Icelandic State Was Deceived in Bank Sale Skip to content

Icelandic State Was Deceived in Bank Sale

The German bank Hauck & Aufhäuser was never an actual investor in Búnaðarbankinn bank when the Icelandic State’s 45.8 percent stake in the latter was sold in January of 2003. This is the conclusion of the Special Investigation Commission (SIC) of Alþingi, the Icelandic parliament, RÚV reports. SIC concludes that authorities were systematically deceived leading up to and following the sale.

A press release from the committee states that detailed written documents indisputably show that the German bank, Kaupþing hf. In Iceland, Kaupthing Bank in Luxembourg, and a group of men working for and on behalf of investor Ólafur Ólafsson used secret agreements to hide the true ownership of shares attributed to Hauck & Aufhäuser. The actual owner was instead the offshore company Welling & Partners, registered on Tortola, the British Virgin Islands. With numerous secret agreements and transfers of funds, among others from Kaupþing hf. to an account of Welling & Partners at Hauck & Aufhäuser, the German bank was guaranteed indemnity in the deal with Búnaðarbankinn.

The secret agreements secured Welling & Partner more than USD 100 million, deposited to its account at Hauck & Aufhäuser. Three years after the sale, USD 57.5 million was transferred from Welling & Partner’s account to the offshore company Marine Choice Limited, founded by the attorney office of Mossack Fonseca in Panama, but registered on Tortola. The actual owner of Marine Choice Limited was Ólafur Ólafsson. At the same time, USD 46.5 million was transferred from the account of Welling & Partner to the offshore company Dekhill Advisors Limited, also registered on Tortola. No conclusive information is available regarding who the actual owners of Dekhill Advisors Limited are, or who benefitted from the amounts paid to the company.

The press release from SIC notes that email communication between the aforementioned parties shows how Icelandic authorities were deceived and how distorted a picture of the purchase was presented to news media and the public.

SIC furthermore states that there is nothing to indicate that other parties inside the investment group which bought the state’s share in Búnaðarbanki, the so-called S-Group, had any knowledge of the secret agreements. They were under the impression that Hauck & Aufhäuser was the real owner of the shares registered in its name.

Kjartan Bjarni Björgvinsson, chair of SIC, stated that the purpose of the secrecy was to hide the real buyer of the state’s share in Búnaðarbankinn. “It’s clear that it was important to [those involved] not to reveal that Kaupþing came anywhere near the deal or that Ólafur Ólafsson’s role in it was larger than publicly stated,” he remarked.

Kjartan added that if it is to be investigated whether this conduct was punishable, then Alþingi will have to appoint a committee of three members to look into that.

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