Landsbanki’s Accounts Gave the Wrong Picture Skip to content

Landsbanki’s Accounts Gave the Wrong Picture

The accountants of the defunct Landsbanki Bank approved false accounts, according to a new Norwegian report conducted on behalf of the Office of the Special Prosecutor at the initiative of Eva Joly, the Special Prosecutor’s consultant.


Landsbanki. Photo by Páll Stefánsson.

The Norwegian experts state that the settlement of accounts in 2007 did not give the accurate picture of the bank’s situation and that Landsbanki used deceit and trickery to make it look better, reports.

Individuals who were obviously connected appeared not to have any connection in the bank’s accounts, collateral for loans were of poor quality, risk was seriously underestimated, accounting documents sporadic and false profit fabricated, the report reveals.

A complicated web of companies in tax havens and offshore accounts made sure that majority owners, father and son Björgólfur Gudmundsson and Björgólfur Thor Björgólfsson, had the complete power of the bank.

In fact, the bank is said not to have fulfilled its operational permit at the end of 2007. Landsbanki should have, and Glitnir Bank too, sought assistance from the Financial Supervisory Authority.

According to the report, Landsbanki’s accounting firm PricewaterhouseCoopers repeatedly confirmed the bank’s capability by signing settlement of accounts and with special declarations.

With confirmation from the accountants, Landsbanki issued commercial papers and collected deposits, among other means through the Icesave savings scheme in the UK and the Netherlands.

From spring 2008 to September 29, 2008, a few days before the banking collapse, ISK 260 billion (USD 2.3 billion, EUR 1.7 billion) had been deposited into the Icesave accounts in the Netherlands, which is now part of the debt Icelandic, British and Dutch authorities have been negotiating on.

If PricewaterhouseCoopers had given the right picture of Landsbanki’s position in 2007, that debt never would have existed, the report concludes.

Its authors point out that possible violations committed by accountants in this case could result in imprisonment of up to two years.

PricewaterhouseCoopers in Iceland said they wouldn’t comment on the report as they hadn’t read it yet but emphasized that their work methods were strictly professional.

Click here to read more about the Special Prosecutor’s investigation and here to read more about Icesave.

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