Reykjavík Grapevine - 24.06.2005, Side 8

Interview continued from page 6
How is that possible?
The reports never even said that
the privatization committee had
prepared to sell the banks to the
public.
So where’d you get that
information?
From the privatization committee.
Someone told me accidentally and I
had it confirmed.
Any idea on how much could have
been made on the stock market?
The market value was higher per
share than what Samson got it for.
He bought it for 3.70 a share.
Maybe the public didn’t have the
money or interest in stocks?
In early 2002, they sold 25% to the
public and it went very well.
So they could have made money on
the market. I’m curious, you said
Samson was the third lowest. What
were the other offers?
4.10 per share from the S-Group
and 4.16 from Kaldbakur. Samson
offered 3.90 which totalled 12.3
billion, but they got a 700 million
ISK write off. 11.6 billion was paid.
So Samson got a remarkable deal?
Yes, a good deal less than market
value. And nobody else would have
received the 700 million ISK write
off.
And then the next bank?
Then the S-Group had the highest
offer and bought Búnaðarbankinn
for about 11.2 billion.
Hey, all right. Sounds legitimate.
But an interesting thing there is the
involvement of a foreign investor
Hauck & Aufhauser, which was their
main asset and part of the reason
they got the deal.
At the time S-Group went into
negotiations, no one knew who the
foreign investor was, including the
privatization committee. The foreign
investor refused to make himself
known. So they arranged a deal
the HSBC to research the investor
without revealing the name.
I have been denied access to the
HSBC official reports, but I know
that the privatization committee
got a report that stated there was
an international investment group,
which sounds an awful lot like
the Société Générale, the French
investment bank. Some within
the privatization committee have
claimed the S-Group gave HSBC
the name of Société Générale despite
the fact that they hadn’t secured an
investor. And not until the deal was
signed in mid-January 2003 was the
name made public, and it was Hauck
& Aufhauser, a small private bank in
Germany.
So international investment
group wouldn’t be an accurate
description?
S-Group’s key to get
Búnaðarbankinn was to have a
foreign investor and some people
say that it wasn’t until a few days
before the deal was signed that
they managed to secure Hauck &
Aufhauser. In the contract with
the government it says none of the
buyers can sell any of the shares
within the next 21 months. After
13 months Hauck & Aufhauser
sold half of their shares to Ker. And
Valgerður Sverrisdóttir, the Minister
of Industry, allowed it. But that was
not made public.
Another interesting thing is that
when Samson got the books, was
given access to the banks after they
bought Landsbankinn, one of the
first things that they noticed was a
6 to 8 billion krónur loan to the S-
Group. Obviously given when the
government still owned the bank.
So half of Búnaðarbankinn was paid
for with a loan the government gave
the S-Group with a very competitive
rates of 1.4 over liber.
S-Group paid in two payments:
the first payment was 6.7 billion,
about the same as the loan. They
merged with Kaupthing when the
valuation of the bank was up 9
billion from when it was bought.
They bought the bank for 11
billion and it was valued at 20
billion months later? Well, I just
can’t see what the problem could
be. Buy a bank with a loan from
the government, when you are
the government. Get a bank that
is severely undervalued. Good
business.
Yes, well they eventually paid the
rest off and the loan off. But they
were worth a lot more at the end of
2003.
Okay. So are we caught up? What
are the errors?
The whole privatisation wasn’t
transparent enough. It leaves too
many unanswered questions. Such
as why weren’t the banks advertised
abroad? Why was no one ever
told about the possibility of public
sale? Why was the price the third
most important factor in selling
Landsbankinn? Why was Halldór
Ásgrímsson interfering? Why didn’t
Ásgrímsson make it clear from the
start that he and his family were
involved in the S-Group? And why
was all the information on the deal
kept secret? This happened three
years ago. I think we have the right
to know.
Let’s go back to the investigation,
then. How did you get at this
information without banking or
government documents?
It’s all from sources; I can’t give you
names but they’re very close to the
process.
How many did you have to use for
this story?
Twenty. And all of the information
was double and triple checked. There
were lots of stories that I couldn’t get
verified that weren’t in the reporting.
What time commitment did you
spend on this?
About five weeks doing nothing else.
What happens if people challenge
you for the sources?
They won’t. But already when the
first piece came out I got phone calls
from people close to Ásgrímsson
and Oddsson saying they were
searching for who the sources were.
All the sources asked me to change
the way they phrased words, their
language, to make sure they couldn’t
be recognized. Which I don’t think
is positive. Why can’t people just say
what happened?
On the other hand, you have to
use people off the record, because
these people have to do business with
each other again. I have to stress
though that all of the information in
the article was verified and double
and triple checked.
Do you think your reporting will
change government policies?
The result is primarily that now
people know what happened. We
haven’t judged anyone. I just made
sure I told the story fact by fact in
chronological order by the people
involved. What happens after is for
politicians and the public to decide.
But the whole discussion
about the banks has been going
on for three years. It’s common
knowledge that people close
to the Independence Party got
Landsbankinn and that people
close to the Progressive Party got
Búnaðarbankinn.
How can people accept this?
I don’t want to criticize the auditor,
but he’s already done two reports
without saying anything. What are
we to do? I mean parliament can’t
do anything, I mean the opposition
parties have been trying but they’ve
been criticized by the government for
doing so.
But now Síminn [the national
phone company] is being sold.
The discussion of the banking
privatization for the last three years
will at least make sure that the sale of
Síminn is more transparent.
Fool me twice, right?
No.
What has been the reaction to you
as a reporter? This is a big story, one
of the biggest to come out in local
journalism?
My phone didn’t stop for three
days. The readers were calling and
thanking me for making this public
information and telling a story and
documenting instead of just rumours.
Obviously the government
immediately started diminishing
both the story and me. From
both parties. People came and did
interviews on television and radio,
talking about how badly this was
researched and written. But it was
completely untrue. One was even
forced to apologize after a really
harsh unfounded criticism on
television, Björn Ingihrafnsson, the
assistant to the Prime Minister.
Is there any precedent for this kind
of investigative piece in Icelandic
journalism?
Not on this scale. Agnes
Ragnardóttir at Morgunblaðið wrote
in 2003 a story about the battle
behind Íslandsbanki, but that was
more about the business sector. This
was about the government.
Was it a difficulty that this story
came out in Fréttablaðið?
To the majority of people it doesn’t
matter where it was published, only
to those who dislike Fréttablaðið.
No one can ever claim that the piece
would have been any different if it
had been printed in Morgunblaðið,
because there was nothing in
there that wasn’t correct. But
government spokespeople were very
quick to point out the connection
between Fréttablaðið and the Social
Democrats, saying we were just
trying to jumpstart their campaign.
They even pointed out how quickly
[Social Democratic Chairperson]
Ingibjörg Sólrún reacted to the piece,
though no one mentioned how
quickly everyone else did as well.
This is a tactic you were familiar
with, I gather?
In early January, when I was covering
Iraq, criticizing the government, they
started a story that the new CEO
of [Fréttablaðið parent company]
365 was writing for me. Valgerður
Sverrisdóttir wrote on her website
a piece about how I was a member
of the Social Democrats and I was
bullying the Progressive Party. But
still, I couldn’t write it myself, so
they claimed [365 CEO] Gunnar
Smári wrote it.
The sad thing is these campaigns
seem to work. The government can
always control how the discussion
develops.
Yes, it seems that the opposition
here is more reactive than anything.
Day one, the Social Democrats and
Ingibjörg Sólrún said they would
look into the investigation. Then the
rumours started that Fréttablaðið
was kickstarting the Social Democrat
campaign, and I don’t think I’ve
heard a word from her since about
this.
Interview by Bart Cameron