Wernerson brothers embezzlement case

This website reported that the Wernerson brothers Karl and Steingrímur are under investigation for serious financial fraud charges.

In this case from the Glitnir bank oversee committee, who have admitted that they had to inject around ten billion ISK into the company. The special prosecutor is investigating weather investments from the mother company Milestone where diverted into Sjóvá in the last two years are.  The case in question is about the illegal use of insurance funds. There are three main issues at hand, the breach of private corporate law, breach of insurance practice law and general embezzlement and fraud laws.mileston wernersons

This last paragraph was written a few weeks ago. After it was published here the government had to put 16 billion ISK instead of the ten billion ISK reported at first. This was done to save the Sjóvá company and according to the government to save the insurance funds. Other insurance companies claimed at the time that they could take over the responsibility of Sjóvá. The government decided to pour 16 billion ISK into the doomed company against all sensible opinions.

It turns out to be a political decision not a financial one. Sjóvá could have gone bankrupt without a serious damage to the people who are insured with them. Many in the corporate world are baffled by this actions of the government.

Then it comes to light that the Wernerson brothers paid themselves 19 billion ISK in dividend payments. Usually dividend is payed as a part of good profits to the owners as a reward for doing well in business. But in this case 19 billion ISK taken from a company in deep trouble, so much that the government has to pay insane ammounts of money into the company to save it from total bankruptcy. Even the government sponsored amount does not even fill the dividend gap.

This would called theft, fraud, embezzlement or worse in most cases. The Wernerson brothers are under investigation but the amounts they drained from the company Sjóvá via Milestone. Karl Wernerson and Milestone are heavily connected to FL Group, Hannes Smárason and Jón Ásgeir Jóhannesson the ex Baugur owner.

This is all linked, and that is the main problem facing Iceland, the cross owenership of companies.


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