Akureyri and Egilsstaðir Airports to be Expanded

Akureyri in winter

The expansion of Akureyri and Egilsstaðir airports in North Iceland and East Iceland respectively will be part of the government’s public investment measures intended to mitigate the economic impact of the COVID-19 pandemic. Of the ISK 20 billion ($142m/€132m) set aside for infrastructure, ISK 6 billion ($43 million/€39.1 million) will be invested in transportation infrastructure.

The construction at both airports is scheduled to start this year, according to a notice from the government of Iceland. At the Akureyri Airport, the terminal will be expanded, as will the tarmac, adding longevity to the airport and supporting tourism in the region. The construction at Egilsstaðir airport will increase operational security and safety at the site, as well as creating space to accommodate up to 20 large jets in the case of closures at Keflavík International Airport.

Minister of Transport Sigurður Ingi Jóhannsson stated that construction of roads, airports, and ports was an important step toward preparing the country for tourism once the COVID-19 epidemic has passed. “Despite the collapse of the tourism industry, there is an urgent need to build up infrastructure and airports are one of the key components of the investment initiative.”

The construction at both airports is intended to facilitate international flights as well. As Sigurður Ingi added in a Facebook post about the initiative: “In the long run, the country’s competitiveness will depend greatly on international flight connections and more gateways into the country have been on the government’s agenda.”

Local government in Akureyri has long been lobbying for expansion to the airport in order to make it more viable for international flights. Akureyri Mayor Ásthildur Sturludóttir celebrated the announcement. “We are extremely pleased that the Transport Minister and the government as a whole have looked at and listened to our wishes.”

Tracking App May Assist Iceland With Coronavirus Contact Tracing

Icelandic authorities are creating an app to help contact trace coronavirus cases, RÚV reports. Residents of the country would be asked to install the app on their phones, and if they contract coronavirus, the data it collects could be used to help identify others they came into contact with. The app is expected to launch next week.

The app collects data about other phones in the area, making it easier to trace whom an individual was in contact with leading up to their coronavirus diagnosis. The initiative is a joint project of the Department of Civil Protection and Emergency Management and the Directorate of Health.

Víðir Reynisson, Chief Superintendent of the National Police Commissioner’s Office says the goal of the app is to speed up the contact tracing process. It will not replace the contact tracing team, which will continue to speak to those infected and work to map their contact with others around them.

Users control data access

Víðir says the data collected by the app will be in the ownership of the Directorate of Health and the same data protection rules will apply to it as to other databases in the health sector. App users will need to grant permission for the data collection upon downloading the app and then grant separate permission to healthcare authorities to access the data if an infection comes up. The data will be deleted once contact tracing is complete. Similar software has been used in South Korea and Singapore.

Hólmar Örn Finsson, a data protection representative at the Directorate of Health, told Vísir that the public does not have to worry that their data will be misused. “I just want to point out that we have got security experts with us in this. That’s why we based it on this double permission. You agree to download the app yourself. And if we need the data from you, you also agree to share it. Only then is it shared with the Department of Civil Protection’s contact tracing team.” Hólmar explains that the data will only be stored for a short time, likely just a couple of weeks. “No one should be able to access this data any more than any other data on your phone.”

Contact tracing has slowed spread of COVID-19

Effective contact tracing and quarantine of those who have been at risk of infection have proven to be effective tools in slowing the spread of COVIC-19 in Iceland. Nearly half of those who have been confirmed with the virus, or 49%, were already in quarantine when their infection was confirmed.

Rabbit Deaths in Reykjavík Caused by Infectious Disease

rabbit Iceland

Rabbit haemorrhagic disease appears to be the cause of widespread death among rabbits in Elliðárdalur valley in Reykjavík. It is the first time the disease is detected in Iceland outside of a rabbit farm or home. The virus that causes the disease is not transmissible to humans or other animals.

After the rabbit deaths were noticed in Elliðárdalur, the Food and Veterinary Authority sent rabbit carcasses from the valley to the Institute for Experimental Pathology at the University of Iceland (Keldur) for study. Preliminary results indicate rabbit haemorrhagic disease to be the cause of the fatalities. The virus was found in Iceland previously in 2002, but at that time infections were limited to rabbit farms and pet rabbits, and response measures succeeded in wiping it out.

Vaccine will be ordered

Rabbit Haemorrhagic Disease is a highly infectious and often fatal disease that affects both domestic and wild rabbits. The rabbits that live in Icelandic nature are classified as semi-wild animals. There are three known types of the virus, RHDV1, RHDV1a, and RHDV2. Mortality rates differ greatly between the strains, ranging from as low as 5% to as high as 90%. Samples from Elliðárdalur have been sent abroad to determine which type is spreading among rabbits in the area. Results are expected next week, and once they arrive, the appropriate vaccine will be ordered to the country.

Directions for rabbit owners

The virus spreads through contact between animals. Although humans cannot contract the disease, they can carry the virus in their hair, clothes, and shoes and thus spread it between animals. In order to kill the virus on clothes, they must be washed at a temperature over 50°C (122°F) for longer than one hour. A 10% bleach solution works to disinfect surfaces that may house the virus.

In order to protect their animals, pet rabbit owners are directed to avoid visiting natural areas where rabbits are known to live and take care to ensure their pets avoid contact with other animals and people who could potentially be carriers of the virus.

Municipal workers are conducting daily monitoring of areas where rabbits are known to live. Rabbits that are visibly ill are captured and taken to a veterinarian.

Suspect Payments Appear to Shed Light on GAMMA Downturn

Gamma capital management

New information appears to shed light on the downturn of investment fund GAMMA, according to investigative news programme Kveikur. Personal payments to Pétur Hannesson, CEO of Upphaf (owned by GAMMA subsidiary GAMMA: Novus) may have been the impetus for unfavourable deals with contractors, leading to losses that weren’t discovered until after Pétur had left the company, and which were ultimately shouldered by insurance companies and pension funds. In just over one year, GAMMA: Novus’s worth went from ISK 5.2 billion ($37 million/€34.2 million) to just ISK 42 million ($300,000/€277,000).

VHE and Upphaf

The service and manufacturing company VHE – hired to complete the lion’s share of construction projects for the property development company Upphaf – paid a total ISK 58 million ($413,000/€382,000) to Upphaf CEO Pétur Hannesson between 2015 and 2019. The payments were made directly to Pétur and companies in his name. At the same time, Upphaf paid VHE and its subcontractors more than ISK 7 billion ($50 million/€46.1 million) for a project negotiated directly with VHE, without tender.

The Sale of GAMMA

As reported by Kveikur, GAMMA (GAM Management) was established by two former employees of the Kaupþing bank during the summer of 2008, months prior to the financial crisis (GAMMA managed assets for pension funds, insurance companies, financial institutions, companies, and individuals). GAMMA survived the financial crisis, and, in 2011, the company began turning its attention to investments in real estate (the company attracted controversy, being accused of driving up rent and real estate prices).

In 2018, following a decline in GAMMA’s operations – during which time many leading figures left the company – GAMMA’s owners began searching for a potential buyer. Kvika bank showed interested, eventually assuming control of GAMMA’s entire outstanding share capital in late 2018. The initial buying price was set for ISK 3.75 billion ($26.7 million/€24.7 million), but was eventually settled at ISK 2.9 billion ($20.6 million/€19.1 million) when the agreement was finalised.

After Kvika Bank acquired GAMMA, it reevaluated GAMMA: Novus’ assets, concluding that the fund’s sole asset – the aforementioned Upphaf – was worth significantly less than previously thought, or approximately ISK 42 million ($299,000/€277,000). As it was initially valued at ISK 5.2 billion ($37 million/€34.2 million) GAMMA: Novus’ value decreased in value by 99%.

As noted in a public statement on September 30, 2019:

“It has transpired that the position of two alternative investment funds managed by GAMMA, GAMMA: Novus and GAMMA: Anglia, is considerably worse than had previously been estimated. The rate of the funds has been lowered to reflect this.”

A single-sheet publication distributed to equity certificate holders on that same month (September 2019) stated that the “actual development” of the project had been significantly overrated. As Kvika explained to investors, the fund’s devaluation could partly be traced to overvalued real estate. Furthermore, almost two billion had been lost to exorbitant loans, and another two billion disappeared when it was discovered that the worth of GAMMA: Novus’ assets had been overestimated (“assertions regarding how much real estate had been constructed turned out to be false”).

Upon this discovery, Kvika replaced the former managers of the fund, notified the Financial Supervisory Authority, and hired the accounting firm Grant Thornton as an impartial agent to investigate. Among other things, Kvika probed whether payments had been made from Upphaf to companies owned by former CEO Pétur Hannesson.

Upphaf, a property development company owned by GAMMA: Novus

Grant Thornton’s investigation centred on the property development company Upphaf, whose sole ownership was in the hands of GAMMA: Novus (a subsidiary of GAMMA Capital Management). GAMMA: Novus’ equity amounted to ISK 4.8 billion ($34.2 million/€31.6 million) in mid-2018. During the spring of 2019, GAMMA: Novus issued bonds to finance construction projects and raised ISK 2.7 billion ($19.2 million/€17.8 million) at high interest rates (approximately 16%).

An extensive business relationship

As reported by Kveikur yesterday, after Pétur Hannesson had assumed the role of CEO, Upphaf entered into an extensive business relationship with VHE, a heavily leveraged contracting company, struggling with illiquidity, and with little experience in large-scale real estate projects. Contracts awarded to VHE, without competitive bids, were such that Upphaf bore sole responsibility for the projects (and VHE none).

Reporters with Kveikur maintain that they are in possession of documents showing payments amounting to a total of ISK 58 million ($413,000/€382,000) from Pétur Hannesson, and companies in his name, at the same time that he was awarding contracts of upwards of ISK 7 billion ($49.8 million/€46.1 million) to VHE.

Kveikur reporters contacted Pétur Hannesson and Unnar Steinn Hjaltason, VHE senior partner and chairman of the board. Both refused to comment. A few days later, a lawyer representing VHE sent a letter to Kveikur, in which the company admitted to having paid Pétur ISK 58 million ($413,000/€382,000) in consulting fees. While acknowledging that the payments seemed suspicious, VHE maintained that there was a valid explanation; the payments concerned to other real estate projects unrelated to Upphaf, and there was nothing suspect about the two parties’ business relationship.

Heavy losses

Investors in the GAMMA: Novus investment fund – Icelandic citizens, insurance companies, and pension funds – suffered heavy losses. The insurance company TM lost ISK 300 million ($2.1 million/€2 million), and insurance companies VÍS and Sjóvá ISK 155 million each ($1.1 million/€1 million). Three retirement funds, among them Birta, lost a total of ISK 800 million ($5.7 million/€5.3 million). In an interview with Kveikur, Ólafur Sigurðsson, CEO of Birta pension fund, stated that the payments to Pétur needed to be investigated. During the programme, it was revealed that the district prosecutor had been given copies of the files in question. On Monday, executives at Kvika Bank have also filed a suit to the District Prosecutor, and the payments will be investigated as embezzlement.

Following Kveikur’s coverage, GAMMA issued a public statement that reads that the current executives of GAMMA had been informed of the programme prior to the broadcast: “The relevant authorities are conducting an investigation into the matter, and GAMMA has informed the office of the District Prosecutor of the pertinent details. GAMMA will also, on behalf of GAMMA: Novus’ owners and its lenders, i.e. its many investors, investigate whether these parties are entitled to compensation.”