In a press release issued yesterday, the office of the National Commissioner of the Icelandic Police said it had charged 6 individuals with 40 counts of violations of various parts of the criminal code, the commercial code and other statutes. The charges will be filed at Reykjavík District Court on August 17.
Those indicted are: Jón Ásgeir Jóhannesson, CEO of Baugur; Tryggvi Jónsson, former CEO of Baugur; Jón Ásgeir’s father, Jóhannes Jónsson; Jón Ásgeir’s sister and CEO of investment company Gaumur, Kristín Jóhannesdóttir; and two auditors, Stefán Hilmarsson and Anna Þórðardóttir, both of KPMG Iceland.
According to Morgunblaðið today, the charges have been issued to the defendants but not yet been made public. Morgunblaðið sought to gain copies of the charges from the defendants, without success.
According to Iceland State Radio, RÚV, one aspect of the police investigation has concerned alleged embezzlement of Baugur funds for amounts counting “hundreds of millions of Icelandic króna” by Jón Ásgeir Jóhannesson and Tryggvi Jónsson while Baugur was listed on the Icelandic stock exchange.
All defendants have denied the charges.
The investigation started when a former business partner of Baugur, Jón Gerald Sullenberger, filed charges against Baugur with the office of the National Commissioner of the Police.
Jón Gerald Sullenberger, who lives in the US, explained in an interview on Icelandic State Television’s current affairs program Kastljós yesterday that in 2002 Baugur had refused to honor certain financial obligations vis a vis his company Nordica. So he looked around for an attorney in Iceland to represent him. Searching for a lawyer without ties to Baugur, he eventually retained the services of Jón Steinar Gunnlaugsson.
“The reason I am here is because Jón Ásgeir Jóhannesson appeared on BBC and claimed that the government of Iceland had a political grudge against him. He also got the President of Iceland to endorse him [on BBC], so I decided to go ahead and explain to the Icelandic nation how all this started,” said Jón Gerald Sullenberger on Kastljós.
(Last year, the current President of Iceland, Ólafur Ragnar Grímsson, vetoed a media bill that would have forced Baugur to divest of some of its media assets. This was the first time in the 60 year history of the Republic of Iceland that a president had made use of the veto rights vested in his office by the constitution. In a strange twist of views and circumstances, ten years earlier, as an opposition Member of Parliament and chairman of the socialist, now-defunct People’s Alliance, Ólafur Ragnar Grímsson had spoken out in the Icelandic parliament in favor of such a bill.)
(The ties between the President and Baugur recently made headlines in Iceland when the weekly “Séð og heyrt” revealed that his second wife, Mrs. Dorrit Moussaieff, had traveled for free on a Baugur private jet in order to attend a fashion show in Reykjavík, held by the Baugur fashion company Mosaic. See Iceland Review, Daily News, June 16, “President’s wife hitches ride on Baugur private jet“.)
According to Jón Gerald Sullenberger, Jón Steinar Gunnlaugsson advised Jón Gerald Sullenberger that he could proceed against Baugur either by filing a civil suit, by filing charges with the police or both. Jón Gerald Sullenberger said that at his own instigation he had decided to do both, and that it was his complaint that had thus prompted the investigation. Jón Gerald Sullenberger added that he had lived abroad for twenty years and never voted in Iceland.
Attorney Jón Steinar Gunnlaugsson is a well known friend of the former Prime Minister and current Foreign Minister Davíð Oddsson, chairman of the Independence Party; he now serves as justice on the Supreme Court of Iceland.
When asked about the nature of the charges, Jón Gerald Sullenberger said that his civil suit in Iceland, and Baugur’s counter-suit in Miami, had both been settled, and he would not discuss the terms of settlement. Neither would he discuss the nature of the charges that the authorities were filing against the Jón Ásgeir Jóhannesson and related parties until they became public. Jón Gerald Sullenberger did, however, maintain that the charges were “quite serious”.
As reported in the Guardian on July 21, 2003, among other things Jón Gerald Sullenberger was said to have filed “33 fake invoices to Baugur” in order to “disguise payments on a 62ft yacht in Miami owned by the father and son behind Baugur, Johannes Jonsson and Jon Asgeir Johannesson, using company money. Mr Sullenberger co-owned the boat with them.”
In the same story, the Guardian also reported that two directors had resigned from Baugur’s board in March of 2003 “over a “breach of trust” when minutes from a meeting were leaked to the press during a row in which the Icelandic prime minister [Oddsson] alleged that Baugur had offered him a £2.5m bribe. Baugur has rebutted this claim.”
On Kastljós, Jón Gerald Sullenberger was asked about allegations that he had made threats against Jón Ásgeir Jóhannesson. He said that when he had tried to pursue his financial claims against Baugur, Tryggvi Jónsson, Baugur’s ex-CEO, had told him to mind that his family did not get hurt. Thus provoked, Jón Gerald Sullenberger admitted saying about Jón Ásgeir to Jón Ásgeir’s father, Jóhannes Jónsson, that he would “take him down.”
BBC interviewed Iceland’s “pop star businessman”, Jón Ásgeir Jóhannesson, in connection with coverage of Iceland aired on “Working Lunch” and “Newsnight” in mid-June.
In footage published on the BBC’s website Jón Ásgeir Jóhannesson said about the investigation, “You know it’s big company in Iceland that’s been hit, you know, in a political fight.” He added, “Our stakes in media companies has almost teared this country apart. Like, last summer, big debate and, you know, we are quite sure that everything that has happened is political things, and it’s a long story, we need another episode to tell you about it.”
When asked how worried he was, Jón Ásgeir replied, “You know, we have no worries. You know, we have total support from our shareholders who own the company.”
(Baugur went private in July 2003, but according to Hoover’s company database Baugur is “controlled by its CEO Jón Ásgeir Jóhannesson.” In a filing made by Baugur subsidiary Hagar on October 30, 2003, his family’s holding company, Gaumur was said to own 68 per cent of Baugur Group and Kaupthing Bank 22 per cent.)
Asked about the cost of the investigation, Jón Ásgeir says: “It’s a shame, the story leading up to what happened is shameful for Icelandic politics, and how people can misuse the power which they have. That’s how it was, and that troubles me. I don’t think it’s good for the Icelandic economy or Icelandic business life.”
(See also Iceland Review, Daily News, June 29, “Viking invaders buy shares in bank on home turf“.)
According to Iceland State Radio, RÚV, Baugur has countered the charges filed by the police by announcing that it intends to file a suit against the government for damages incurred during the investigation.
RUV also reports that, in a letter to the National Commissioner of the Icelandic Police, Jón Ásgeir Jóhannesson claims Jón Gerald Sullenberger’s charges had been inspired by “a desire for revenge.”
Jón Gerald Sullenberger has responded to the letter by saying he will sue Jón Ásgeir Jóhannesson for violating the confidentiality terms of his private settlement with Baugur.
In the same letter, Jón Ásgeir Jóhannesson demands an investigation into the competence of the chief of the police’s Economic Crimes section to lead the investigation.
Separately, Baugur Group has solicited a legal opinion from a professor of law at the University of Iceland, Jónatan Þórmundsson. He finds the charges filed by the police to be “vague and poorly constructed”. He also suggests that the way the investigation was conducted may have infringed the Icelandic constitution and the European Human Rights Convention.