Former Mayor of Reykjavík Vilhjálmur Þ. Vilhjálmsson announced to the board of Eir, which runs a nursing home and safety apartments for the elderly in the capital, yesterday that he will step down as chair due to its difficult financial situation: Eir owes ISK 8 billion (USD 62 million, EUR 49 million) and is technically bankrupt.

Calls had already been made for Vilhjálmur’s resignation but until yesterday he stated that he would stay on as chair. In a statement he explains, “It is my private decision. I realize that this matter is difficult and what is most important to me is to secure future interests [of Eir],” as Fréttablaðið reports.

“After careful consideration my estimate is that it is important to rebuild trust towards creditors and clients. The board is responsible and I believe I’m shouldering that responsibility with my decision,” Vilhjálmur concludes.

It has been maintained that Vilhjálmur kept the company’s financial situation secret from the board while he served as managing director, a position from which he resigned early this year and became the board’s chairman instead.

Among his critics is Björn Valur Gíslason, chairman of the Icelandic parliament’s budget committee, who wrote on his blog that the operation of Eir is not only an example of corruption but perhaps even “organized crime.”

Björn reasoned that Eir had been managed by people who knew where its finances were going yet tricked senior citizens to invest high amounts, often their life savings, in apartments in the home—an investment that didn’t exist—who may now lose everything.

The MP said it would be perfectly reasonable for people to consider filing charges against the home’s directors to the police.

Vilhjálmur has denied all accusations.

Vice-chair Magnús L. Sveinsson will now serve as chair. The board will hold a meeting in one week to discuss Eir’s position and how it’s financial problems will be handled.

ESA