Emails Indicate Fraud in Sterling Air Transaction Skip to content

Emails Indicate Fraud in Sterling Air Transaction

E-mails between the management team at FL-Group seem to indicate that assets sold to Northern Travel Holding (NTH) at year end 2006 were overvalued on purpose to deceive stakeholders about the real condition of the companies involved in the transactions. Among the assets being transferred were the Danish low budget airline Sterling and Iceland Express, an Icelandic low budget travel company.


Hannes Smárason, President of FL-Group at the time of the e-mail

Among the main players in these transactions were Pálmi Haraldsson, owner of Iceland Express and Sterling and Hannes Smárason, President of FL-Group. Both were close associates of Jón Ásgeir Jóhannesson, Chairman of Baugur Group and FL-Group.

Vidskiptabladid (Business Magazine) published the first of three articles on the subject on Thursday, September 2.

One of the e-mails was from Jón Sigurdsson, then a manager of FL-Group and later president of the company, to Einar Thorsteinsson, another manager at the company. It goes like this in English translation:

From: Jón Sigurdsson

Sent: 6. November 2006 at 23:27

To: Einar Thorsteinsson

Subject: RE: ScanTravel

Let’s put a password on this.

Things to study:

* Are we happy with this structure? I am wandering whether we should demand a seller’s loan against the travel stores.

* Is IE [Iceland Expressed] overvalued as much as ST [Sterling], relatively? That’s a key issue.

* Interest on sellers loan, 15-20% more realistic. 30% will never happen. Must put up some imagined IRR case in 2-3 years.

* Must have a shareholders’ agreement on how we will increase debt on the company, etc.

* Maybe we have to insure at least equal treatment on the seller’s loans. I don’t really know how that is done. Maybe we have to do special loan agreements on this; these are large amounts of money.

List all the guarantees that FL has given. Newco has to take them over.

Scantravel became Northern Travel Holding. Hannes Smárason was president of FL Group when the above transaction took place. Scantravel was the project name of Northern Travel Holding (NTH). Newco is the company NTH.

Related news:

17.11.2007
Northern Travel Holding Takes Over Astraeus Ltd.

11.09.2007
Making a Pig’s Tail of Economics

28.12.2006
New travel giant founded

27.12.2006
FL Group buys six percent share in AMR

28.03.2006
Dispute at Sterling threatens air travel safety

14.03.2006
Icelandic markets open higher in wake of Monday’s losses

03.02.2006
Three bidders for Icelandic Express

30.11.2005
The Joy of Christmas

02.11.2005
New chairman of FL-Group says no evidence of unauthorized transfers

28.10.2005
Media spotlight on FL-Group and Sterling

26.10.2005
FL-Group to raise ISK 44 billion in share offering

19.10.2005
More changes at FL-Group?

07.10.2005
FL Group and Sterling still in discussions

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