Baugur CEO calls Baugur case "a mud pie" Skip to content

Baugur CEO calls Baugur case “a mud pie”

A visibly nervous but composed Jón Ásgeir Jónsson appeared Tuesday night on the Icelandic National Broadcasting news show Spotlight, hosted by Sigmar Gudmundsson. In the interview he describes the Baugur case as “a mud pie”, “with all kinds of issues smeared together with people hoping something will stain or stick”.

In the interview he emphasized that there was never any intent to hide transactions between Baugur and him and his family’s investment company Gaumur. He explained that Gaumur was a “front runner” for Baugur during investments in third parties. He also implied that the case was not about rules having been broken but about whether or not anyone had suffered a loss. He said the case was politically motivated but expected a fair trial in the Reykjavík District Court, but added he was not so sure about the Supreme Court.

Following are a few highlights:

Question: The case isn’t just about intent and profit it was also about the fact that people need to play by the rules that apply to society. Sometimes even though you don’t make a profit you can be breaking the law, correct?

Jón Ásgeir: That could be right, but the case must be about whether anyone suffered a loss or not.

Question: How much money went from Baugur to Gaumur and from Baugur to you, your sister and ex-Baugur CEO Tryggvi Jónsson in connection with stock purchases in Baugur?

Answer: I can’t quite remember, I think about ISK 200 million, but there were also payments made in return. It’s not just like we just took what we took, we made payments as well. This is about accounts that reflect the business between those two companies. There is debit and there is credit in the accounts and it’s totally unfair to take just one side of the account and not show what was paid in exchange.

Question: Did Baugur’s board of directors agree to this arrangement, that the company [Baugur] would lend you money to buy shares in the company and other companies?

Jón Ásgeir: It varied. Purchasing shares in other companies was something that the board knew about because Gaumur was often front running Baugur. That is to say taking the initial risk for Baugur. I want to point out that if it hadn’t been for Gaumur,10-11 [the convenience store] would not have merged into Baugur. We would not have acquired Smaralind [shopping mall] nor the Arcadia shares. That’s because Gaumur took this initial risk, when we thought we had made it, we transferred the investment into Baugur.

Question: But was it really that risky when a part of the payment is a loan from Baugur and according to the charges with no written agreements regarding the “loans”?

Jón Ásgeir: There is no question that they were entered in the books of the company and the auditors thought that was sufficient. There was no intent to hide one thing or another. That is the key issue, there was nothing being hidden, everything was in the company’s books. All these transactions between the companies were of course discussed in the board and Gaumur was of course good for the money that it owed us for a while. It is absolutely necessary to consider the fact that there were payments made in return. It is not just outflow. You can see headlines in some papers where this has been turned upside down, some amounts have been added up but no consideration is made for what came in.

Question: Are all the charges are wrong?

Jón Ásgeir: We protest all the charges. We believe that they are misinterpreted, poorly investigated and we don’t set any store by them, anymore than the auditors or the shareholders who have been involved. The company did not ask for this investigation, and today I am the CEO of the company that’s supposed to be the “victim” it’s kind of a weird situation, probably unique.

Question: Did the case start because someone wanted revenge on Baugur, and then suddenly the then-prime minister and the courts and police also became involved in the case?

Jón Ásgeir: We maintain that it is politics that got this thing going, there are too many things that happened before the police took on the case for it to be a coincidence, which reinforces our beliefs that this is politically motivated. For example, British people have said that this guy Jón Steinar is representing this guy who made the charges against us [Jón Gerald] and everyone knows that he is the prime minister’s right hand man [Jón Steinar], just that is enough to raise a lot of suspicion.

Question: Explain to us please, because people listen when you speak, when you say that the prime minister of the nation is using the police that then in turn uses the courts to raid a company, it erodes people’s trust in society, what information or evidence do you have to support this?

Jón Ásgeir: We had this turmoil that came before the case broke. When we were being repeatedly attacked by this member of the government [then prime minister Davíd Oddsson], later at a meeting with the chairman of our company he used big words and according to what Hreinn [chairman] told me he [Davíd Oddsson] directly threatened actions by the authorities against the company. Hreinn was so startled, that he said, “I want to know everything that is going on here at the company these accusations are so serious and I know that these people will follow through.” So there was a great deal done inside the company to go through everything in order to defend against this kind of attack, this is very strange, people are startled when they hear this.

Question: Do you believe that the police act on the order of some minister or some third parties, that they are not independent?

Jón Ásgeir: I am absolutely sure that, by Icelandic standards, this large company would never have been raided except with the back up of the most senior people in power.

When asked about the much written about Viking luxury yacht, Jón Ásgeir animatedly explained that if he was going to have Baugur pay for “some boat or boating service, it wouldn’t have been a problem for me to receive a ISK 7 – 8 million (USD125,000) to pay for boating services that year which was within the limit from my expense account, it would have been approved without questions”.

Jón Ásgeir concluded the interview by saying that he was certain to get a fair trial, at least in the Reykjavík District Court, but he was not so sure about the Supreme Court where Jón Steinar, Jón Gerald’s lawyer now serves as a judge.

Sign up for our weekly newsletter

Get news from Iceland, photos, and in-depth stories delivered to your inbox every week!

* indicates required

Subscribe to Iceland Review

In-depth stories and high-quality photography showcasing life in Iceland!

Share article