped his battle against collapsed Icelandic bank Kaupthing over £137m in proceeds from the sale of his stake in supermarket Somerfields.

Kaupthing claimed a right to the money more than a year ago, because the former billionaire had pledged it as collateral against a huge loan.

Mr Tchenguiz claimed that Kaupthing officials promised not to take the Somerfield proceeds over dinner at Scott's in Mayfair.

After the bank began to call in loans in 2008, Mr Tchenguiz launched legal action in London and the British Virgin Islands to prevent the money being seized. A case was due to be heard this week but the two parties have now settled out of court.

Johannes Runar Johannsson, a member of the committee running Kaupthing's affairs, said: "This is a very satisfactory outcome for Kaupthing Bank. The resolution committee of the bank believes that the terms of the settlement are in the best interest of Kaupthing and therefore its creditors."

It follows Kaupthing's seizure of Mr Tchenguiz's stakes in high street restaurant and pub groups Slug and Lettuce, Yates, Mitchells & Butlers and La Tasca, plus holdings in J Sainsbury.

The bank sued Mr Tchenguiz in Reykjavik for repayment of a £650m overdraft granted to his investment vehicle Oscatello, which now also belongs to Kaupthing and is being wound down.

Mr Tchenguiz was a director of Kaupthing's biggest shareholder, Exista, and the bank's largest borrower with loans of almost €1.7bn (£1.4bn), which were used to finance his companies' private investments. A report by the Icelandic authorities later found Kaupthing's exposure to Mr Tchenguiz was against the bank's rules.

"It is hard to see that lending, to the extent that Tchenguiz's companies received it during times of liquidity crisis, was decided with the bank's best interests in mind," it said. "Rules about large risk exposures were not followed."

However, earlier this year, Mr Tchenguiz fought back, claiming Kaupthing owes him £650m based on allegations that there were serious problems at Kaupthing before it failed.

The bank is now under investigation by Britain's Serious Fraud Office and Iceland's special prosecutor over claims of market abuse, excessive loans to related parties and fraud.

It collapsed in October 2008, leaving 160,000 British savers unable to access their money. The UK Treasury paid £2.5bn to bail out the UK customers of the bank's high-interest Edge internet accounts and is still waiting to be repaid. Total claims against Kaupthing are equivalent to about five times Iceland's gross domestic product, stemming mostly from Germany.


Tchenguiz loses £137M to Kaupthing

  • arny
  • 15/10/08 31/05/09
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  • Fri, 25/06/2010 - 19:17

Finance section of the Telegraph. How much is that worth to us? Pennies?


EFTA: Iceland must pay Icesave

  • glen07
  • 21/10/08 n/a (free)
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  • Tue, 22/06/2010 - 10:34

EFTA: Iceland must pay Icesave

http://www.icenews.is/index.php/2010/05/27/efta-iceland-must-pay-icesave/

Posted on27 May 2010.

icesave1-0392394The European Free Trade Association (EFTA) yesterday sent a letter outlining its decision that Iceland is legally bound to insure the minimum deposit guarantee to British and Dutch Icesave account holders. The guarantee is part of Iceland’s EEA (European Economic Area) membership agreement.

The minimum depositors’ guarantee is EUR 20,000 per saver in the failed Icesave internet savings accounts which were run as a branch of Landsbanki before it collapsed in autumn 2008. The EFTA report states that the UK and the Netherlands have reimbursed their own savers and that Iceland’s severe recession does not diminish the country’s obligation to pay the two governments back.

The Icelandic government had insisted in a letter to the EFTA that the existence of a depositors’ guarantee fund in the country was enough to fulfil the requirements of the EU directive on cross border banking and also that the rules do not fully apply in the case of the collapse of an entire national banking system (as happened in Iceland). The EFTA disagrees with this reading of European law.

The EFTA president, Per Sanderund explained that the EU directive guarantees that each depositor is insured up to EUR 20,000 and that all nations must make sure they guarantee that insurance without question. This simple rule is extremely important to make customers feel that their savings are safe, he said.

Shortly after the fall of Landsbanki the British and Dutch governments unilaterally decided to refund savers in their countries. In the UK, 300,000 savers were paid GBP 4.5 billion, and under the directive Iceland is responsible for GBP 2.1 billion of that. The Dutch refunded EUR 1.53 billion to 118,000 savers and Iceland is responsible for EUR 1.34 billion, according to the EFTA.

The letter also criticises the Icelandic government for guaranteeing domestic depositors but not those in overseas branches of Icelandic banks – a breach of European rules, Visir.is reports.

The Icelandic government has two months to respond formally to the letter. If Iceland does not respond appropriately, the letter could be the first step in removing Iceland from the EEA.

“The EFTA is fully aware that Iceland, the UK and the Netherlands have tried to agree a solution to the issue. If such a solution is found there will be no need for further EFTA action,” said Per Sanderud.

Talks broke down in the late winter between the three countries and all agreed that a new deal was highly unlikely before elections in the UK and the Netherlands. With Dutch elections scheduled for 9th June, the three countries will come back to the negotiating table again very soon.


expatmoney blog & IOM PR

  • anrigaut
  • 19/10/08 30/10/09
  • a depositor
  • Offline
  • Fri, 18/06/2010 - 05:53

Interesting little blog by Hannah Beecham, praising the IoM for its compensation scheme (doesn't mention it took a year to start to pay out).

You may wish to add to the excellent retorts already posted here:
expatmoney.blogspot.com/2010/06/promises...d-whole-pile-of.html

Don't miss also the Twitter alongside (doesn't always show up when twitter is saturated - if so, try again):
"Chief regulator John Aspden explains how the Isle of Man is paying back KSF(IOM) savers at www.expatmoneychannel.co"
A 9 min video of her interview with John Aspden and John Spellman. Fascinating! You'll love it!

Monday, 14 June 2010
Promises, pledges and a pile of protection
Go back to 2008 ... it's the visual images that stick in the mind more than the words. The pink and black logo; the meandering queues; the besieged branches; thousands of ordinary savers desperate to withdraw their savings from the once mighty, now seemingly defunct, bank. Northern Rock or financial quicksand?

And then there was Iceland - and that pre-volcanic eruption in its fissile banking sector. The cash had gone up in smoke the way the ash was about to. Ordinary savers left stranded once again. Those of us on the sidelines gawped in horror as our fellow investors faced up to the appalling reality that their nest eggs had gone, vanished, vamoose. They'd been robbed within seconds. Would we be next?

And so it was offshore with the collapse of Kaupthing Singer & Friedlander (IOM). And suddenly expats around the world experienced that same numbing sense of insecurity not knowing what calamitous news they'd be waking up to the following morning. Whose bank would Humpty Dumpty its depositors next? And where, of where, were all the King's horses to help savers ride out the mess they found themselves in? Could any of the great finance houses be trusted? Any statement believed? And it all went on for long enough to compel the rest of us into making panic withdrawals. We scratched around like headless chickens looking for safe havens where none were to be found.

I know from personal experience, because whereas I didn't have have savings with Kaupthing Singer & Friedlander (IOM), I did have some tucked away with another offshore deposit-taker on the Isle of Man. In my case I had a pot of euros and was obliged to go to Offshore Britain with them because no bank in the UK at the time I was looking offered a straightforward euro savings account. And yes, when KSF(IOM) went down, I didn't hang around. I pulled my pot out quicker than any bank manager could say, "one bank collapse doesn't make an industry crash."

This wasn't entirely rational because the reason I'd chosen the Isle of Man over another offshore finance centre in the first place was solely down to the fact that this one offered depositors - the small guys - not just deposit protection, but deposit compensation. Plain and simple. And although I didn't have to suffer the same agony as KSF(IOM) depositors who endured months of insecurity about whether they'd ever see their money back, that situation has now changed; deposits have been restored. So I needn't have worried.

I believe it's time the rest of the expat saving world heard the good news.

Every single depositor with KSF(IOM) qualifying for the compensation scheme (which post collapse was raised from £30,000 to £50,000) has now received that latter sum back. This Island's government proved its maturity and stepped up to the plate by meeting its obligations in full. What's more, the liquidator's work has not finished; there are hopes of going further; the target is to compensate depositors with at least 93p in the £1, whilst hopes remain that eventually the full 100% will be recovered.

So what now? Well, after my recent tour of the Island finding out how the government has honoured its pledges to depositors, irrespective of their nationality or place of residence, and given that my own plans for future spending remain euro-centric, it's time for me to get this particular savings pot back on track. To which end, I'm bringing my next egg back to the Island. My choice is swayed by the one centre that has proved how it behaves when disaster strikes. The Isle of Man keeps to its pledges. As a saver this tells me all I need to know.

And what's my cut off point? It's very straightforward. The regulator guarantees that not a penny less than £50,000 will, in the face of a banking collapse, be recovered for each and every depositor. So, on that premise, not a penny more of that total breaks the ceiling of my deposit with each and every deposit-taker.

The Isle of Man has proved itself by sticking to, indeed improving on, its guarantee to depositors. That's the contract we have as depositors with the regulator. Now all we have to do is interrogate the middle man - the deposit-taker - and to hunt around for the best bargains. Happy shopping!


Offshore savings market contracts dramatically.

  • arny
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Wed, 09/06/2010 - 12:17

People are no longer banking on The Isle of Man or Guernsey it seems. Telegraph today- Finance: Savings.


@ arny - Offshore savings market contracts dramatically

  • glen07
  • 21/10/08 n/a (free)
  • a depositor
  • Offline
  • Wed, 09/06/2010 - 12:45

http://www.telegraph.co.uk/finance/personalfinance/offshorefinance/78030...

Offshore savings market contracts dramatically
The choice of accounts for expatriate savers is narrowing – and experts predict that soon there could be just a handful of providers willing to handle offshore accounts.

By Charlotte Beugge
Published: 9:37AM BST 07 Jun 2010

Comment on this
Fewer offshore products will be a particular blow to those who rely on them for their everyday banking.

After last week’s announcement by Irish Permanent that it is shutting up shop in the Isle of Man, this week Northern Rock announced that it is to close down its operation on Guernsey. And, to make things even worse, Britain’s second largest building society, the Yorkshire, reports that it is weighing up whether it too should pull out of the offshore market.

Northern Rock Guernsey, the offshore subsidiary of the once-notorious bank now in the hands of the government, said late last week (thurs) that it was to exit the market. In a statement, the bank said; "Following a strategic review of commercial operations, the board of Northern Rock has decided that it will close its banking operation in Guernsey."

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The bank reassures customers that their savings remain "safe and secure". It is to shut the doors finally on the Guernsey operation on September 2 and is writing to all customers giving them three months to move their money elsewhere.

It will make a "goodwill" payment equivalent to 10 days’ interest – with a minimum payment of £20 – for those savers who move their money by the deadline. Also, those savers with fixed rate accounts may qualify for an enhanced payment if the Northern Rock fixed rate they are being ousted from is higher than the average rate on the market. Savers will receive details on how the payments will be calculated by letter.

However, their choice of where to move their money to is contracting by the minute. Now that Irish Permanent is going, it seems likely many others will follow. Yorkshire Building Society, which took over the Chelsea Building Society earlier this year, says it is currently deciding whether it should continue to keep Yorkshire Guernsey going.

If it does decide to pull out it will be a bitter blow to offshore savers as Yorkshire has a track history of offering good deals to savers. This week, for example, it has the best-paying 90 day notice account at 2.6 per cent on a minimum of £100,000 as well as a good value 15 day notice account at 1.8 per cent.

The mass withdrawals from the offshore savings market are down to two factors. Firstly, since the failure of the Icelandic banks – which were heavily involved in the offshore savings market – savers have been less willing to put their money in these accounts even though there are investor protection schemes in the Isle of Man and the Channel Islands.

Secondly, the credit crunch has meant that banks, both those with a UK or an Irish home base, are retrenching and cutting back on possibly peripheral bits of their business. Rachel Thrussell, savings expert at Moneyfacts says: "These days, there’s no benefit in rate terms from going offshore unless you need to – it’s a change from the heyday of offshore a few years ago when even UK residents put their money in the Isle of Man or Guernsey to get the best deals.

"Now the trend has started, we’re bound to see more getting out of the offshore market – to the disappointment of savers who rely on these accounts and who have no option but to go offshore."

And even for those organisations keeping their offshore operations, the deals for savers are still not good. Skipton International has just introduced a new two-year fixed rate at 3.1 per cent – but it was offering 3.25 per cent guaranteed for the same time. It’s also closed its 30 day notice account and replaced it with a 40-day deal – paying 2.1 per cent.


Legal cases against old Icelandic banks multiply

  • glen07
  • 21/10/08 n/a (free)
  • a depositor
  • Offline
  • Wed, 09/06/2010 - 00:02

http://www.icenews.is/index.php/2010/06/08/legal-cases-against-old-icela...

Legal cases against old Icelandic banks multiply

Ice News Posted on08 June 2010.

kronur1It seems that some 1,000 cases will be brought against the old bankrupt Icelandic banks in Icelandic courts over the coming weeks and months. 200 cases have already been filed with the Reykjavik District Court.

This information comes from a communication released yesterday at a Kaupthing debtors’ meeting. According to the Kaupthing resolution committee, the Icelandic authorities had not expected anything like this number of court cases.

The communication also stated that Kaupthing’s debts have reduced by around ISK 400 billion since the new year when whole debt stood at ISK 7,300 billion and now stands at ISK 6,900 billion, RUV reports (approximately USD 53 billion).


Icelandic bank sues PwC for fraud cover up

  • glen07
  • 21/10/08 n/a (free)
  • a depositor
  • Offline
  • Tue, 08/06/2010 - 11:39

The Accountant
May 2010

http://www.vrl-financial-news.com/accounting/intl-accounting-bulletin/is...

Icelandic bank sues PwC for fraud cover up

The board appointed to wind up Iceland’s Glitnir Bank is taking legal action against the bank’s former auditors PricewaterhouseCoopers Iceland (PwC) for allegedly facilitating and helping conceal fraudulent transactions engineered by a principal shareholder.

The lawsuit, filed in the New York Supreme Court on 11 May, alleged Jón Ásgeir Jóhannesson led a group of seven businessmen who drained more than $2bn from Glitnir Bank, ultimately leading to its October 2008 collapse.

One main accusation against PwC is that the firm helped Jóhannesson and his associates raise $1bn from New York investors without revealing the truth about the bank’s financial exposure and losses.

“The individual defendants could not have succeeded in their conspiracy to loot Glitnir without the complicity of outside auditors at PricewaterhouseCoopers,” the Glitnir complaint stated.

The Glitnir board claimed PwC was “intimately familiar” with Glitnir’s related party exposure procedures and reviewed and signed off on Glitnir financial statements, which grossly misrepresented the related party exposure.

Last October, Icelandic police raided the Reykjavik offices of KPMG and PwC as part of an investigation into alleged criminal activity at three collapsed Icelandic banks

PwC Iceland has not responded to International Accounting Bulletin requests for comment at the time of publish.


PWC

  • Codpeace
  • 23/10/08 30/11/12
  • unspecified
  • Offline
  • Wed, 23/06/2010 - 00:53

Is there not a conflict of interest here with PWC as our JL???? Starts to make sense of some of Simpsons lack of action - who is pulling his strings?????


What lack of action?

  • bellyup
  • 10/10/08 09/01/10
  • a depositor
  • Offline
  • Wed, 23/06/2010 - 14:10

@Codpease

What lack of action by Simpson are you referring too?
It is the job of the CoI to keep the liquidators up to the mark .
Is there something that you think should be brought to their attention?


lack of action

  • Codpeace
  • 23/10/08 30/11/12
  • unspecified
  • Offline
  • Wed, 23/06/2010 - 16:54

From what I can deduce he seems to pussyfoot around any action against Khf, KSFUK, the bank directors, and the rgulators - he just seems to sit there and take whatever they say without any fight. He even started badly and then bowed down to the SoA which was definitely not a benefit to the depositors who is he supposed to be fighting for.

I see he is also sitting on the fence with the re-assignment of accounts from DCS - despite the DCS having said this was possible - Simpson never advised people that they would have to go to court to get it done and they are now trapped and he just seems to give out platitudes.

Gordon 45 has to twist his arm to get info all the time.

Dammit, just what is he doing to justify the huge paycheck????

Great shame the conflict guy could not have been put in place...


Simpson: An incompetent.

  • follow_the_tao
  • 11/10/08 31/05/09
  • a depositor
  • Offline
  • Tue, 12/10/2010 - 15:58

He has a job, There isn't much competition. The mediocre bastard has risen to the top of the pile by omission.
He takes his pay-check and tries to keep his wife happy.
The UK operation leaves his minder in place.
But we know. And we're learning. He has to live with the shame. The question is can he feel it?
SNAFU.


Codpease

  • Julie
  • 03/12/08 14/07/09
  • a depositor
  • Offline
  • Wed, 23/06/2010 - 10:30

Definitley room for thought. How can they give a true picture if their Icelandic branch is involved?


Icelandic bank sues PwC for fraud cover up

  • glen07
  • 21/10/08 n/a (free)
  • a depositor
  • Offline
  • Tue, 08/06/2010 - 11:39

The Accountant
May 2010

http://www.vrl-financial-news.com/accounting/intl-accounting-bulletin/is...

Icelandic bank sues PwC for fraud cover up

The board appointed to wind up Iceland’s Glitnir Bank is taking legal action against the bank’s former auditors PricewaterhouseCoopers Iceland (PwC) for allegedly facilitating and helping conceal fraudulent transactions engineered by a principal shareholder.

The lawsuit, filed in the New York Supreme Court on 11 May, alleged Jón Ásgeir Jóhannesson led a group of seven businessmen who drained more than $2bn from Glitnir Bank, ultimately leading to its October 2008 collapse.

One main accusation against PwC is that the firm helped Jóhannesson and his associates raise $1bn from New York investors without revealing the truth about the bank’s financial exposure and losses.

“The individual defendants could not have succeeded in their conspiracy to loot Glitnir without the complicity of outside auditors at PricewaterhouseCoopers,” the Glitnir complaint stated.

The Glitnir board claimed PwC was “intimately familiar” with Glitnir’s related party exposure procedures and reviewed and signed off on Glitnir financial statements, which grossly misrepresented the related party exposure.

Last October, Icelandic police raided the Reykjavik offices of KPMG and PwC as part of an investigation into alleged criminal activity at three collapsed Icelandic banks

PwC Iceland has not responded to International Accounting Bulletin requests for comment at the time of publish.


Kaupthing fraud investigations continue in Iceland and UK

  • glen07
  • 21/10/08 n/a (free)
  • a depositor
  • Offline
  • Tue, 08/06/2010 - 11:31

Kaupthing fraud investigations continue in Iceland and UK

http://www.icenews.is/index.php/2010/06/08/kaupthing-fraud-investigation...

Posted on08 June 2010.

Kaupthing Bank’s relations with foreign investors are being investigated in Iceland and the UK – especially Sheikh Hamad bin Khalifa Al Thani’s “purchase” of a five percent stake in the bank in the lead up to its collapse.

Both Britain’s Serious Fraud Office and Iceland’s Special Prosecutor into the banking crash are investigating the sale which was used heavily at the time to prove how much trust new foreign investors had in Kaupthing. Closer examination revealed that the deal did nothing to strengthen the bank’s capital position and the bank did not give out any new shares to the sheikh – instead selling him bonds in the bank. What investigators are still trying to find out is whether the bonds, bought on a loan from Kaupthing itself, were purchased from other investors or if the bank had previously been trying but unable to sell them off.

The trade deal saw al Thani borrow ISK 12.8 billion from Kaupthing against personal risk. The same amount was also loaned out from a company owned by Olafur Olafsson – meaning that the Qatari’s investment was around ISK 26 billion. When Kaupthing collapsed and the bonds became worthless, al Thani had to reimburse Olafur Olafsson’s company. However, another company of the sheikh’s received a loan payment of USD 50 million at the same time – which was ISK 6.4 billion, or roughly ISK 12.8 billion at the post crash weakened exchange rate.

The whole deal appears to have been carried out to protect the sheikh’s finances while also conveniently moving money around the world and appearing to enjoy the trust of a major Qatari investor. It now seems likely that al Thani had little real trust in Kaupthing at all, but was willing to own a stake in the bank at no personal risk.


Arab Sheik got money for lending his name...what a surprise!

  • glen07
  • 21/10/08 n/a (free)
  • a depositor
  • Offline
  • Tue, 08/06/2010 - 07:35

Iceland Review

http://icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_i...

07/06/2010 | 23:14

Sheik Al Thani got 50 Million Dollars for Lending his Name to Kaupthing Bank Deal

A phone call between two former Kaupthing Bank employees who are now top managers at Arion bank revealed that a big transaction of shares in Kaupthing in September 2008 was funded by the bank. According to eyjan.is and other sources the purpose of a complex scheme behind the transaction was to hide the fact that Ólafur Ólafsson, owner of Samskip shipping and one of the owners of Kaupthing at the time, was behind the deal.
Kaupthing headquarters. IPA Photo.

Al Thani, an Arabic Sheik, allegedly bought a 5 percent share in Kaupthing in September 2008. According to interrogations of the special prosecutor over Halldór Bjarkar Lúdvígsson, previously a Kaupthing employee but now an Arion bank manager of corporate finance, “the boys in Luxemburg” were primary actors in the complex business plot. According to Lúdvigsson’s testimony CEO Hreidar Már Sigurdsson and Kaupthing Luxemburg manager Magús Gudmundsson organized the transaction.
Ólafur Ólafsson, Photo: Samskip

In a recorded phone call between Lúdvigsson (HBL) and internal auditor Lilja Steinthórsdóttir (LS) the plot is described. According to Eyjan.is a report of the phone call has been leaked to DV.

LS: OK, why was Choice created, or what type of company was it?

HBL: This was one more BVI company, you see.

LS: Yes is this just to cover the tracks, or why is it done like this?

HBL: Yes this is in fact done to hide the fact that Óli [Ólafur Ólafsson of Samskip] owned half of this, you see.

LS: Yes, OK.

HBL: The only way to get flagged on this [reporting a 5% share by an individual] was this company, owned 100% by the sheik.

LS: That the sheik owned it all.

[...]

LS: But what were these US dollars for, how should they be used?

HBL: This was fundamentally just a kickback the sheik should get for, for being involved.

[...]

HBL: And then as a matter of fact the sheik had been promised that he would get 50 million dollars.

LS: Yes.

HBL: Right away.

LS: Yes.

HBL: To, you see, to, you see, yes you see as a payment for lending his name to this, you see.


Kaupthing Fraud Investigation

  • arny
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Mon, 07/06/2010 - 12:39

Interesting article in the Guardian Business Section today


Kaupthing SFO investigation full artcle in Gaurdian/Business

  • fight theft
  • 10/10/08 28/05/13
  • a depositor
  • Offline
  • Mon, 07/06/2010 - 18:08

LOOKS LIKE DUESCH BANK are involevd (Also Kaupthing's largest creditor!)

London business figures embroiled in Kaupthing fraud investigation
Serious Fraud Office team thought to be to be scrutinising Deutsche Bank's role in alleged suspect trades

Iceland's Kaupthing Bank is alleged to have used its own funds to manipulate credit derivatives. Photograph: Bob Strong/Reuters
A Serious Fraud Office investigation into Kaupthing, the failed Icelandic bank, is understood to be pursuing a number of allegations of market manipulation involving investment vehicles controlled by some of the bank's largest clients, including several high profile UK business leaders.
It is alleged that in the weeks and months before Iceland's financial system went into meltdown, certain trades improperly used at least €500m (£413m) of Kaupthing funds in an effort to manipulate credit derivatives. Bank bosses hoped this would restore crumbling confidence in Kaupthing's solvency in the months before the bank collapsed in October 2008.
The SFO, which announced a wide-ranging probe into Kaupthing last December, is believed to be closely scrutinising the role of Deutsche Bank, which is said to have been advising Kaupthing throughout 2008 and allegedly played a role in facilitating suspect trades. Investigators want to establish whether or not Deutsche Bank or its employees may have acted improperly by pushing trades through.
A spokesperson for Deutsche Bank said: "We are co-operating with the authorities in seeking to establish the facts in this matter." The bank declined to comment on details of the allegations.
Also caught up in the investigation is Conservative party donor Tony Yerolemou, who is the London-based food manufacturing entrepreneur behind the Cypressa food brand. Others who have become embroiled in the saga include high street fashion entrepreneur Kevin Stanford and his former wife Karen Millen.
There is no suggestion of dishonesty on the part of Stanford, Millen or Yerolemou, all of whom had close ties to Kaupthing – the latter being a non-executive director at the bank. They are not thought to have known the trades might amount to market abuse on the part of Kaupthing.
Working closely with Icelandic counterparts and the Financial Services Authority, the SFO is focused on offshore investment vehicles, nominally controlled by at least five of the bank's largest clients, including the three British entrepreneurs. Investigators are looking at whether these vehicles were used by Kaupthing executives to manipulate the price of certain derivatives that offered insurance against Kaupthing bonds defaulting.
In the credit derivatives market the price for insuring these bonds against the possibility of the bank going bust had been climbing sharply for certain periods in 2008, sparking wider concern about Kaupthing's solvency. Bank executives were desperate to reverse rising insurance premiums as these were increasingly being highlighted as a warning light flashing over the bank, damaging investor and depositor confidence.
However, the bank could not act alone. Clearly Kaupthing could not offer to insure against its own insolvency because, in such an event, it would not have the funds to pay out on the insurance policy. Instead Icelandic bank bosses arranged for loans to be extended to investment vehicles controlled by trusted Kaupthing clients and these sums were used to write the insurance contracts, known as credit default swaps (CDSs).
Investigators are poring over communications between Deutsche Bank and senior figures at the Icelandic bank, including London-based former executive chairman Sigurdur Einarsson and former chief executive Hreidar Mar Sigurdsson.
Both Einarsson and Sigurdsson deny wrongdoing. The former Kaupthing chairman has insisted the CDS trades under investigation were Deutsche Bank's idea – a claim the German bank is understood to deny strongly.
A letter from Einarsson, containing his explanation of the CDS trading strategy, was leaked to the Icelandic media last year. In it he said: "On a proposal from Deutsche Bank it was decided to put to the test what would happen if the bank itself would start buying these credit default swaps. It was, however, not a simple issue, as the bank cannot buy credit default swaps on itself. Therefore [we] resorted to getting clients we trusted well and had long-standing relations with based on trust and loyalty to engage in these transactions on behalf of the bank … The transactions were made with the interests of the bank as a guiding light and fully in accordance with laws and regulations."
The effect was for investment vehicles – financed by Kaupthing loans, and at least nominally controlled by some of the bank's largest clients – to take on risk associated with the bank going bust. Kaupthing loans were being use to write insurance against Kaupthing bonds defaulting.
A 2,300-page Truth Commission report for the Icelandic parliament, published in April, said: "In the fall of 2008, Kaupthing ... loaned its key clients roughly €500m for the purpose of selling credit default swaps on Kaupthing itself. The clients themselves took no risks but they would have made substantial profits if the bank would have withstood ... difficulties."
It added: "By selling these CDSs the bank was in a way paying up its long-term debts. The buyer of these credit default swaps, on the other hand, was Deutsche Bank or its foreign clients. Yet again had an Icelandic bank bought a foreign bank out of Icelandic risk troubles, and the loans and the risk had been repatriated."
One source said it was unclear whether Deutsche Bank employees had been fully aware of the relationship between the investment vehicles that conducted the CDS trades, on the one hand, and Kaupthing, on the other.
Deutsche Bank has emerged as the largest single claimant against the assets of failed Kaupthing and is said to be owed almost 900bn Icelandic Krona (£4.8bn) through close to 50 different claims. The bulk of that sum is understood to relate to claims in Deutsche Bank's capacity as custodian bank on behalf of third parties.
Iceland's Truth Commission obtained details of emails sent by Deutsche Bank staff to Kaupthing which, according to its report, demonstrated that the German bank had been offering advice on how to influence the CDS price on Kaupthing bonds from early 2008. The Icelandic bank had become concerned because the price was indicating a relatively large and growing risk that Kaupthing could collapse – a risk assessment out of line with the more favourable scores from traditional credit rating agencies.
One memo in February 2008 from Deutsche Bank to Kaupthing was entitled: "Why the CDS curve is where it is and what can we do to take it back to normal levels". A second Deutsche Bank email in June allegedly discussed the idea of a trade in Kaupthing derivatives. The Truth Commission report states that this email argued such a trade could be an effective way to affect the market price for Kaupthing CDSs. The email allegedly suggested the timing would be critical if it was to get "most bang for the buck".
Kaupthing bosses have said they believed the price for insuring against the bank going bust was being manipulated by hedge funds trying to "short" the bank. They said false rumours were circulating about the bank.
Kevin Stanford
Best known for co-founding retailer fashion chain Karen Millen, which took the name of his then wife and business partner, pictured right, Stanford is one of the most prolific entrepreneurs in UK high street fashion, involved in investments including All Saints, Mulberry, Moss Bros, Debenhams, French Connection and Woolworths. His relationship with the now failed Icelandic bank started in 2000 and Kaupthing took a stake in Karen Millen the following year. The business later merged with Oasis, a rival chain that had been acquired by Icelandic investment group Baugur together with Kaupthing. This combination became known as Mosaic Fashions and went on to acquire several other chains. Despite being separated, Stanford and Millen continued to regularly operate as silent backers of each other's investments. Stanford eventually became the second largest borrower from Kaupthing's subsidiary in Luxembourg, receiving loans of €362m. He is also said to have been granted a €100m loan from Kaupthing in Reykjavik to fund the acquisition of shares in the bank. In the last two years Stanford's investments have suffered and he has been forced to make major concessions to Kaupthing's administrators.
Tony Yerolemou
Co-founder and former chief executive of Katsouris Fresh Foods, a family run business in west London making ready meals and dips for Tesco and other supermarkets, The group includes the Cypressa brand, which had been built up over decades. He is best known in the UK as a Conservative donor. In 2001 Katsouris was sold to the tiny Icelandic firm Bakkavor, specialising in exporting fish roe. The family received £70m in cash and £32m in Bakkavor shares. Cyprus-born Yerolemou took a seat on the board of the Icelandic firm. Debt financing for the deal — at the time the largest ever for an Icelandic firm — had been provided by Kaupthing and HBOS. In 2007 Yerolemou was appointed to the board of Kaupthing as a non-executive director. Some of his investments were under strain in 2008 and the recent report by Iceland's Truth Commission suggested some of his business interests, financed by Kaupthing, appeared to be in negative equity. The commission's report questioned whether he met a "fit and proper" test required for him to sit on the bank's board. By the autumn of 2008 Yerolemou was the fourth largest borrower from Kaupthing's Luxembourg subsidiary, receiving loans of €157m. Like many clients of the Icelandic bank, he owned shares in it, which were pledged as collateral against Kaupthing loans.


And I wonder how many other

  • expat
  • 10/10/08 31/05/09
  • unspecified
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  • Tue, 08/06/2010 - 07:16

And I wonder how many other "advisers" are involved in all of this? It seems inconcevable that the company auditers we're aware of the shenahagins going on. Still begs the question what on earth were the FSA doing??

I notice that there seems to be evidence at last emerging on Icenews that the infamous 5% investor Sheikh was actually a front and on a fee.


Does all this have any

  • Julie
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  • Wed, 09/06/2010 - 11:55

Does all this have any bearing on how PWC seem to be treating us and what every one thinks about their sincerity to us?


Jon Asgeir

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leaves House of Fraser to fight fraud claims. Daily Telegraph.


Jon Asgeir leaves House of Fraser to fight fraud claims

  • glen07
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http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/773411...

Jon Asgeir leaves House of Fraser to fight fraud claims
Jon Asgeir Johannesson, the retail investor, has resigned as the chairman of Iceland Foods and a director of House of Fraser to fight allegations that he led a $2bn (£1.4bn) conspiracy to "loot" collapsed bank Glitnir.

By Rowena Mason, City Reporter
Published: 10:09PM BST 17 May 2010
Jon Asgeir Johannesson, the boss of Baugur, has been the target of much anger in Iceland
Jon Asgeir Johannesson, the boss of Baugur, has been the target of much anger in Iceland

Mr Johannesson, who lives at an unknown location in London, was one of the original "Viking raiders" whose company, Baugur, led an investment charge on the UK high street.

At the height of its power, Baugur owned stakes in Debenhams, Woolworths, Iceland Foods, House of Fraser, Hamleys, Karen Millen, Whistles and Marks & Spencer.

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*
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*
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*
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*
  Baugur boss Jon Asgeir Johannesson's property deal under scrutiny

Mr Johannesson was also the biggest investor in Glitnir, which last week filed lawsuits in Iceland, London and New York accusing its former part-owner of "siphoning off money" from the bank before its collapse in October 2008. The collapsed bank still owes £200m to British local councils, which are not ranked as priority creditors.

On Monday Mr Johannesson released a statement, saying his resignation was "taken with regret in order to avoid any unwarranted damage being caused to these companies whilst he defends himself against the claims made by Glitnir Bank".

"Mr Johannesson does not own any shares in either business. He fully intends to defend himself against the claims made by Glitnir Bank and reiterates his innocence in relation to all the false allegations made," it added.

The lawsuit alleges: "A cabal of businessmen led by convicted white-collar criminal Jon Asgeir Johannesson, engaged in a sweeping conspiracy to wrest control of Iceland's Glitnir Bank to fill their pockets and prop up their own failing companies.

The businessman's co-defendants in the case are his wife, Ingibjorg Palmadottir, investor Palmi Haraldsson, Glitnir's former chairman Thorsteinn Jonsson, its former chief executive Larus Welding, and two former directors Jon Sigurdsson and Hannes Smarason.


Glitnir joins Kaupthing as Icelandic bankers come under further

  • glen07
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http://www.icenews.is/index.php/2010/05/12/glitnir-joins-kaupthing-as-ic...

Glitnir joins Kaupthing as Icelandic bankers come under further scrutiny

Posted on12 May 2010.

glitnir-logoGlitnir Bank’s dissolution committee members today described what they called the robbery from within of the bank by Jon Asgeir Johannesson and his “clique”. Seven have already been served by a New York court and more will likely follow.

Glitnir Bank’s dissolution committee held a press conference today where details were given of the subpoenas issued in New York to seven former bosses and investors in the bank. Glitnir is also suing PricewaterhouseCoopers, RUV reports.

Iceland has already frozen the assets of Jon Asgeir Johannesson, Palmi Haraldsson and Thorsteinn M. Jonsson and a London court has ordered the freezing order on Jon Asgeir to be upheld internationally as well. He has not been formally served the papers yet, despite efforts to find him, dissolution committee chairwoman Steinunn Gudbjartsdottir said.

Jon Asgeir refused to give away where he currently is in a telephone interview with Bloomberg this afternoon, but described recent events as “a left hook” which it is pointless to spend millions of kronur trying to defend against – especially with all his assets frozen. “They have won,” he conceded; adding that it is all politics and not based on facts. Political figures including David Oddsson are behind the lawsuit, Johannesson believes.

Glitnir’s move to recoup cash from its former masters comes in the same week that Iceland’s Special Prosecutor began arresting key players from Kaupthing Bank. It is important to point out that Glitnir is pursuing civil actions, while the Special Prosecutor is a criminal investigator.

The Glitnir committee is handing all evidence over to the Special Prosecutor however, and criminal prosecutions could also take place.


er hem Good ole' PWC

  • fight theft
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PWC
"P" stands for "Parasites"
"W" stands for "Waste of Space' and Wasters
and "C" stands for "Callous" beyond belief...

Why do we honourable innocent decent depositors end up as victims of these evil deeds from such scum (Darling included) - bring out the Russians with the Kallishnikovs (Yes I know expat I must have miss spelt it!)

Article in today's Gaurdian
Link:
http://www.guardian.co.uk/business/2010/dec/01/pricewaterhousecoopers-ac...

Landsbanki administrators accuse auditor of negligencePricewaterhouseCoopers warned it will face claims for damages on behalf of collapsed Icelandic bank's creditors

Share Simon Bowers guardian.co.uk, Wednesday 1 December 2010 20.44 GMT Article history
Landsbanki was audited by PricewaterhouseCoopers, which has now been accused of negligence by the failed bank's administrators. Photograph: Olivier Morin/AFP/Getty Images

Administrators to Landsbanki, the failed Icelandic bank behind the Icesave internet deposit account scandal, have accused the firm's former auditors, PricewaterhouseCoopers, of negligence, warning the accounting firm they expect to claim damages on behalf of creditors.

Landsbanki's creditors include more than 100 UK councils which placed a total £900m with Icesave and — unlike British retail savers — were not protected by a deposit guarantee. The negligence allegations set out at a creditors' meeting yesterday relate to PwC's audit of Landsbanki's 2007 accounts and an endorsement of its half-year financial update six months later. In the 2007 accounts, Landsbanki told investors: "Icesave, launched in October 2006, has played a key role in transforming the bank's funding profile."

The accusation against PwC's Iceland operations comes after a year of forensic investigations conducted by a team from Deloitte in London. As well as signalling their intention to pursue damages from PwC, administrators have filed a legal claim against former Landsbanki executives relating to losses of more than 30bn kronur (£165m).

It is the second time PwC's Icelandic branch has been accused of major failings in the months preceding Reykjavik's 2008 financial meltdown, which felled all three of the tiny country's outsized banks — Landsbanki, Glitnir and Kaupthing — and forced officials to seek a bailout from the International Monetary Fund.

In its capacity as auditor of Glitnir, PwC was named as a defendant in a legal claim brought by US bond investors in New York in May. The case accuses Baugur retail tycoon Jon Asgeir Johannesson of leading "a sweeping conspiracy to wrest control of Glitnir and fraudulently drain more than $2bn out of the bank to fill their own pockets and prop up their own failing companies".

Of PwC's role at Glitnir, the claim alleges "defendants could not have succeeded in their conspiracy without the complicity of PwC.PwC ... knew what Glitnir's true related party exposure was, reviewed and signed off on financial statements which grossly misrepresented Glitnir's related party exposure."

Separately, forensic accountants from PwC in London have been hired by administrators to Kaupthing to investigate suspicious transactions entered into by the bank in the months before its collapse.


Iceland seeks retribution

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Observer business section.


Iceland seeks retribution from Jón Ásgeir Jóhannesson

  • glen07
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http://www.guardian.co.uk/business/2010/may/16/jon-asgeir-johannesson-ic...

Iceland seeks retribution from Jón Ásgeir Jóhannesson

Nine West in Covent Garden

Nine West was one of many familiar UK high street retail chains in which Jóhannesson's group Baugur held a stake. Photograph: Graeme Robertson

When Baugur began buying up the British high street in 2004 the Icelandic outfit, led by its handsome executive chairman Jón Ásgeir Jóhannesson, was hailed as a new breed of Viking raider.

The Icelander with the shoulder-length blond hair and black designer clothes behaved more like a rock star than a sober businessman, throwing champagne-fuelled parties and seducing business associates with trips by private jet to Reykjavík to sample a thriving 24-hour party scene as the small island nation reinvented itself as a banking hothouse.

On the London circuit Jóhannesson, a paper billionaire at one time, was feted as the new kingmaker of British retail, in league with tycoons such as Sir Philip Green as he poured hundreds of millions of pounds into an acquisition spree that swallowed up retailers from swanky jeweller Mappin & Webb to House of Fraser and no-frills food chain Iceland. At the height of its powers, the Baugur empire had a turnover of £5bn.

But six years on the party is over and the mother of all hangovers has set in. Last week Jóhannesson, along with a number of former directors of collapsed Icelandic bank Glitnir, were hit with a $2bn (£1.3bn) US lawsuit that accuses them of a "sweeping conspiracy" to seize control of the bank and, latterly, drain cash out of it – actions that contributed to its eventual collapse.

Steinunn Gubjartsdóttir, who heads Glitnir's winding-up committee and is behind the US legal action, gives a bald assessment of what the team of forensic accountants from Kroll, who have spent the last year combing through its books, found: "There is evidence supporting the allegation that Glitnir Bank was robbed from the inside."

The 80-page filing lodged at New York's supreme court last week reads like the plot of a movie. It even comes with a compelling title – "Project Tornado" – which, it is claimed, was the shorthand used by the men, who include Thorsteinn Jonsson and Lárus Welding, Glitnir's former chairman and chief executive, to describe their plan to gain control of the bank.

The lawsuit paints a picture of a bank that became a personal fiefdom. The documents allege that Jóhannesson, whose father started one of Iceland's biggest retail chains, discount supermarket Bónus, was the "ringleader" of a "cabal of businessmen" who worked together to "wrest control of Glitnir and fraudulently drain over $2bn out of the bank to fill their pockets and prop up their own failing companies".

And in another damning development for the reputation of auditors, the suit also accuses PricewaterhouseCoopers, the world's largest accountancy firm, of malpractice and negligence.

Jóhannesson's glamorous wife Ingibjörg Pálmadóttir is also one of the defendants. The couple sought to add to their trophies – which include two apartments in New York worth an estimated $25m and a 144ft yacht named Viking – by opening a boutique hotel in Reykjavík. The $30.8m borrowed to open 101 Hotel has not been repaid.

The sensational lawsuit adds to mounting pressure on the disgraced elite who controlled Iceland's three main banks – Glitnir, Kaupthing and Landsbanki – and led the island's transformation from fishing economy to financial superpower in the debt-fuelled spending boom that preceded the credit crunch.

The uncomfortable verdict that has emerged from Iceland's official post-mortem into the crisis – which forced the fiercely independent nation to turn to the International Monetary Fund for help – was that its financial system was shot through with corruption. The truth commission report, published last month, also claimed Iceland's three biggest banks were in the thrall of their major shareholders.

And, after more than a year of piecing together the evidence, the reckoning has now begun for the country's disgraced former banking bosses. Last week prosecutors arrested and detained Kaupthing's former chief executive, Hreidar Mar Sigurdsson, on suspicion of offences including embezzlement and falsifying documents. In another dramatic development, Kaupthing's erstwhile chairman, Sigurdur Einarsson, has been put on Interpol's wanted list. Height: 1.8m, weight: 251lbs, hair: bald, says the description alongside the mugshot.

Lawyers acting for Glitnir allege the men created a web of companies that enabled Jóhannesson to circumvent the Icelandic financial regulator and ultimately speak for nearly 40% of Glitnir's shares and 33% of the voting rights. They say he "stacked" Glitnir's board with individuals connected to his other interests and "hand selected" an inexperienced candidate – Lárus Welding – to replace its chief executive.

Indeed, one email uncovered by investigators acknowledges the reality of two men's relationship, with Welding complaining that Jóhannesson treated him "more like a branch manager" than a chief executive.

How much money the Icelandic authorities can realistically hope to claw back is debatable, as estimates of Jóhannesson's personal wealth fall far short of the £1.3bn taken out in loans between April 2007 and February 2008 that is the focus of the legal claim. Baugur collapsed like a house of cards in the credit crunch with any investments that were worth anything seized by the administrators of the defunct Icelandic banks..

Lawyers acting for Glitnir have won a court order to freeze Jóhannesson's assets around the world. He has been liquidating assets and they estimate he made $85m (£57m) from the sale of offshore assets last year. There are also his New York apartments to consider; it is understood Jóhannesson was served with the court papers at his apartment in the exclusive Manhattan enclave of Gramercy Park.

Jóhannesson denies the allegations, arguing that they are politically motivated and a new iteration of a long-running vendetta against him. He was quoted last week as saying "it's just politics" and that he had "proof" to account for his actions.

Glitnir has chosen to sue in New York because central to its case is a $1bn US bond sale in September 2007 where the true state of the bank's finances were obfuscated – with the help, it is claimed, of PwC. "The defendants … used their control of the bank and funds raised in US financial markets to issue massive 'loans' to, and fund a series of equity transactions with, companies Jóhannesson controlled in an effort to stave off their eventual collapse and enhance the value of their publicly traded stock," the court filing alleges.

PwC says its opinion was based on "information and data the accountants had access to at that time".

The case is expected to take more than a year to come to trial.


Viking Raider

  • arny
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Article in Times business section. We live in interesting times.


Wanted Kaupthing bos is in London

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Telegraph financial section today


Wanted' Kaupthing boss is in London - Telegraph article

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http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7721125/...

'Wanted' Kaupthing boss is in London
British police cannot arrest the former Kaupthing boss wanted by Interpol on suspicion of fraud because the warrant is not valid outside Iceland, according to his lawyer.

By Rowena Mason
Published: 6:15AM BST 14 May 2010
British police cannot arrest the former Kaupthing boss wanted by Interpol on suspicion of fraud because the warrant is not valid outside Iceland, according to his lawyer.
British police cannot arrest the former Kaupthing boss wanted by Interpol on suspicion of fraud because the warrant is not valid outside Iceland, according to his lawyer.

Sigurdur Einarsson, the bank's ex-chairman, remains at large in London despite being wanted for questioning over the Icelandic bank's collapse in October 2008.

He denies all accusations of wrongdoing and has hired Ian Burton, a City lawyer with expertise in fighting white-collar crime allegations.

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*
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*
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*
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Mr Einarsson publicly blamed Gordon Brown for Kaupthing's collapse, which cost the British Treasury £2.5bn and has left hundreds of UK savers waiting to be fully compensated. He has now been listed on Interpol's website as "wanted".

Iceland's special prosecutor issued an international alert over Mr Einarsson on Tuesday, describing him as 1.8m tall, 114kg in weight, bald and with blue eyes.

Mr Einarsson lawyer said his client is willing to return to Iceland for questioning on the condition that he is not arrested on arrival. If Icelandic authorities were to have evidence to charge Mr Einarsson with any offence, they could apply to the UK for his extradition.

Kaupthing's former co-chief executive, Hreidar Mar Sigurdsson, was arrested last week on suspicion of falsifying documents and market manipulation. He is still in police custody.


Former Kaupthing Bank boss wanted by Interpol

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The Independent


Interpol hunt former Kauthing Bank chief

  • arny
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  • Thu, 13/05/2010 - 06:36

In today's Telegraph


Interpol Hunt

  • Stunned Mullet
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Just to clarify the headline in the press, Interpol (known to those in law enforcement fondly as "Interplod") does not "hunt" any fugative. Interpol in its various member countries is essentially a mail service within the respective police force. Each issues notices to its members, Red for arrest and blue for notification, relating to persons wanted for offences in their country. Interpol has no cross-border authority. If a member country chooses to act on a notice in the case of an arrest, it is the responsibility of the country that issued the notice to then produce evidence that would be recognised by the country in which a person is detained, and then commence extradition proceedings. That's provided there is an extradition treaty in existence between the two countries.

Having said all that, no doubt he'll surface. As the saying goes, you can run, but you can't hide.


@ arny - Interpol hunt former Kaupthing Bank chief

  • glen07
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http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7714122...

Interpol hunt former Icelandic bank chief Sigurdur Einarsson
Sigurdur Einarsson, the ex-chairman and chief executive of collapsed Icelandic bank Kaupthing, is wanted by Interpol on suspicion of forgery and fraud.

Published: 10:15AM BST 12 May 2010

The former banking executive, who lives in West London, publicly blamed Gordon Brown for Kaupthing’s collapse in October 2008. He has now been listed on the website of the international law enforcement agency as “wanted”.

Iceland’s special prosecutor issued an international arrest warrant for Mr Einarsson yesterday, with a description of him as 1.8m tall, 114kg in weight, bald and with blue eyes.

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*
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*
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*
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*
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*
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According to Icelandic media reports, he has told the prosecutor’s team that he is willing to return to his home country to help with their enquiries on the condition that he is not arrested on arrival.

His former co-chief executive, Hreidar Mar Sigurdsson, was arrested last week on suspicion of falsifying documents and market manipulation. He is still in police custody.

Kaupthing's collapse in October 2008 cost the British Treasury £2.5bn and hundreds of UK savers with its Isle of Man branch are still waiting to be fully compensated. Both he and Mr Einarsson have previously denied any wrongdoing over Kaupthing's collapse.

The bank's actions are under investigation by the UK Serious Fraud Office and a special inquiry team in Iceland over claims of share ramping and big loans to related parties.

Iceland's special prosecutor is looking into more than 20 cases of potential criminal activity connected to Kaupthing and the country's other failed banks.

A special report by Iceland's parliament showed Kaupthing secretly owned almost half of its own shares.

Two-thirds of Kaupthing's clients were based in London, including high-profile investors such as Robert Tchenguiz, Simon Halabi and the Candy Brothers, who all lost substantial sums in the crash.

After Kaupthing's loan book was leaked on to the internet last August, it showed key shareholders and owners were the bank's main borrowers. Mr Tchenguiz, who was a director of Kaupthing's largest shareholder, had the biggest debt of €1.74bn.

Following the disclosure, Mr Sigurdsson defended the bank's practices but made a public apology. "Mistakes were made," he said. "I'm obliged to offer my apologies to the bank's shareholders, lenders and employees. I should have prepared the bank better for the storm that hit it."


Baugur Boss accused of £2bn fraud

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In the Telegraph today.


@ arny- Baugar boss accused of $2 billion fraud

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http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/771659...

Former Baugur boss Jon Asgeir Johannesson accused of $2bn fraud

Jon Asgeir Johannesson, the former billionaire boss of UK retail giant Baugur, allegedly led a conspiracy to siphon $2bn (£1.4bn) out of Iceland's collapsed bank Glitnir, according to a lawsuit filed by its winding-up committee.

By Rowena Mason
Published: 6:00AM BST 13 May 2010

The billionaire investor, who is still a director of House of Fraser and chairman of the Iceland frozen foods chain, was also hit with a global asset freeze order, giving him 48 hours to hand over a list of what he owns.

The case was filed in London, New York and Reykjavik by the board of Glitnir, which collapsed in October 2008 and still owes British local councils £200m. The lawsuit also targets accountancy firm PwC in Iceland, accusing them of "facilitating" the alleged fraud.

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*
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*
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Mr Johannesson, who lives at an unknown location in London, was one of the original "Viking raiders" whose companies led an investment charge on the UK high street, picking up stakes in Debenhams, Woolworths, Iceland Foods, House of Fraser, Hamleys, Karen Millen, Whistles and Marks & Spencer.

The lawsuit alleges: "A cabal of businessmen led by convicted white-collar criminal Jon Asgeir Johannesson, engaged in a sweeping conspiracy to wrest control of Iceland's Glitnir Bank to fill their pockets and prop up their own failing companies.

"The individuals siphoned money out of Glitnir at the worst possible time for the bank . Having depleted Glitnir's cash reserves after April 2007 by engaging in heavy and improper lending to entities that they controlled, the individual defendants left Glitnir heavily exposed to the global credit crunch."

It also accuses Mr Johannesson and his co-defendants of staffing the bank with their "willing accomplices", ignoring the risk committee and concealing their self-dealing with "a blizzard of controlled companies".

Glitnir alleges that bondholders in particular were misled by the Mr Johannesson and his associates over a $1bn issue in September 2007 to New York investors. About 90pc of Glitnir's 9,000 creditors are not from Iceland.

Mr Johannesson could not be reached for comment but he told Icelandic media that: "The distortions and the nonsense in the lawsuit are incredible". He denies any wrongdoing in connection with Glitnir's failure.

The businessman's co-defendants in the case are his wife, Ingibjorg Palmadottir, investor Palmi Haraldsson, Glitnir's former chairman Thorsteinn Jonsson, its former chief executive Larus Welding, and two former directors Jon Sigurdsson and Hannes Smarason.


More from Darling (soon to end I pray)

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  • Sun, 09/05/2010 - 19:41

"I am very, very clear that if there is a proposal to create a stability fund for the euro, that has got to be a matter for the euro-group countries," British Chancellor Alastair Darling told the BBC. "What we can't do is to provide support for the euro. That has got to be for those countries that use the euro."

Is there a sense of deja-vu with regard to the above and our situation? Darling displaying his usual tunnel-vision and not giving a s*** about anyone else despite being a champagne socialist.


Commons support Landsbanki savers

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Article in The Telegraph of interest to us.