Trade with Iceland Supermarkets a Scam? Skip to content

Trade with Iceland Supermarkets a Scam?

Investigators believe that entrepreneur Jón Ásgeir Jóhannesson’s several hundred billion ISK trade with the Iceland supermarkets in the UK may have been a giant scheme to defraud money from the Icelandic banks.

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Jón Ásgeir Jóhannesson. Photo by Páll Stefánsson.

The market abuse may have been going on for years, ruv.is reports. Jóhannesson released a statement yesterday rejecting all such claims.

Stocks in Iceland supermarkets increased by 74 percent in a period of a few weeks in the summer before the banking collapse in Iceland in October 2008. The resolution committees of Landsbanki and Glitnir banks are now trying to find out why.

The trade with Iceland supermarkets is a complicated affair where a number of companies in different countries are involved.

Five years ago a group of Icelandic investors, called A in this news story, led by Jóhannesson and his business partner Pálmi Haraldsson was founded.

They bought the supermarkets called Iceland in a leveraged buyout with the assistance of the Icelandic banks. According to RÚV, the purchasing price was close to ISK 35 billion (USD 311 million, EUR 233 million) at today’s exchange rate.

Two years later the same parties founded a company, B, and bought the supermarket Iceland at triple the original price, approximately ISK 100 billion (USD 890 million, EUR 640 million), again with loans from the banks.

Investment group A made extensive profits, which were paid out as dividends.

In March 2008, Jóhannesson sold Landsbanki an eight percent share in the supermarket Iceland for ISK 11 billion. In July 2008 he sold a 15 percent share of the supermarket to Landsbanki and Glitnir for ISK 38 billion.

So the banks paid a combined sum of ISK 49 billion (USD 436 million, 312 million) for the shares in the store. The increase in stock value is approximately 74 percent.

In September 2008, Landsbanki lent ISK 50 billion to move shares in the supermarket Iceland from Haraldsson’s company Fons to the company Stytta. ISK 48 million were used to pay Fons’s debt to the bank, the remaining ISK 2 billion were not delivered.

Iceland supermarkets were valued at ISK 35 billion in 2005, at ISK 100 billion in 2007 and ISK 250 billion in 2008, judging by the trade that took place shortly before the collapse.

The resolution committees of Landsbanki and Glitnir are now looking into the trade with the stores with the assistance of specialized investigators. Parts of the investigation have landed in the office of the special prosecutor because of the banking collapse.

One of RÚV’s sources commented this is “the most complicated shitty plot” he has ever seen. It is suspected to have been one giant illusion and market abuse staged to suck money out of the banks.

These allegations are rejected by Jóhannesson. “Since [the supermarket] Iceland was bought in 2005 it has paid Icelandic investors, including Landsbanki Íslands, approximately 67 billion krónur in dividends. In spite of that, the company’s shares are valued at 200-250 billion today but Landsbanki Íslands’s resolution committee recently rejected an offer to the company worth 1 billion pounds. I dare to state that this asset is the most valuable asset of the old banks and will pay almost a third of Landsbanki’s Icesave hole. No one will lose out on this investment, because Iceland [the supermarket] is among the most valuable privately-owned companies in Britain,” he wrote in his statement.

Click here and here to read more about the affairs of Jón Ásgeir Jóhannesson.

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