The Independence Party might have enough on their plate with the scandal surrounding the donations from FL Group and Landsbankinn. Andri Ottarsson has resigned as the CEO, issuing a statement saying he had nothing to do with the donations but he still wanted to resign to help the party regain some credibility (why is he resigning if he didn´t do anything wrong?). His predecessor, Kjartan Gunnarsson says he knows who was behind this whole mess but his loyalty lies with the party and its backers, not the people of Iceland who are left with the ruins of his old bank so he won´t disclose their names. If Gudlaugur Thor Thordarson´s political career is not over then his good name at least is. 

But there are still plenty of questions unanswered. One revolves around Fund 7 and Fund 9 in Glitnir, the infamous funds that were temporarily closed for business when Glitnir was nationalized. So far, the government of the Independence Party and the Alliance Party as well as the Central Bank have refused to answer why the state pumped 200 billion ISK into some funds in the defaulting banks before allowing investors access again. 

The supporters of Gudlaugur Thor Thordarson have not tired of pointing to his foe within the party, MP Illugi Gunnarsson who sat on the board of the notorious funds. The story goes that Geir Haarde and finance minister Arni Mathiesen were bailing out their fellow Independence Party MP as the funds had become loaded with worthless bonds from FL Group, a large shareholder in Glitnir, criminally ignoring the published investment policy of the funds. 

But why did the funds end up with all that FL Group waste? The more plausible story goes like this; 

- At the end of 2007 it was clear to everyone on the inside that the Icelandic economy was heading for a crash and FL Group stock had become virtually worthless.
- Those holding the stock were unable to find buyers and were stuck with the rapidly declining company.
- But inside the banks, some were being offered the chance to get rid of the toxic waste into these funds.
- So the connected business elite (and maybe some politicians, we don´t know?) facilitated a rescue mission for each other, getting cash from the owners of the funds (thousands of small and large individuals and businesses) without their knowledge at a price not available to other investors in FL Group. Essentially using the money in the funds to bail out some investors.
- Then, the taxpayers, through Geir Haarde and Arni Mathiesen paid for this rescue mission. 

This might just be a story, but as such it is a good one. It rhymes with what has become common knowledge, that some customers, employees and former employees of the banks were warned before the crash so they could rescue their assets. It would be nice to have this story confirmed or denied before the upcoming elections.

Related posts:

1. MP’s Answers Raise More Questions About Glitnir’s Fund 9
2. The Independence Party FL Group/Landsbanki Scandal
3. How Long Can Illugi Hide?
4. Gudlaugur Thor Thordarson Bought By FL Group?
5. Paid For By Baugur And FL Group