Icelandic media reports on the charges against Baugur Skip to content

Icelandic media reports on the charges against Baugur

In the wake of stories carried by UK daily Guardian on Friday and Icelandic daily Fréttabladid on Saturday, several reports have appeared in the Icelandic media about the Baugur investigation and the charges that the office of the National Commissioner of Police presented to six defendants in June, to be filed at court later this week.

Iceland State Radio, RÚV, said yesterday that overall the charges relate to funds amounting to close to 3 billion króna. Most of the charges are related to alleged crimes committed by the current and former CEO, Jón Ásgeir Jóhannesson and Tryggvi Jónsson, respectively. In addition to embezzling funds, the two are charged for cooking the books and lying about it.

RÚV claims that amounts relating to embezzlement and illegal loans amount to 1.3 billion króna. The funds were funneled to, among others, the investment company Gaumur, owned by the current CEO and several close relatives including his father, Jóhannes Jónsson, and his sister, Kristín Jóhannesdóttir. The transfers were not documented, says RÚV. The largest single transaction is for ISK 200 million, the smallest for less than ISK 500 thousand.

RÚV claims charges relating to wrongful accounting amount to 1.4 billion króna. The former and current CEO are alleged to have made, or given instructions to make, wrong and fraudulent entries in the books of Baugur hf – and subsequently to have tried covering them up. One such charge relates to Baugur shares of par value 40 million króna which the defendants claimed the company had sold to foreign investors for ISK 300 million; according to the police, the shares were not sold to foreign investors but held by Baugur on behalf of a Luxembourg company, allegedly for the purpose of compensating several insiders.

The charges also involve several million króna in alleged fraud relating to import duties and VAT.

RÚV mentions the accusations that Jóhannes Jónsson and Jón Ásgeir Jóhannesson made in Fréttabladid Saturday concerning alleged threats that foreign minister Davíd Oddsson is said to have made to them in 2001 and 2002 when he served as prime minister. The Economic Crimes unit of the National Commissioner of Police raided the offices of Baugur in August, 2002, shortly after the threats are said to have been made. The subsequent investigation lasted close to three years and has resulted in the indictments of six individuals.

RÚV quotes “anonymous legal experts at Iceland’s universities” who say that the accusations that Jóhannes Jónsson and Jón Ásgeir Jóhannesson make against the former prime minister are so serious in nature that they demand an investigation into his conduct in office. Charges of such serious nature have never before been made against a prime minister, said RÚV.

RÚV also interviews Sigurdur G. Gudjónsson, supreme court lawyer and former CEO of the media company which runs TV station Channel 2 and radio station Bylgjan. Sigurdur wonders why the privatization of former state bank Búnadarbanki has not been investigated as thoroughly as the business affairs of Baugur and its officers.

(Earlier this year, considerable debate broke out in Iceland concerning the involvement of the political parties now in power, the Independence and Progressive parties, in the sale of controlling stakes in two state banks in 2002. See Iceland Review, Daily News, May 31, “Privatization of banks draws heavy fire“; June 13, “Prime Minister under investigation“; and June 14, “Prime Minister’s feelings hurt but announces he’s been exonerated“.)

Sigurdur G. Gudjonsson says only two people have been investigated to any extent in Iceland on account of their business activities, Jón Ásgeir Jóhannesson and Jón Ólafsson, former owner of TV-station Channel 2 (Stöd 2), radio channel Bylgjan, music publisher Skífan and several other companies. Sigurdur says that there is “good reason” to investigate more people than just those two. He questions the activities of the investigators and wonders why other individuals who have engaged in similar transactions are not being investigated as well.

Egill Helgason, the host of Channel 2 current affairs show “Silfur Egils”, shares his thoughts on the reporting of Frettabladid of the charges against Baugur in his column on the news portal

(On Saturday, Frettabladid published interviews with Jóhannes Jónsson and Jón Ásgeir Jóhannesson while admitting that the interviews had been subject to their ultimate editorial approval. Frettabladid also omitted at least one set of charges and published rebuttals from the defense team alongside the others. Jóhannes Jónsson and Jón Ásgeir Jóhannesson are controlling owners of of the publisher of Fréttabladid, as well as Channel 2.)

In an article titled “Like little poodles”, Egill says that Fréttabladid has committed the “the most serious error of judgment” he has ever seen made by a news organization in Iceland. He accuses Fréttabladid of participating in “an organized media campaign” which he says was started by leaking the charges to the British daily Guardian. “The editors of Fréttabladid are unable to report independently on a law suit involving their publishers. [They] act like little poodles,” he says. He adds, “unfortunately, now those who should speak are silent – or speak against everything they have stood for. They bow to power and money. It is horrible to witness how even those one would have suspected the least have become the obliging instruments of their owners.”

Concerning the Guardian story, Egill remarks “one almost gets the feeling that they [the defendants] wrote the story themselves.”

Morgunbladid publishes the charges and the defendants rebuttals in its Sunday edition. “Serious charges against the officers and auditors of Baugur and Gaumur – Investments of Gaumur and Fjárfar financed by Baugur” reads a prominent headline across the front page. It is accompanied by several smaller headlines, “Wrong semi-annual statements filed; Baugur paid 34 invoices for a recreational boat owned by 3rd party; Baugur paid for personal expenses unrelated to the operations of the company; Loans to managers not disclosed in semi-annual statements.”

Morgunbladid publishes the charges and an accompanying rebuttal both of which it claims to have secured from the lawyer of one of the defendants. Among other things reported by Morgunbladid, Jón Ásgeir Jóhannesson is charged with making Baugur pay ISK 95 million to a Luxembourg subsidiary of his family’s investment company Gaumur in 1999 in order to finance the purchase of shares in former state bank FBA (now part of Islandsbanki); Jón Ásgeir Jóhannesson and Tryggvi Jónsson are charged with using ISK 100 million of Baugur funds to pay for Gaumur’s participation in a share offering of Baugur; etc.

Morgunbladid also summarizes the coverage of Fréttabladid on Saturday.

In an editorial, Morgunbladid questions whether it is acceptable for criminal charges to be withheld from the public for over a month and a half after they are presented to defendants. It observes that there are no rules prohibiting the publication of charges after they have been presented to defendants. By not disclosing the the charges, the relevant institutions are following established convention, but Morgunbladid expresses its frustration at the institutions’ inflexibility and inability to “change with the times”. Morgunbladid also claims in the leader that the “methods used in publishing the charges, first by a story in the British media and subsequently in an unorthodox way in their own publication” prove that the accused set great store by the public opinion. But Morgunbladid observes that it is not for the public but the courts to render a verdict in this case.

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