Magma Energy and the strange political reactions

Magma Energy bought the Icelandic geothermal energy company HS Orka (HS Energy). This was documented a year ago on this website. After that there has been an intense discussion in the blog-sphere and some radio stations. Some of the old media guard has reported this, but not gone into any serious details.

After the initial buy, Magma has now bought over 95% of the company much to the anger of most people, but to the immense joy of the city council of Reykjanesbær, and some of the people around that group of political “think-alikes” that mostly come from the right wing of the Independence party. The whole case has the massive stench of sleaze, corruption and the desperate will to give the company away.

The strange thing is that Orkuveitan, Iceland’s main energy company is lending Magma Energy a bullet loan for 9 billion ISK for 7 years with shares themselves as collateral. In short: Magma Energy gets control of the company, they only have to pay a little amount of money, and then get the rest as an interest free loan from Orkuveitan that they must pay in one go after 7 years.

The reason the politicians are so desperate to sell the company and the rights to the geothermal energy for 95 years, is all the foreign money that will pour into the country. Was is not for the fact that 70% of the whole amount is a local loan from a company that is basically bankrupt. One can only wander why this obvious madness of a deal is being done.

Would Norway sell the drilling rights and profits of its oil to a Canadian company for 95 years? Or would England do so? I don’t think so. The hot water and indeed the fresh water is Iceland’s oil. The madness is to sell the natural energy resources to shady companies for pocket change. How does that benefit the nation or the local community?

The politicians are supposed to work for us, that is why they are “public servants”, but after this travesty, one can only wander what the motivations are.

Legal issues:

EU regulation states that non EU states cannot invest in energy companies inside the EU or EFTA. To avoid this Magma Energy started a shelf company in Sweden called Magma Energy Sweden AB.

Icelandic laws also prohibit non EU corporations to invest in the energy industry. The investing company has to have a EU address, but in this case the company is Canadian.

This was proven when an Icelandic blogger who lives in Gothenburg Sweden decided to pay the company a visit. The claims had been that this was a genuine company with some operation in Sweden, but then Teitur Atlason went to the MES office and found a law firm called Glimstedt Göteborg AB. It turns out that this is a company started for the single purpose of getting around the laws and regulations, both local and international to gain ownership of the Icelandic energy resources.

Political reactions:

After a year of information flow, statements, facts and massive criticism about this imminent deal, it was struck, and Magma gained HS Orka and it’s geothermal rights for 95 years. The day after it was signed, Svandís Svavarsdóttir the minister for the Environment blasted that this was an outrage and became angry in the media that the energy rights got sold. The minister of Industry claimed that this was a childish outburst. This was convenient for Svandís Svavarsdóttir to gain popularity by being angry, but only after the deal was done.

After the Swedish shelf company was officially revealed a few members of parliament for the Left Green party got very angry at the media (TV stations mostly) for not exploring this and their refusal to discuss and report this properly. It is too easy to blame the media for not doing the jobs of parliament members and other politicians. This is in that sense, big news, but something that has been known for a long time.

The Parliamentary Committee of Foreign Investments consists of politicians who are representative of all the parties in parliament. Most of them are not members of parliament but put in this committee by their friends in the parties. Their credibility is questioned, since none of them has any expertise, education or any relevant qualification to be deciding such important legal issues. They got 3 separate legal expert views that all agreed that the deal was legal, but still the committee was split in two, 3-2.

Unnur G. Kristjánsdóttir, clothing designer and a arts teacher, sits for the Social Democratic Alliance. Chairman

Adolf H. Berndsen, student and a local county councilman from the northern rural area of Skagaströnd, sits for the Independence party

Sigurður Hannesson, mathematician and a former marketing expert for Straumur investment bank. Sits for the Progressive party and a prolific member of the InDefence group.

Those people do not have the expertise to decide weather to sell our energy resources for the next 100 years.

All excuses about lack of knowledge that the politicians are coming up with, should have been their duty to find out, as members of parliament.

The very strange part is the inherent will of the Social Democratic Alliance (and other parties as well) to push this through, when ideologically this should be forbidden compared to the leftist ideology of the SDA manifesto and policy. Ólína Þorvarðardóttir and Mörður Árnason, both members of parliament at some point and prolific propaganda distributors for the SDA started defending this in the blog-sphere simultaneously. That along side all the talking down of any legal wrong doings and a massive campaign by the “voices” out there in blog land and short articles in newspapers, smell of a party line being enforced.

Again one can only speculate why the SDA and others have this will to sell and to push this through, directly against the will of the people and directly against the best interests of Iceland and the local communities that HS Orka serves.

One article claims this to be the mess of the parliament and the political parties, but it seems more than just mistakes and mess, it seems deliberate, organized and previously arranged.

The final questions are: Why have all the politicians from the Left Green and those who are against this only been angry at and in the media? Why have they not put any legislative proposals, or used their power as MP’s to actually change this, or even reverse this?

The answers are pretty simple, there is no will, mostly caused by corruption. What forms of corruption is hard to say, but most likely personal or political payments of some sort. That is how business is done in Iceland.