Treasury Lost Out on “Significant Funds” with Íslandsbanki Sale

A professor at the University of Iceland’s School of Business has told RÚV that the state treasury forfeited “significant funds” in its sale of Íslandsbanki shares last March. Minister of Finance Bjarni Benediktsson rejects the idea that a higher share price could have been secured without “sacrificing other interests.”

Losses “obvious” shortly after markets opened

Dr Ásgeir Brynjar Torfason is an assistant professor at the University of Iceland’s School of Business. He focuses on accounting and finance. In an interview with RÚV earlier today, Ásgeir stated that the government had lost out on “significant funds” in its sale of Íslandsbanki shares last March. The losses were obvious shortly after the markets opened on the following morning.

Yesterday, the National Audit Office released a report concerning the sale. The report reviewed, among other things, the dissemination of information prior to the sale, the determination of the share price, the selection process for determining qualified investors, and the reliance on outside consultants.

The report – focusing on the technical execution of the sale and valuation of shares – did not pass judgement on whether any laws had been broken; the opposition has demanded that a parliamentary committee be entrusted with such an investigation.

Concerning such an investigation, Ásgeir Brynjar stated that it was important for independent institutions – such as the parliamentary commissioner, the National Audit Office, and the Financial Council – to supervise such a process:

“These institutions play a hugely important role for parliament, and given that the National Audit Office has brought these facts – which we suspected or feared – to light, it’s clear, after a thorough review, that the execution of the sale wasn’t sufficiently well handled … it’s as if the sellers were trying to get rid of something that they didn’t want to own in the quickest possible way, which isn’t good when you’re handling publicly-owned entities and trying to secure the best possible price.”

Welcomes the publication of the report, constructive criticism

In a separate interview with RÚV, Minister of Finance Bjarni Benediktsson stated that he did not want to place himself on a high horse and mete out responsibility following the National Audit Office’s report. According to Bjarni, there wasn’t much in the report that suggested wrongdoing on behalf of his Ministry.

“There were, however, many things, which were asserted last spring – that buyers had been hand-picked or that the bank had been subject to a fire sale, for example – which have been rejected.”

Bjarni added that it was good that the report had finally been published and that the many considerations detailed in the report were “unsurprising” given that they had been discussed last spring: “Dissemination of information in the run-up to the sale could have been better.” Bjarni also stated that the report made many useful points and that he welcomed any constructive criticism.

Finally, the Minister of Finance rejected the idea that the report was an indictment on the execution of the sale and stated that he “remained focused on the big picture,” namely that they had been successful in selling shares in the bank, securing diverse ownership, and a reasonable share price. “The sale is not above criticism,” Bjarni added, “but I think that it was largely successful.”

As noted in the RÚV article, the authors of the report suggest that a higher share price could have been secured, a suggestion that Bjarni rejects without sacrificing other interests: “We had several aims, among them diverse ownership. We got a pretty good price, and the report indicates that the financial interests of the government were safeguarded.”

Bjarni added that after the sale the government continues to be the majority owner of the bank, which now enjoys a higher valuation: “The fact that we managed to sell of over ISK 100 billion ($693 million / €672 million) with this group of owners, I just say: ‘Well done.’”

Execution “Not Good Enough,” Minister of Business states

Vísir also published an interview with Minister of Culture and Business Affairs Lilja Alfreðsdóttir today. Lilja stated that it was clear that the execution of the sale was “not good enough” and that this was confirmed by the National Audit Office’s excellent report. Lilja added that it was disappointing that the experts had not handled the sale, which shouldn’t be overly complicated, in a better way.

“The execution wasn’t good enough. We can see that the valuation should have been better as well as the execution of the sale, for which the Icelandic State Financial Investments are responsible,” Lilja observed.

PM Katrín Jakobsdóttir has also weighed in on the Audit Office’s report: “First and foremost, I’m disappointed in the execution itself: one of it being the price, and the difference therein. But first and foremost I’m disappointed in how this could affect trust in Iceland.”

Esports Manager Among Suspects of Iceland’s Biggest Cocaine Bust

police station reykjavík

None of the four individuals arrested during the biggest cocaine bust in Icelandic history has a criminal record, Vísir reports. A lumber dealer and a former eSports team manager are among the suspects that were arrested this summer. The case will be filed in court tomorrow.

100 kg of cocaine hidden within a timber shipment

In August of this year, the police confiscated 100 kg of cocaine, which had been hidden inside seven logs included within a timber shipment to Iceland. The drugs were planted inside the logs in Brazil before being shipped to Iceland via the Netherlands.

As reported by Vísir, the Icelandic police got wind of the shipment in connection to an investigation into organised crime and subsequently notified police authorities in Rotterdam. The Rotterdam police replaced the cocaine with a fake substance before the container was shipped to Iceland. The estimated street value of the drugs is ISK 2 billion ($14 million / €13 million).

The indictment states that the container was shipped from customs to Borgartún in Reykjavík where it stood unmoved for two days. The container was then transported to Hafnarfjörður, where the cocaine were removed, packaged, and delivered to a third party for distribution and sale. The police subsequently seized the cocaine inside a vehicle on Vefarastræti in Mosfellsbær.

The suspects have been charged with engaging in organised criminal activity, attempted large-scale narcotics offences, and money laundering. The case will be filed in the Reykjavík District Court tomorrow. 

No meaningful criminal record

As noted by Vísir, none of the suspects possesses a criminal record of note. One of the defendants is a timber dealer in his sixties, whose company, Hús og Harðviður, was used to launder money. The other suspects are in their twenties and thirties, and include a former team manager of Iceland’s eFootball national team.

The district attorney has motioned for several items, believed to have been purchased with ill-gotten gains, to be seized: including a Rolex watch, a Lexus, almost 100 logs of timber, a Volkswagen jeep (believed to have been purchased for the transportation of drugs), and a number of smartphones, among other things.

During a raid on the suspects’ homes, the police found quantities of drugs, including MDMA, marijuana, and cannabis.

Cash deposits that could not be accounted for

All of the four suspects are charged with money laundering and are believed to have, for some time leading up to the arrests on August 4, received, stored, converted, or gained from profits resulting from criminal offences. The police believe that millions of Icelandic króna were stored in the suspects’ bank accounts, for which they could not account. In most instances, the money was traced to cash deposits.

As reported by Vísir, the defendants are expected to receive lengthy sentences. Recently, two men received 12-year sentences – the maximum punishment for such crimes – for extensive drug offences, having imported narcotics to Iceland via a salt spreader

According to Chief Superintendent Grímur Grímsson, the recent cocaine busts may have led to an increase in drug-trafficking through Keflavík Airport, which have been on the rise over the past weeks and months.

Enrollment in Opioid-Substitution Treatment on the Rise

Individuals receiving opioid-substitution treatment have significantly increased over the past years. According to Minister of Health Willum Þór Þórsson, 276 people were enrolled in the treatment in 2019, compared to 438 in 2021.

A formal enquiry before parliament

Following a formal enquiry by MP Diljá Mist Einarsdóttir – on whether doctors would be granted greater authority to prescribe opioids to those struggling with addiction – Minister of Health Willum Þór Þórsson gave no indication before Parliament that greater authority would be granted.

Read more: In Harm’s Way: Opioid Addiction in the Age of Harm Reduction

Willum Þór explained that opioid-substitution treatment is provided primarily by three institutions in Iceland: SÁÁ (the National Centre of Addiction Medicine), the University Hospital of Iceland (Landspítalinn), and the Akureyri Hospital in North Iceland. The main drug employed during treatment in Iceland is Buprenorphine, both in tablet and injectable form, which is a licensed drug (“costly and/or must be treated with care”) administered at no cost to patients and supervised by the University Hospital’s Medicines Advisory Board.

The use of Buprenorphine in injectable form, Willum noted, is restricted to healthcare institutions (H-label) while Buprenorphine in tablet form must be prescribed by doctors with knowledge and experience of addiction (Z-label). This means that physicians specialising in addiction treatment, who have secured a license and can demonstrate experience, outnumber psychiatrists when it comes to the prescription of Buprenorphine.

Willum also noted that Buprenorphine is primarily administered to patients at Vogur’s MAT (medication-assisted treatment) clinic in Reykjavík (in accordance with an agreement regarding opioid substitution treatment signed by Icelandic Health Insurance and SÁÁ) although a number of patients retrieve their drugs in tablet-form at pharmacies.

As noted by the National Library of Medicine, opioid-substitution therapy (OST) is an “evidence-based intervention” for opiate-dependent individuals, which replaces “illicit drug use with medically prescribed, orally administered opiates such as buprenorphine and methadone.”

OST/MAT programme responsible for reducing overdose rates

As noted in the Minister’s response before Parliament, individuals receiving opioid-substitution treatment (OST) have “increased significantly over the past years.” According to the minister, 276 people were enrolled in the treatment in 2019, compared to 438 in 2021.

SÁÁ’s medication-assisted treatment (MAT) clinic at the Vogur treatment centre has gradually expanded over the years and as of late summer treats 250 patients – most of whom have injected opioids or have suffered serious consequences as a result of their addiction. According to Dr Valgerður Rúnarsdóttir, the Medical Director of SÁÁ, MAT patients receive methadone, buprenorphine pills, or injections, which reduce withdrawal symptoms and cravings for opioids.

“There’s a low threshold for participation,” Valgerður stated. ‘We’d be seeing a much higher overdose rate if it weren’t for this programme. We also collaborate with other healthcare and social services to help people become sober. If we want to improve the lives of these people, these factors must be entwined.”

Although most of the patients in Vogur’s MAT are either sober or aspiring toward abstinence, there are also some who are not ready to quit. It is important to provide services to these individuals, and the City of Reykjavík, according to Valgerður, has greatly improved access to housing for this group of people over the past years. “Things are much better today compared to ten years ago,” she stated, adding that besides offering treatment and other services, removing stigma is also vital.