Guardian questions Icelandic economic miracle Skip to content

Guardian questions Icelandic economic miracle

In a scathing article in today’s edition of the British daily, The Guardian, titled “Baugur throws a harsh light on Iceland”, the paper uses Baugur’s response to fraud charges as an example of how “at every turn the Icelanders seem to defy conventional business wisdom.”

The article’s subtitle reads “Economic miracle under scrutiny”.

The paper asks “what are we possibly to make of Baugur and, indeed, the whole Icelandic corporate invasion of these shores?”

The Guardian finds it strange that Baugur argues that the charges are against individuals and not the company, “Baugur is little more than Johannesson and his tight circle of associates, and to suggest otherwise is to stretch credulity.”

(As Daily News reported on July 2, Baugur CEO charged on multiple counts, 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.)

The paper continues to report, “there’s a qualitative difference between police checking out some spiteful reports of past impropriety and the laying of full blown fraud charges against Johannesson, members of his family and also his accountants – as happened last Friday.”

The Guardian seems surprised that Baugur´s CEO, Jón Ásgeir Jóhannesson, did not “withdraw from the Somerfield deal, proclaim his innocence and vow to fight these trumped up allegations.”

The Guardian writes that although Baugur insists that it is still in the Somerfield game “it’s a sure bet it will not be for much longer.”

The Guardian predicts that from now on “we should now expect a much harsher light to be shone on the Icelandic economic miracle generally.”

It ends its article provoking its readers to explain “why direct investment in the tiny Icelandic stock exchange from Guernsey-based entities moved from nothing in 2001 to IKR11.6bn (£100m) in 2003? Or why money coming from Luxembourg jumped from IKR4.4bn in 2000 to IKR25.2bn in 2003?”

Last month the Guardian published an article “Next-generation Viking invasion” by Ian Griffiths. In that article, Griffiths, who received Business Journalist of the Year at the 2005 British Press Awards, acknowledges that the rumors of Russian money driving Icelandic expansion are “persistent but unsubstantiated”. But he still asks “They’ve got the cash to buy big UK groups like M&S. But where does it come from?”

As of yet the Icelandic media has not picked up the latest Guardian story.

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