Former CEO of Iceland’s FL Group Suspected of Fraud Skip to content

Former CEO of Iceland’s FL Group Suspected of Fraud

Reykjavík District Court rejected yesterday the a petition from Hannes Smárason, former CEO of investment company FL Group, that a search of two of his homes and LOGOS law firm be deemed illegal. Smárason is suspected of extensive fraud.

Hannes Smárason. Photo by Páll Stefánsson.

Smárason intends to appeal the ruling to the Supreme Court, reports.

The search was undertaken as part of an investigation by the economic crimes department at the National Commissioner of the Icelandic Police in light of recent embezzlement allegations related to FL Group’s acquisition of Sterling Airlines four years ago.

The economic crimes department is also investigating alleged tax evasion of holding companies owned or connected with Smárason.

The Reykjavík District Court ruling states that the economic crimes department believes that the acquisition of Sterling Airlines had caused extensive financial damage to FL Group and that too large an amount may have been paid for Sterling.

There is well-founded suspicion that Smárason abused his position. The economic crimes department also has well-founded suspicions that a loan granted to Smárason from FL Group worth more than USD 46 million (EUR 33 million) was illegal.

The tax evasion investigation is, among other items, directed at the private limited company FI Investment. The company is suspected of having paid Smárason’s private costs in 2006 while Smárason was not on the company’s payroll. The costs amount to ISK 50 million (USD 390,000, EUR 278,000).

Furthermore, Smárason’s private limited company, Fjölnisvegur 9, is being investigated. The company purchased real estate and sold two of them to Smárason and his partner at a loss of almost ISK 3 million (USD 23,000, EUR 17,000). The economic crimes department claims to have well-found suspicion on tax evasion.

Three holding companies connected to Smárason are also suspected of tax evasion. Two of these companies had a registered address on Efstaleiti 5, where the law firm LOGOS is located.

LOGOS was the workplace of Gunnar Sturluson, the managing director and authorized signatory of most of the aforementioned companies while the alleged crimes were committed.

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