Reykjavík Grapevine - 24.06.2005, Side 6

6
Can you explain to a foreigner what
exactly is going on with the banking
scandal regarding privatization
of Icelandic banks? Why were the
foreign and prime ministers and the
cover of Fréttablaðið every day for
a week?
If you want to use the word scandal,
even though we never used that word
in our piece. What we did in those
four pieces is go through the story
of the privatization of the two banks
from when it was first brought up in
1997 in parliament and what actually
happened until they were sold.
The government first tried to
sell Landsbankinn in 2001 and hired
[British Investment Bank] HSBC
to contact some foreign banks and
investment banks to see if they
were interested in buying at least
25 or 33% or up to a 45% share in
Landsbankinn. This happened just
after 9/11, when the world economy
was put on hold for a few months,
and nothing really happened. No one
was really interested.
So early 2002, the deal gets put
on hold. And what has never been
made public until these pieces was
that the privatization committee
was preparing to sell the shares on a
public market on the stock exchange.
And they had made all necessary
preparations until Björgólfur
Guðmundsson of Samson contacted
Prime Minister Davíð Oddsson and
said they were interested in buying
one of the banks. Björgólfur’s son,
Björgólfur Thor, had met someone
at HSBC in London at a party and
found out that they were no longer
trying to sell the banks. The plan had
just been thwarted. So he thought
there were two banks up for grabs,
he might just try to get one of them.
And when Björgólfur Guðmundsson
contacted Davíð Oddsson, Oddsson
spoke to the three other ministers
in the Ministerial Committee on
Privatization.
He did contact the other ministers?
It’s not a case of acting unilaterally?
Yeah, they had a meeting. The four
ministers decided that they were
no longer going to sell the banks to
the public but try to sell to the most
interested public party.
Were the other ministers in the
Independence Party?
The other ministers were Halldór
Ásgrímsson [now Prime Minister
of the Progressive Party], Geir H.
Haarde [Finance Minister of the
Independence Party], and [Minister
of Industry] Valgerður Sverrisdóttir
of the Progressive Party. They
made the political decision on the
privatization. Then there was a
privatization committee that was
supposed to be an independent
committee to make sure the
ministers obeyed the rules and that
kind of thing, but obviously that
didn’t happen.
Dumb it down for me. Two
privatization committees? Is one
like a watchdog?
Yes, the other privatization
committee is made up of people the
ministers appoint.
But if you’re appointed by the
people you’re supposed to check?
No one in the privatization
committee was independent. All
were appointed by government
ministers.
Of course. So did they verify that
this was a good idea?
They thought this was an interesting
offer. So Mr. Oddsson told
Björgólfur Guðmundsson to send the
privatization committee a letter of
interest, which he did, so they could
discuss this letter without being told
to do so by the ministers’ committee.
Still, this offer was interesting. The
money was coming from abroad,
which at this point was important.
The profit from the sale was to pay
down foreign debt, and the deal was
to be done in dollars. That was a big
issue.
But what has never been made
public was that at that point the
decision to sell the bank to the public
was aborted without telling anyone
that it had been the plan. The
ministers decided to sell both of the
banks without even discussing this
with the privatization committee.
What I’ve learned since I
published the feature, and I have
very solid insider information, is
that Davið Oddsson just wanted
to sell Landsbankinn to Björgólfur
Guðmundsson; the Progressive
Party has told me this, someone
very much in the know, a source
close to Halldór Ásgrímsson told
me that Davíð Oddsson wanted to
sell Landsbankinn to Björgólfur,
announcing it afterwards.
Halldór Ásgrímsson and
Valgerður Sverrisdóttir, both
Progressive members, had to force
Oddsson not to do it. Had to force
him to advertise the banks locally.
It’s interesting that despite the
government wanting to sell the
banks to foreign investors, the banks
were never advertised abroad. Only
in Iceland.
That might hurt foreign interest.
So the banks were being sold to
private companies in Iceland?
There were five investment groups
that showed interest. The three
that were short-listed were Samson,
the S-Group and Kaldbakur, an
investment group. Very shortly after
the list was made public, Kaldbakur
and the S-Group were getting
messages from the privatization
committee that they should join
together and put an offer on
Búnaðarbankinn, not Landsbankinn.
From the start it was obvious to
some of the investors that Samson
was going to get Landsbankinn.
Halldór Ásgrímsson himself
coordinated a telephone meeting,
in which he participated, between
S-Group and Kaldbakur to get
them to work together. He has since
admitted that this happened.
But he was essentially saying they
had no chance at Landsbankinn,
the largest bank?
That was after it was announced that
Samson would buy Landsbankinn.
The deal between the government
and Samson took place 31st of
December 2002. In June 2003 S-
Group alone buys Búnaðarbankinn.
Samson, the S-Group and
Kaldbakur were all in the running
for Landsbankinn, all along. The
two that didn’t get Landsbankinn
were going to get Búnaðarbankinn.
Samson had the lowest offer. But
still got it.
Why would that happen? Why
would the lowest bid win? Were the
offers public?
At the time I don’t think the offers
were made public. No one really
knew what the difference was.
But Björgólfur and Samson had
foreign capital.
Yes, that was the explanation, that
Samson had foreign capital. Plus
future plans, future vision. Number
three priority was the price. They did
a scheme where they broke down the
priorities.
It seems like they could have gone
reverse. 1) Price, 2) Vision, 3)
Foreign Capital.
Well the assessment, the claim of
the privatization committee is that
the assessment was made to fit the
purchase.
The privatization committee
openly stated this?
No. All off the record. But they
told me that. And there was a very
intense debate within the committee
when they were deciding on how to
evaluate the categories. It’s stated
in reports from the government
auditing office that the debate was
heated, which resulted in one of
the members of the privatization
committee resigning in protest.
Steingrímur Ári Árason. And that
was a huge blow at the time.
But this is a meeting going on after
the deal has been made?
No, it was when they were deciding
to go to talks with Samson. It was
about how we can explain why we
are dealing with Samson when
their bid is the lowest one. In early
September 2003.
I can’t help thinking in the back of
my head about the recent news that
all parties opened their books to
show who donates to them except
the Independence Party.
Yeah.
If they opened their books, would
we see a significant contribution
from Iceland’s richest man?
I don’t know. There is a side
story to this about Landsbankinn.
Landsbankinn and the S-Group each
owned 50% share in the insurance
group VÍS. The Progressive Party,
which has significant ties to the S-
Group, was not going to allow half
its share in VÍS to go to Samson. So
there was a period just after Samson
was chosen that the S-Group calls
the Six Day War over VÍS. Both
Halldór Ásgrímsson and Davið
Oddsson took part in this war over
VÍS. I’ve been told that Ásgrímsson
threatened to abort the privatization
process if VÍS was sold with
Landsbankinn, which would result in
Davið Oddsson having to break up
the government. The result was that
the S-Group bought the shares from
Landsbankinn.
Why fight over a smaller asset like
an insurance company?
The S-Group needed VÍS to have
the credit to buy Búnaðarbankinn.
Okay, so where are the other
problems?
What’s now being investigated by
the government auditor is Halldór
Ásgrímsson’s direct involvement
in the S-Group. He and his family
own a significant share in a fishing
company, which owns a share in
Hesteyri, which owns a share in
Ker, which is the main investor in
Búnaðarbankinn.
Not until now did the main
auditor think it might be a good
idea to see if Halldór should have
abstained from the deal because of
his direct ownership of one of the
investment groups, at least until the
12th of November 2002 when his
company sold its share of Ker in
exchange for VÍS, which is still an
investor in Búnaðarbankinn.
No one until now has seen a
reason to question this connection.
Ongoing discussion within the
opposition. It has been dismissed as
rumour.
How can that be dismissed? Isn’t it
in the numbers?
He claims it’s because people are out
to get him. The auditor will release
a report soon that says whether
Ásgrímsson should have withdrawn
himself due to conflict of interest.
The auditor has already written two
reports on these sales without having
found anything controversial.
Interview with Sigríður Dögg Auðunsdóttir
Bart Cameron Interviews Sigríður Dögg Auðunsdóttir
In the first week of June, daily newspaper Fréttablaðið ran a four-part front-page series
explaining the many improprieties in the privatisation of the national banks of Iceland. With
blacked out profile photos of the Prime Minister and Foreign Minister, the story by Sigríður
Dögg Auðunsdóttir captured the imagination of the public. A month later, little has come of the
series: an investigation into accusations by the government has turned up a not guilty statement,
though with little explanation. The Grapevine sat down with the investigative journalist who
took on the government, the richest man in Iceland, and the corporate establishment, and asked
for a play-by-play on a piece of writing that will be in the history books.
H
.S
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