The case of Baldur Gudlaugsson, the secretary of the Ministry of Education who quit yesterday because of an investigation by the Special Prosecutor, is intriguing to say the least.

Baldur is being investigated for selling his shares in Landsbankinn, after attending a meeting late in the summer of 2008 with Alistair Darling, the British Chanchellor of the Exchequer regarding the impending danger posed by the IceSave savings accounts. At the time, career bureaucrat Baldur was the secretary of the Financial Ministry.

The CEO of N1, the petrol and retail company asked last week in a column what could possibly be wrong with Baldur having sold his shares? He should have the right to protect himself and his family. But what the misguided CEO doesn’t understand is that public officials should be looking out for public interests, not simply their own…well how would he understand?

Much has been said in the media how Baldur sold his shares but what is even more interesting is how a bureaucrat, apparently without family wealth managed to amass 200 million ISK (the suggested but unconfirmed amount) in the bank he helped privatize.

It is telling of the distrust Icelanders have in their political leaders that the following scenario is being questioned:

As a young man, Baldur Gudlaugsson formed a friendship with other young men while they published a magazine called Eimreidin. That group included David Oddson, Kjartan Gunnarsson, Hannes Holmsteinn Gissurarson, Geir Haarde, Þorsteinn Palsson and Jon Steinar Gunnlaugsson.

Þorsteinn, David and Geir became Prime Ministers and leaders of the Independence Party.

Kjartan became the party’s longest serving CEO and sat on the board of Landsbankinn before and after privatization.

Jon Steinar became Supreme Court Justice in their time.

Hannes Holmsteinn has been provided with a tenure at the University of Iceland.

But Baldur Gudlaugsson became a bureaucrat. And as such he was brought into the state privatization committee as a replacement for Steingrimur Ari Arason. Steingrimur, a respected bureaucrat like Baldur resigned saying he’d never seen such questionable methods as were being used in the privatization of the state banks. Baldur then signed off on the behalf of the privatization committee that Landsbankinn could be sold to Bjorgolfur Gudmundsson and Bjorgolfur Thor, the Independence Party favourites.

Seven years later he sells shares in said bank said to be worth hundreds of millions.

There might be nothing questionable about how Baldur, noted for being a knowledgeable and affable man became a multi-millionaire through Landsbanki shares. But the lack of trust in Icelandic society right now makes it imperative that it should not just be investigated how he sold the shares, but also how he gained them in the first place.

Why this lack of trust? Well, it has been revealed that Bjorn Ingi Hrafnsson, assistant to Progressive Party leader Halldor Asgrimsson around the time of privatization managed to get a bullet loan without personal risk, unavailable to regular customers with Kaupthing afterwards to buy shares in the bank and profit handsomely. It was the Progressive Party that steered Bunadarbankinn into the hands of Kaupthing.

And Sigurjon Arnason was the CEO of Bunadarbankinn when Bjorgolfur and son borrowed billions to buy Landsbankinn, when the public thought they had brought in their own money. A short while later he was the CEO of Landsbankinn.

The web must be untangled before “New Iceland” can rise from the ashes. Who within the government, administration and political parties profited personally from the privatization of the banks?

In the middle of this whole mess, a certain editor in chief of a daily newspaper in Iceland who withheld relevant news about Baldur’s situation in the last couple of weeks. The man who says he warned everybody, but in fact was the man who lit the fire.

Related posts:

1. Who Was Warned?
2. Bah Bah Brynjolfur
3. Who’s Still Listening?
4. Who Got The Calls From The Invisible Hand?
5. It all started when…