Jón Gerald Sullenberger looks Baugur CEO in the eye Skip to content

Jón Gerald Sullenberger looks Baugur CEO in the eye

The same day Baugur CEO Jón Ásgeir Jóhannesson was arraigned in court in Iceland, his former business partner Jón Gerald Sullenberger, whose testimony to the Icelandic police provoked the investigation into the affairs of Jón Ásgeir and Baugur, appeared on TV-station Stöd 2 in an interview on the current affairs program “Ísland í dag”, “Iceland today”.

(Jón Gerald Sullenberger is a US based businessman of Icelandic descent who had various business relationships with Jón Ásgeir Jóhannesson from 1991 to 2002.

According to the August issue of the Icelandic magazine Mannlíf, Jón Gerald’s wife and Jón Ásgeir’s wife, from whom Jón Ásgeir separated in the late nineties, were linked by family.)

Two interviewers discussed several aspects of the Baugur case with Jón Gerald. In what follows, Daily News summarizes some of the discussion.

One of the charges relates to 34 invoices amounting to ISK 40 million which are alleged to have been paid by Baugur to Jón Gerald in order to cover the costs of a recreational boat, Thee Viking, which Jón Gerald maintains he owned jointly with Jón Ásgeir Jóhannesson and Jóhannes Jónsson in Florida. The defendants have denied being part owners of the boat.

Jón Gerald stated that the three had owned the boat, but that the boat had been registered in the name of a company he owned, and that he had submitted invoices for “commissions” and “finder’s fees” to Baugur (then a public company) in order to pay for its operations and purchase.

Jón Gerald claimed that emails and financial documents relating to the boat prove that he owned the boat jointly with Jón Ásgeir and Jóhannes. Jón Gerald said he could link the invoices issued to Baugur to payments he had made for the boat.

When asked about the propriety of issuing such bogus invoices, Jón Gerald said that Baugur’s accounts were not his responsibility, he had just acted according to their [Jón Ásgeir’s and Jóhannes’s] instructions.

When asked if he was not confusing Baugur with Gaumur, and if Gaumur had not provided him with a loan for the boat (as the defendants maintain), Jón Gerald said that the defendants had been unable to provide a copy of any loan agreements between himself and Gaumur.

Responding to the interviewer’s assertion that the defendants were now claiming in Iceland that he, Jón Gerald, had been the sole owner of the boat, and that the defendants had taken him to court in the US in 2003 in order to pursue the opposite claim, ie, that Jón Ásgeir and Jóhannes owned the boat jointly with Jón Gerald, Jón Gerald replied, “Yes, very interesting it’s opposite of what they say in Iceland.”

When asked how the US court case had concluded, Jón Gerald said that the defendants had withdrawn charges against him in the US and settled the counter-charges he had made against them in a civil suit in Iceland.

When asked about allegations made by the defendants that Baugur paid a monthly retainer to Jón Gerald, for “consulting”, to compensate for losses at his warehouse, and in order to support him and his family, he replied that if his financial situation had indeed been so difficult, why had he not then sold the boat, worth one million dollars at the time?

Jón Gerald was asked about a credit note for ISK 60 million, or USD 600 thousand, which he issued in 2001 for the benefit of Baugur. The alleged purpose of the credit note, according to the interviewer, was to dress up Baugur’s books (by inflating revenues). Jón Gerald said he’d unexpectedly received a phone call from ex-Baugur CEO Tryggvi Jónsson, asking him to issue such an note before 4 pm that same day. Tryggvi provided no further explanation according to Jón Gerald. Following instructions sent to him by email, Jón Gerald promptly issued the credit note and faxed it to Baugur from his office in Florida. Then he “tore it up and threw it in the trash.” He wrote on the credit note that it was issued as compensation for “damaged goods” during a 6 month period in 2001 and 2002.

When asked how he responded to the current claims of the defendants that the credit note was issued in connection with a discount for transactions running from 1992 through 2002, Jón Gerald replied that they had settled the accounts annually, and that the amount of USD 600 thousand corresponded to 17 containers worth of damaged goods which did not make sense.

The interviewers asked Jón Gerald if he had been violating laws by issuing the false credit note for USD 600 thousand. Jón Gerald responded that he had “been used” and was a “victim of blackmail”. Eighty per cent of his revenues came from Baugur, and he insinuated that he had had no choice but to oblige them.

When asked what had happened to the ISK 60 million (USD 600 thousand), he said that Baugur had never pursued the claim, and that he had never paid it.

The interviewers asked Jón Gerald why he was not being charged since he had issued false invoices and credit notes to Baugur. He responded by saying that he had not reaped any financial gain from the transactions, in any case he had issued the invoices and notes in the US, and the Icelandic authorities had no jurisdiction there.

When asked if he had made a deal with the Icelandic police, Jón Gerald replied “no”.

Concerning allegations by the defendants that Jón Gerald’s charges had been prompted by a desire “for revenge”, Jón Gerald responded that the defendants had already been in breach of contract, for example, they had not honored a promise to guarantee a certain minimum level of transactions for a new warehouse Jón Gerald had opened.

The interviewers asked if the “private relations” between Jón Ásgeir and Jón Gerald’s wife had provoked him to file the charges. He responded that there had been more, he had been pressing them to settle certain issues, the defendants had not treated his friend, ex-Wal-Mart manager Jim Schaefer, right in connection Schaefer’s and Baugur’s involvement in Bonus Dollar Stores. But Jón Ásgeir had “violated trust”, and the issue concerning Jón Gerald’s wife was the “straw that broke the camel’s back”.

The interviewers referred to prior transactions involving, among other things, boats, and asked Jón Gerald why it had taken him so long to come to the conclusion that the defendants were “dishonest”. He answered that in their business dealings he had taken care of his part, they of theirs, he had not been aware of how they had kept their books, just issued the invoices and received payment.

When asked if he intended to sue the defendants in connection with an alleged breach of the settlement of the civil suits between the two parties, which Jón Gerald threatened this summer, he responded that he was looking into the issue.

When asked how his business was doing at the moment, he replied it was going well.

When asked why he had been at the court proceedings earlier that day, Jón Gerald said he had attended the arraignment in order “look them in the eye”. According to Jón Gerald, they did not reciprocate.

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