Iceland is currently in a state of shock. The nation has been hit with one bad news after another since the economic collapse last year. The dust has not settled, with no one made responsible and few solutions to Iceland‘s problems offered by its leadership. Fingers are still being pointed and anger and resentment is apparant everywhere as people realize that Iceland is worse off, and worse for it.
But what can an island of 300.000 inhabitants expect in the future? How is society supposed to be built to withstand such rampant nepotism and corruption? It will be very hard indeed, as the person sitting on the other side of the table, whether in a business meeting, at the bank or in a courtroom is likely to be someone from the golf course, the parent‘s association or even good old uncle Siggi.
The best place to start would be to implement what Hjalmar Gislason of DataMarket calls “merciless transparency”. Instead of all official documents and actions being secret unless in an situation of emergency, it should be the other way around. Everything in our government, local or state should be on the table except matters of national security.
Secrecy breeds corruption, and even worse since the economic collapse, the lingering suspicion of corruption which resides in every Icelander. There is no trust in official institutions, elected officials, bureaucrats or the business sector. The trust that is needed to build a society where people feel safe is only attainable by making everything official…well official.
The alternative is likely to make Iceland into a place where it is intolerable to live, work and pay taxes in good faith. For example, the secrecy surrounding the sale of HS Energy to Magma Energy is creating a stir in Iceland. As officials refuse to disclose the whole story and march on under the shield of secrecy, rumors are rife, and anger is brewing.
There are questions aplenty that remain unanswered in the Magma/HS case. And the word on the street is that Bjarni Armansson and Finnur Ingolfsson are behind the deal. If that were true, how badly would society react to two of the people most involved in the corrupt Icelandic economic miracle which went bust on its nation being handed the natural resources while everyone is too confused to lift a finger?
Not much is known about Magma Energy which was formed in January 2008, shortly after the REI Energy deal blew up in Bjarni Armannsson‘s, FL Group‘s and the Progressive and Independence Party‘s faces. But also while the economy was faltering and was heading downwards. It was registered on the Toronto stock market last July where three thousand investors participated. Magma currenly only owns one power plant in Nevada, with production capabilites of 23 megawatts. It has acquired research permissions in the US and South America.
Ross Beatty is the founder, main shareholder, CEO and chairman of the board of Magma. He is also chairman of Pan American Silver which is the second largest silver mining company in the world and became wealthy himself through investments in copper. The purchase in HS Energy is the largest deal made by Magma so far, albeit through a shelf-company in Sweden as foreign investment in the geothermal sector is prohibited to companies outside the European Economic Area.
The lenght of the deal, 65 years is strange compared to 10 years plus options which Magma has negotiated in the US. Over there the company is also subject to resource taxes nowhere to be found in Iceland.
But why is Ross Beatty, such a prominent businessman who even Canadian newspapers find hard to gather information about, investing in Iceland? Obviously there is an opportunity for businessmen to look for gold in the economic rubble of Iceland, but how do these kind of deals come about? And is he really investing his own cash in an unfamiliar business environment? No, not really as the deal is financed through Landsvirkjun on a loan with a due date in seven years time. An interesting lookup of Magma in Canada reveals $43m of assets on June 30, $5 m of revenue and $10 m of costs = $5m losses so the company could not have guaranteed a loan by itself. It would need the guarantees of a director or someone else willing to back it up.
Sound familiar? If you didn‘t know better you‘d think the fingerprints of the Icelandic business-vikings were all over the case.
But we don‘t know any better because the whole deal is done behind closed doors. So therefore people are making up likely scenarios involving Capacent Glacier, Halldor J. Kristjansson, Bjarni Armannsson and Finnur Ingolfsson. That the whole deal is done to save Atorka an investment company which owns 41% of Geysir Green Energy opposite of GREF which is now owned by the solvency committee of Glitnir, and put together by Arni Magnusson, former Progressive Party minister. You might remember Finnur as the former Progressive Party Minister made billions from the privatization of Bunadarbankinn, almost Soviet-oligarch style.
Capacent Glacier which has now been consulting on the sale to Magma is basically GREF a former division of Glitnir and headed by the same person Magnus Bjarnason. The connection with Bjarni Armannsson is obvious, as Glacier Renewable Energy Fund was formed in the wake of the REI scandal where Bjarni, former Glitnir CEO was one of the main investors behind the deal.
Moreover,people are asking where is Halldor J. Kristjansson? What is the former CEO of Landsbankinn and ministry director for Finnur Ingolfsson doing in Canada of all places? Any connections to Ross Beatty, Magma? No? Who knows?
More on this story from IcelandTalks
It is impossible to expect a society without corrupt people ascending to positions of power. But in a society where information is available to the public, it is easier to trust politicians and businessmen instead of making up stories.
Is the Magma plot true? Who knows? The absence of disclosure is destructive for all parties, the public, the politicians who are under suspicion of being dirty and the businessmen who might have nothing to do with it.
In a small society, merciless transparancy would be a great stepping stone onto a better future for Iceland.
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Carl Mosconi
2 years ago
I´m just waiting for the enablers to be exposed. Let´s take a look at the accounting firms for a start and we can add more later. No since exposing the entire plot in one fell swoop!