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Prime Minister Bjarni Sold Assets Hours Before 2008 Collapse

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Prime Minister Bjarni Sold Assets Hours Before 2008 Collapse

Minister of Finance Bjarni Benediktsson speaking at the Independence Party general meeting in 2013.

Photo: Geir Ólafsson.

Current Prime Minister of Iceland Bjarni Benediktsson sold millions of ISK in assets at Glitnir bank before the 2008 banking collapse, The Guardian reports. The assets were in the bank’s Sjóður 9 investment fund, which invested mainly in Icelandic bonds. Bjarni's assets in the fund were particularly vulnerable as a majority of Sjóður 9's investments were tied to securities of companies affiliated with Glitnir or which had ownership in the bank. Bjarni sold almost all of his assets in the fund days and hours before an emergency law took effect placing Glitnir and other failed financial institutions under state control.

Newly leaked documents suggest Bjarni had insider information on Glitnir’s worsening financial situation. The documents show Bjarni had a close relationship with executives at Glitnir, pointing to a conflict of interest between his role as an MP at the time and as a client of the bank.

Leaked emails reveal personal links between Bjarni and Einar Örn Ólafsson, head of Glitnir’s investment banking division. The two travelled together and Einar Örn was heavily involved in Bjarni’s campaign for the Icelandic election in 2007. On September 28, Bjarni was invited by the bank’s chairman to a meeting discussing the bank’s worsening situation. He sold his assets in Sjóður 9 only four days later.

Another email shows Bjarni and Glitnir CEO Lárus Welding met on February 19th, 2008, two days before Bjarni sold nearly all his shares in the bank for ISK 119 million (USD 1.4 million/EUR 971,000 at the time).

Last year, Bjarni was asked whether he had sold assets from the fund just before the bank collapse. He responded, “I had something in Sjóður 9 at one time, but I don’t remember it being anything that mattered”. The leaked documents show he had ISK 165 million (USD 2 million/EUR 1.43 million at the time) invested in the fund. Bjarni told the Guardian he had sold “most of my units but not all” in the fund. He did not, however, give figures, and emphasized that despite thorough investigation, he had never been found at fault.

Bjarni has previously faced criticism for his personal financial dealings: his name appeared in the Panama Papers in connection with Falson & Co, a company based in the Seychelles of which Bjarni previously owned a third. He had not declared his stake in the company in the register of parliamentary interests, later saying he had thought it was based in Luxembourg. The Panama Papers named over 170 Icelanders and Icelandic companies, leading to mass protests and the resignation of then Prime Minister Sigmundur Davíð Gunnlaugsson, whose family was among those accused of sheltering money offshore.

Bjarni’s family is one of the richest and most influential in Iceland. The documents also confirm that his father and uncle sold their assets at Glitnir days before the collapse.

Though Bjarni denies any wrongdoing and the sale of his assets does not seem to break any laws, the revelation reflects poorly on the prime minister, who is facing an election later this month. The coalition he led collapsed following a scandal involving his father and a convicted paedophile.

This investigation was a collaborative effort between Ingi Freyr Vilhjálmsson of Stundin, Jóhannes Kr. Kristjánsson of Reykjavík Media, and the Guardian.

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