The director of the ruling Progressive Party and former head of the board at the Directorate of Labour, has been implicated in the Panama Papers scandal for having set up an offshore company in 2003 to hide investments in Danish companies.
A loan from Hrólfur Ölvisson’s Icelandic company to his Tortola-based company is special cause for concern, according to the former head of the tax office. After taking the reins as director of the Progressive Party, Hrólfur took part in buying Arion Bank’s stake in BM Vallá—a purchase which was harshly criticized by Progressive Party MPs at the time.
The revelations were reported on in RÚV’s Kastljós news program last night and was worked on in conjunction with Reykjavik Media, the ICIJ and German newspaper Süddeutsche Zeitung.
Hrólfur has been involved in sensitive and confidential tasks for the Progressive Party for a decade, as well as running the party paper, Tíminn, he also sat on the board of the old Búnaðarbanki bank and led public companies. He was chair of the board at the Directorate of Labour between 1998 and 2007.
During that time, the Directorate of Labour was under pressure due to construction of the Kárahnjúkar Dam and the foreign contractors said to be trying to cheat Icelandic tax and workers’ welfare laws. Hrólfur was influential in calling for new laws to prevent cash-in-hand working and remove secrecy, saying that cheating was not to be tolerated in the Icelandic workplace.
During the same year, Hrólfur set up the company Chamile Marketing in the Caribbean tax haven of Tortola. As expected, Mossack Fonseca staff members are registered as board members and managers. Hrólfur had power or procuration over the company and the company’s shares were all owned by another company owned by Hrólfur and associates in Iceland.
At this time Hrólfur was one of three owners of Eldberg ehf. through its parent company Jarðefnaiðnaði ehf. Both companies were involved in mineral extraction near to Mount Hekla, which were shipped out from Þorlákshöfn. The company in Tortola was supposed to hide the two Icelandic companies’ trade with Denmark.
Eldberg loaned Chamile Marketing ISK 12 million, interest-free for five years. Chamile Marketing used that money to invest in Danish company Scancore. The investment agreement between the two companies states:
“The reason is to ensure that the Eldberg name or that of its parent company will not be registered in connection with the investments of Chamile Marketing.”
Eldberg’s annual accounts make no mention of the special loan it made overseas. Hrólfur has since defended his actions, saying that there is no law against businesses granting interest-free loans.
The Panama Papers leak shows that at the end of 2008 Chamile Marketing had outstanding money owed to it up to the value of DKK 6 million, due to the impending bankruptcy of Scancore Aps. That money was later lost outright when Scancore in Denmark folded and the money loaned from the Icelandic companies was never returned.
Hrólfur was made director of the Progressive Party in 2010, but alongside that role he has also take part in extensive trading through the same companies connected with the Tortola company, Chamile. In 2012, he bought, along with a group of other investors, Arion Bank’s share in construction company BM Vallá, which later merged with Björgun and Sementsverksmiðjan.
Arion Bank had taken BM Vallá over after the financial collapse, but its previous owners had accused the bank and the authorities of breaking the law during the take-over. Many Progressive Party MPs were outraged and wanted an investigation into the whole case.
Most of those MPs had no idea that the director of their party was among the people who had bought the company from the bank following its reorganization.
This latest scandal will be discussed by Progressive Party MPs at a meeting today and none would talk to reporters beforehand, RÚV reports.
Hrólfur is employed by the Progressive Party and is not an elected official or government minister. He is, however, by the nature of his role, very influential within the party.