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Sale of Icelandic Bank to Be Investigated?

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Sale of Icelandic Bank to Be Investigated?

Alþingi, the Icelandic parliament

Alþingi, the Icelandic parliament. Photo: Páll Kjartansson.

Finance Minister Bjarni Benediktsson wants an investigation of the role of the German bank Hauck & Aufhäuser in the purchase of the government’s stake in Búnaðarbanki bank in 2003, RÚV reports. In light of new information regarding the purchase, there is willingness in parliament to investigate the issue.

Bjarni stated, “In fact, I don’t think it can have large consequences other that we may be able to draw lessons from the possibility that authorities may have made decisions without having a comprehensive overview [of the issue] or all necessary information available at hand. But certainly, such cases must be examined and all available information exposed.”

The new information supports the suspicion that Icelandic authorities were deceived regarding the purchase, RÚV reports.

Yesterday, the Alþingi ombudsman presented a letter to the Alþingi Constitutional and Supervisory Committee wherein he states he has received new information regarding the involvement of the German bank in the purchase. He believes it is cause for an investigation.

On January 16, 2003, a purchase agreement was signed between the Icelandic state and the so-called S-Group regarding the sale of the state’s almost 50 percent stake in Búnaðarbanki bank. The agreement was signed by Finance Minister Geir Haarde, Minister of Industry and Commerce Valgerður Sverrisdóttir, Ólafur Ólafsson from Samskip and one of the leaders of the S-Group, and by a representative from the German bank Hauck & Aufhäuser, who was presented as taking part in the purchase.

The role of the German bank has remained unclear, and there have been doubts that its role in the purchase was as presented. The S-Group was made up of the pension fund Samvinnulífeyrissjóðurinn, the insurance companies Vátryggingafélag Íslands and Samvinnutryggingar, and the company Egla hf. The German bank was said to own a 50 percent stake in Egla hf.

Valgerður Sverrisdóttir, who was minister of industry and commerce at the time of the purchase, believes the information, which remains confidential, to suggest the German bank was a front for investors in Iceland.

In 2010, Valgerður told the news analysis program Kastljós that there were flaws in the process of privatizing the Icelandic banks. Only a day before Búnaðarbanki bank was sold was she informed which foreign bank was the purchaser. It turned out not to be the large foreign bank that had been spoken of, but a small German bank. The minister and the project committee on privatization were under the impression that a solid, French bank would be the purchaser.

RÚV asked if Valgerður was to blame. She responded, “We’ll just have to see. The thing is we had a foreign consulting firm advising us regarding this privatization, and that was very costly. And we trusted those foreign consultants from HSBC, probably way too well. Because it turns out regarding Búnaðarbankinn bank and Landsbankinn bank that things are not right.”

Valgerður admits that she became suspicious when she realized that the bank was not the French bank Société Générale, as she had assumed, but a small German bank.

“Yes, it didn’t seem quite right to me. But, as I say, that company we trusted saw no reason to back out of the sale.”

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