Landsbanki solvency committee

The solvency committees of the banks are under scrutiny as they are accused of being corrupt.

First is the Landsbanki solvency committee. FME (The Financial Supervisory Authority) is now run by Gunnar Andersen who seems to be cleaning house so to speak. He says that the investigations are taking far to long and is starting to show that he is up to the job.  Two weeks ago he fired Sigurjón Geirsson and Ársæll Hafsteinsson from the solvency committee and said that they had no longer use for their talents. Ársæll Hafsteinsson got 6 million ISK a month for his work in the committee, an insane monthly wage.

The Landsbanki solvency committee hired them both back less than two weeks after they got the sack from the FMA. They got hired in as consultants for the committee by request from the stakeholders who are dealing with the committee. This excuse by Páll Benediktsson the spokesman for the committee is dubious at best. The stakeholders got very angry according to him when the committee was changed. It raises questions on who is in charge of the committee, the chairman or the stakeholders?

If the stakeholders got angry that is because they had been promised a special deal by those fired, or they had them in their pockets. The stakeholders have no reason to be angry when dealing with a committee like this unless they have personal and financial interest in certain individuals. This is generally called bribes or corruption.

Ársæll Hafsteinsson has a very dark past when it comes to finances and work for the banks. In 2003 he was guilty of back secrecy breach and took part in illegal business affairs that led to an FMA ruling that Búnarðarbanki (a bank that is no longer in existence, was merged with Kaupthing a few years ago) had broken the law. After that he was hired to Landsbanki as the head of the legal department, and as the director there he was responsible for all outgoing loans. He seems to have failed (see Icesave for example and almost all the loans from Landsbanki to its owners, and others without collateral). Ársæll Hafsteinsson was very close to Sigurjón Þ. Árnasona, Halldór J. Kristjánsson, Kjartan Gunnarsson and Björgólfur Thor and Björgólfur Sr.

His reward for leaking inside information from Búnaðarbanki to Björgólfur Sr landed him the j0b at Landsbanki.

It is amazing that he was allowed to be on the committee in the first place but to be hired again after being fired by the FME is unbelievable.  But this is not the only case. Six of the fifteen individuals in the solvency committees have worked for the banks in the past.

It now seems that Magnús Kristinsson (fish industry mogul) the owner of Gnúpur investment company that went bankrupt in 2007, the first major company to go bankrupt and the beginning of the end for similar companies, had his debts written off from Landsbanki solvency committee. The amount: 50 billion ISK. He has very valuable fishing quota that has not been taken from him to sell or to pay debts with over longer period of time. He simply gets his massive loans written off and then keeps on doing his thing, again.

UPDATE: The story (the paragraph above) about Magnús Kristinsson loans has been refuted by Páll Benediktsson, who is mentioned above. It remains to be seen who is correct in this case.

The story has it that the Landsbanki committee is the most enthusiastic in writing off debts, a lot from the very badly managed fishing industry in Iceland. The debts written off for Magnus Kristinsson is the loan he got when he bought the Toyota dealership in Iceland four years ago, and he was shareholder in Landsbanki when the bank fell. Magnús was not personally reliable for the debts.

Lárentínus Kristjánsson is the committee chairman, a lawyer who had the audacity to give the job of collecting a debt by Exista (around 25 billion ISK) to his own legal firm for the fee of 250 million ISK (insane). Lárentínus is the man who said that the “so called crash”.

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