Iceland Drops in Corruption Rankings

Boat with Samherji Logo

Iceland is down two spots in Transparency International’s corruption rankings and now sits in 19th place. The Nordic countries, apart from Iceland, rank at the top as some of the least corrupt countries in the world, Heimildin reports.

Transparency International, a global movement to end the injustice of corruption, published its list this morning. Each country is rated on the basis of factors linked to corruption in the public sector, with 0 being the most corrupt and 100 the least corrupt. As it stands, Iceland has a rating of 72, the lowest rating it’s ever received. The country dropped two points and two spots from last year. In 2005 and 2006, Iceland ranked as the least corrupt country in the world before revelations related to the financial crash of 2008 saw it move down the list.

Samherji case highlighted

In a notice from the Icelandic office of Transparency International, a number of bribery cases, the privatisation of the publicly-owned Íslandsbanki, the Samherji bribery scandal, political uncertainty, and a corrupt fisheries system are named as examples of factors that have decreased public faith in good governance.

The Icelandic office specifically mentions the 2019 revelations that Samherji, one of Iceland’s largest seafood companies, had allegedly bribed Namibian government officials to gain access to lucrative fishing grounds, while also taking advantage of international loopholes to avoid taxes. A number of Namibian officials are already on trial for their part in the scandal, but in Iceland, no one has been charged in the four years since the story broke.

“Namibia has 49 points, unchanged from last year,” the notice reads. “The Icelandic office would like to highlight that Namibia is down three points since the Samherji case began. During the same time period, Iceland dropped six points.”

Nordics top the list

Transparency International was founded in 1992 and now operates in over 100 countries. They’re independent, non-governmental, and not-for-profit and have a vision for “a world in which government, politics, business, civil society and the daily lives of people are free of corruption”, according to their website.

Denmark is the least corrupt country according to the index, with 90 out of 100 points. Finland, New Zealand, Norway, Singapore and Sweden follow. The most corrupt country in the world is Somalia, according to the index, with South Sudan, Syria, Venezuela, Yemen and North Korea ranking just above it.

Isavia’s Former Service Director Found Guilty of Accepting Bribes

The former service director for Isavia, the national airport and air navigation service provider of Iceland, has been found guilty of accepting bribes in connection with the company’s purchase of tickets in the airport parking lot. RÚV reports that on Friday, the Court of Appeal overturned the previous ruling of the Reykjavík District Court in the case, which had found the service director guilty of fraud and money laundering, but not of accepting bribes.

As a result of Friday’s ruling, the service director also received a longer sentence: 15 months instead of 9 months, although 12 of these were suspended.

When the district prosecutor argued the case two years ago, the service director was said to have accepted roughly ISK 3.5 million [$27,110; €23,418] in bribes. The CEO of a tech company that sold Isavia parking tickets was also charged and said to have made a profit of ISK 4.5 million [$34,856; €30,110]. Friday’s ruling determined, however, that the former service director abused his position at Isavia to obtain illegal profits.

Both men were ordered to pay Isavia just over ISK 8 million [$61,963; €53,526]. Their assets were seized, and the proceeds of those seizures will be used to pay damages owed to Isavia.

Former Samherji CEO Reinstated

Þorsteinn Már Samherji

Þorsteinn Már Baldvinsson has returned to his position as CEO of seafood company Samherji after stepping down last November. Þorsteinn stepped down from the position last November after an investigation alleged the large fishing company had bribed Namibian government officials to gain access to lucrative fishing grounds, while also taking advantage of international loopholes to avoid taxes.

Read More: Samherji Scandal

A notice on the Samherji website announcing Þorsteinn’s return states that his main task will be leading the company through the challenges presented by COVID-19. “Þorsteinn Már has previously steered Samherji through the Icelandic banking collapse and the global financial crisis with outstanding results. The board of Samherji therefore believes that no one is better equipped to tackle the current situation,” Eiríkur S. Jóhannsson, chairman of the board, is quoted as saying.

Returns despite ongoing investigation

In the wake of the bribery allegations, Samherji solicited the aid of Norway-based law firm Wikborg Rein to conduct an internal investigation. The hiring of Wikborg Rein was heavily criticised, as the firm also defended Samherji’s interests in Namibia. The firm’s investigation is ongoing, and Samherji states that it is expected to be completed later this year.

Samherji increases stake in Eimskip

On March 10, Samherji increased its stake in Icelandic freight company Eimskip by 3.05%, giving it a 30.11% stake in the company after the purchase. As a result, the company’s holding exceeded the acquisition limit. However, Samherji Holding requested an exemption from the takeover obligation, which the Central Bank’s Financial Supervisory Authority approved on March 31. The Authority considers that the minority protection of other shareholders has not been violated.

“These are very particular and unusual conditions on the financial market,” stated Björgólfur Jóhannsson, director of Samherji Holding. “We do not therefore consider it wise to put forth a takeover bid in the shadow of this turmoil but we hope the conditions will be more favourable later.”

Tax Authorities Open Samherji Case

Þorsteinn Már Baldvinsson

Communication has begun between Samherji and The Directorate of Tax Investigations in Iceland and the District Prosecutor, RÚV reports. The Icelandic fishing company will be ceasing operations in Namibia within a few months, sooner than previously stated. Samherji has been embroiled in a bribery scandal in the African country since last month.

Samherji’s acting CEO Björgólfur Jóhannsson told RÚV today that the company had decided to cease operations in Namibia in 2017, but recently accelerated the final stages of that process. Björgólfur says that communication has been opened between the company and the Directorate of Tax Investigations in Iceland as well as the District Prosecutor.

The six Namibians who are suspected of fraud and money laundering in connection with the Samherji case appeared in court this afternoon where their charges were read to them. The Namibian reports that their charges include fraud and tax evasion as well as money laundering.

Samherji and Iceland Under Scrutiny

Prime Minister Katrín Jakobsdóttir is prepared to ensure any additional funding that may be needed to investigate Samherji’s operations in Namibia. Icelandic banks also report that they plan to investigate their business with Samherji. The Organisation for Economic Co-operation and Development (OECD) says Iceland’s handling of the bribery scandal will be a touchstone case and plans to follow the matter closely.

Government investigates

Prime Minister Katrín Jakobsdóttir stated in an interview on Kastljós yesterday that if tax authorities need more funding to conduct an investigation into Samherji’s affairs, it will be provided, so that the issue is researched “with due diligence.” The Prime Minister added that it’s also necessary to consider whether laws need to be amended in order to require large unlisted companies, like Samherji, to submit comparable information to companies listen on the stock market.

Icelandic banks investigate

Arionbanki’s board of directors has requested a detailed examination of the bank’s business with Samherji. Friðrik Sophusson, chairperson of the board at Íslandsbanki, says the board will likely discuss the issue at a meeting today. Helga Björk Eiríksdóttir, chairperson of Landsbanki’s board, stated the bank cannot comment on issues relating to its customers, but is legally bound to carry out statutory supervision of its customers.

Norwegian bank DNB is reviewing the tax component of Samherji’s case. The bank ceased its business relationship with Samherji last year as it deemed the company a money laundering risk.

Björgólfur Jóhannsson, who took over as CEO of Samherji following Þorsteinn Már Baldvinsson’s resignation last Thursday, says that one ship which is part of the company’s foreign operations is financed through an Icelandic bank. Björgólfur says the company will provide banks with information on its finances if it is requested.

Þorsteinn Már has not only stepped down as CEO of Samherji, he has also requested indefinite leave from the board of Síldarvinnslan and stepped down as board director of Faroese fishing company Framherja.

“Touchstone case,” says OECD

Drago Kos, chair of the OECD Working Group on Bribery, says the case data appears trustworthy, and the case will be a touchstone for Icelandic authorities. The case is being formally investigated by Icelandic police, and the OECD will follow its development closely.

“For us at the OECD, it will be a good test of the Icelandic police and the prosecution to see how they handle the case,” Kos stated. “We are closely monitoring the case’s progress.” Kos says he hopes Icelandic authorities will address the case “within a reasonable timeframe, in a quick and efficient way,” underlining that the first step is to determine whether the allegations are in fact true.

CEO of Samherji Steps Aside Amid Bribery Scandal

In a statement released this morning, Samherji announced that CEO Þorsteinn Már Baldvinsson will be stepping aside indefinitely pending an internal investigation into the company’s subsidiaries’ “alleged wrongdoing in Namibia.”

As reported this week, subsidiaries of Samherji – one of Iceland’s largest fishing companies – are alleged to have paid high-ranking officials in Namibia more than ISK one billion since 2012 to ensure access to horse-mackerel fishing quotas in the country. Following the allegations, Samherji announced that it would solicit the aid of the Norwegian-based law firm Wikborg Rein to investigate the alleged wrongdoing.

According to Samherji’s statement from this morning, Björgólfur Jóhannsson – former CEO of Icelandair Group – will take Þorsteinn’s place as acting CEO and will meet with employees and key stakeholders in the coming days.

“Samherji employs thousands of people globally. We take this serious step to ensure and demonstrate the complete integrity of the ongoing investigation. At Samherji we are committed to fair and honest business, and we will always strive to act in accordance with applicable laws and regulations, says Eirikur S. Jóhannsson, Chair of the Board of Directors of Samherji,” the statement reads.

The Namibian Minister of Fisheries, Bernhardt Esau, and Minister of Justice, Sacky Shangala, resigned yesterday.

Namibian Ministers Resign Following Samherji Scandal

Following revelations of a fishing-quota kickback scandal, the Namibian Minister of Fisheries, Bernhardt Esau, and Minister of Justice, Sacky Shangala, have resigned, RÚV reports.

As reported by the investigative journalism programme Kveikur (produced in collaboration with Stundin and Al Jazeera Investigates) yesterday, Samherji allegedly bribed Esau and Shangala – along with three other high-ranking officials – in order to secure access to horse-mackerel fishing quotas in the country.

Leaked documents from former Samherji employee and whistleblower Jóhannes Stefánsson suggest that Samherji paid these individuals, mostly through companies in Namibia and Dubai, approximately ISK 1.5 billion at present value. The payments were frequently made simultaneously with Samherji’s negotiations of quota agreements with the Namibian government, agreements that rarely seemed to have been in the government’s best interest.

To fill the vacancies, President Hage Geingob has appointed Frans Kapofi as acting Minister of Justice and Albert Kawana as acting Minister of Fisheries. According to the Namibian Broadcast Corporation, President Geingob thanked Esau and Shanghala, “for their patriotism and contribution to the work of government.”

Samherji Accused of Tax Evasion and Bribery in Namibia

Companies owned by the Icelandic fishing company Samherji are alleged to have paid high-ranking officials in Namibia – and individuals connected to them – more than ISK one billion since 2012 to ensure access to horse-mackerel fishing quotas in the country. This was reported by the investigative journalism programme Kveikur (produced in collaboration with Stundin and Al Jazeera Investigates) on RÚV yesterday. During the programme, former Samherji employee Jóhannes Stefánsson blew the whistle on the company’s activities. In addition to allegations of bribery, Samherji is also accused of transferring money to offshore tax havens.

One of Iceland’s Biggest Fishing Companies

Samherji, one of Iceland’s biggest fishing companies, is owned largely by cousins Kristján Vilhelmsson and Þorsteinn Már Baldvinsson. The company operates dozens of vessels around the world. Over the past few years, Samherji has made substantial profits in Africa, most notably from horse-mackerel fishing off the coast of Namibia.

The Icelandic government spent just under ISK two billion at present value in developmental aid for Namibia between 1990 and 2011, chiefly in support of the local fishing industry. Shortly after the government’s formal aid to Namibia came to an end, Samherjii endeavoured to secure access to fishing quotas in the country. This proved difficult, owing to restrictions on foreign investment in the Namibian fishing industry. The restrictions aimed to ensure that Namibians, and especially the impoverished, enjoyed the fruits of the fishing industry.

Bribes to High-Ranking Officials in Namibia

According to documents leaked to Wikileaks, and which Kveikur investigated, Samherji solicited the aid of three high-ranking officials in Namibia, all of whom are closely connected to Namibia’s Minister of Fisheries, Bernhard Esau (who is said to have accepted bribes as well): Tamson Hatuikulipi, Esau’s son in law; James Hatuikulipi, Tamson’s cousin and Chairman of the Board of the National Fishing Corporation of Namibia (Fishcor); and Sacky Shangala, the current Minister of Justice. Payments were also made to Mike Nghipunya, CEO of Fischor.

The documents suggest that Samherji paid these individuals, mostly through companies in Namibia and Dubai, approximately ISK 1.5 billion at present value. The payments were frequently made simultaneously with Samherji’s negotiation of quota agreements with the Namibian government, agreements that rarely seemed to have been in the government’s best interest.

“It looks like bribery,” Daniel Balint-Kurti, head investigator for the anti-organisation Global Witness, said. “I think that Samherji has some tough questions to answer.”

As reported by Kveikur, the leaked documents show how Samherji profited from a quota treaty that Namibia signed with its neighbour Angola in 2014. The treaty seems tailored to Samherji’s interests.

The Whistleblower

Jóhannes Stefánsson, the former general manager of Samherji’s operations in Namibia – and who mediated some of the aforementioned payments – blew the whistle on Samherji’s alleged offenses, as well as his own, to anti-corruption authorities in Namibia and other countries.

“The orders came from Þorsteinn Már and Aðalsteinn [Aðalsteinn Helgason, Jóhannes’ superior in Afirca]. Every obstacle was to be surmounted, to obtain the highest possible quota,” Jóhannes stated. Asked whether bribery was involved, he responded in the affirmative: “Yes, bribes were not an issue for Samherji.”

Samherji Responds

In a statement released by Samherji following the premiere of Kveikur, the company stated that it took these allegations seriously and that it had solicited the aid of the international law firm Wikborg Rein (based in Norway) to investigate the allegations. The statement also quotes Þorsteinn Már Baldvinsson, who questions Jóhannes Stefánsson’s role in the investigation:

“All of the operations of Samherji and connected companies were subject to extensive investigations for a period of many years without any punishable offense being discovered. All of our books, emails, and other documents were thoroughly reviewed, including those of the companies operating fishing vessels off the coasts of Africa from 2007. Just like before, we will not put up with the false and misleading accusations of a former employee, which are, once again, being served up by the same parties within the media and the Central Bank.”