Special Prosecutor Sues Former Exista Chair and CEO

The Office of the Special Prosecutor in Iceland has filed charges against Lýður Guðmundsson, former chair of investment company Exista, and Sigurður Valtýsson, its former CEO, for breach of trust and violations of corporation law as board members of insurance company VÍS.

Reykjavík District Court.

The charge is in three parts, Fréttablaðið reports.

The first two concern an ISK 50 million (USD 417,000, EUR 306,000) loan from VÍS to Sigurður in February 2009, which was repeatedly extended, and a loan of a similar amount from VÍS to Korkur ehf., a company owned by Lýður and his brother Ágúst Guðmundsson, which was extended and raised on six accounts.

These two loans are considered to be in breach of the 104^th article of corporate law which forbids a company to loan money to its board members. The maximum sentence for such a crime is two years in prison.

The third item of the charge concerns alleged breach of trust when VÍS acquired 40 percent of shares in Reykjanesbyggð ehf. from Kristján Gunnar Ríkharðsson, a member of Sigurður’s family by marriage, for ISK 150 million. If convicted, this could result in two to six years in prison.

The case will open in Reykjavík District Court on October 24.

The Special Prosecutor’s Office raided the facilities of VÍS in relation to this case in May 2011, bringing four persons in for questioning.

The investigation into the insurance company was much more extensive to begin with, concerning, among other issues, 41 loans from VÍS to Exista in 2008, amounting to ISK 84.4 billion (USD 704 million, EUR 517 million).

This is the second charge filed by the Special Prosecutor’s Office against Lýður. The former charge concerned the increase in share capitalization of Exista when only ISK 1 billion, on loan from Lýsing, was paid to cover the increase in shares worth ISK 50 billion.

In May, Lýður was found guilty and made to pay a fine of ISK 2 million, whereas the prosecutor had requested a prison sentence of 18 months.

Lawyer Bjarnfreður Ólafsson, who was also facing charges in the same case, was cleared.

ESA