Economic Disaster Area » Bjarni Armannsson

Icelandic Bank CEO’s Success At The Ig Nobels

Dadi — Fri, 02 Oct 2009 09:43:36 +0000

Economics: The directors, executives, and auditors of four Icelandic banks for demonstrating that tiny banks can be rapidly transformed into huge banks, and vice versa (and for demonstrating that similar things can be done to an entire national economy).

The CEO’s of Iceland’s collapsed banks have been honored at the Ig Nobel . This is the first time the Ig Nobel prize goes to Iceland, so this is a matter of national pride.

Should we expect a welcome party downtown Reykjavik or in Smaralind Mall for the winners?

From the BBC

PS: The bankers were unable to be present at the awards ceremony. The photo above is from 2008 when Bjorgvin G. Sigurdsson, Minister of Commerce handed Landsbankinn an award for the best annual report.

Unlike the Ig Nobels, that award wasn’t meant to be a joke.

Merciless Transparency To Build A Better Nation And Avoid Magma Suspicion

Dadi — Tue, 29 Sep 2009 15:43:52 +0000

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?

Irresponsible Treatment Of Money

Dadi — Fri, 18 Sep 2009 10:34:22 +0000

Bjarni Armannsson is a genius.

Quoted last week as saying it would be irresponsible treatment of money to pay a debt he owes to Islandsbanki, Bjarni has set the tone for his countrymen.

At a video store yesterday the clerk told the person in front of a relative of mine that he owed 1.200 ISK for a late delivery of a Friends DVD.

The person’s reply; “What? I owe you money? But I wold be guilty of irresponsible treatment of money if I paid you. Now go ahead and prove to me that I owe you.”

Bjarni Armannsson: It Would Be Irresponsible Of Me To Pay

Dadi — Thu, 10 Sep 2009 10:12:03 +0000

How is Steingrimur J. Sigfusson going to tackle this one?

Glitnir/Islandsbanki is probably about to relieve former CEO Bjarni Armannsson of a debt of 800 million ISK, which is from a loan his own shelf-company Imagine got from the bank to purchase 12% of shares in the Norwegian business Glitnir Property Holding. Bjarni who walked out of Glitnir with 7 billion ISK says in an interview with DV that it would be an irresponsible treatment of money to pay this debt.

How does this sit with Iceland’s finance minister who recently said it was Icelanders’ moral duty to keep paying their debts even though they have grown out of proportion. “I think it is very irresponsible to encourage people to give up or stop paying. That will bring more misfortune on us all, those who are worst off and society as a whole”.

Top 10: Who’s To Blame For The Icelandic Crash

Dadi — Wed, 29 Jul 2009 10:42:55 +0000

Since Newsweek was pointing fingers this week with its “Who’s to blame” report, it only makes sense that Icelanders start extending their index fingers. For every Fred Goodwin, there is a Bjarni Armannsson and for every David Oddson…well there are actually few people who could have made as much mess in history as David Oddson. So here is the top ten, which actually holds a lot more than ten people, but then again inflation is still here.

1. David Oddson
He wanted all the praise so he has to accept the blame. Within 50 years of ridding itself of a foreign monarch, the King of Denmark, Iceland had something close to its own. He went about changing a closed, regulated society and throwing it onto the free market of everything. Unfortunately he wanted complete control of where the wealth and power was supposed to go. He could have become a JFK but ended up a George W. Bush. You can throw Political Science Professor at the University of Iceland, Hannes Holmstein Gissurarson into the mix with David as they are attached lips to butt anyways. Retired for now, supposed to be writing his memoirs. Quite a few dinosaurs and Independence Partyjugend would like to see a return to politics. One of incredibly many top Icelandic politicians to battle cancer in the last decade.

2. Halldor Asgrimsson
A Godfather of sorts to a Progressive Party Cosa Nostra which did not hesitate stealing the resources of Iceland in broad daylight. Hardly a visionary of any kind, but a dark lord of special interest who did anything to maintain the axis of power he built with the Independence Party. Thought he could become the emperor, but once on the PM throne he was ruefully exposed as a naked don of demons of greed and corruption. Would have sold Mount Esja if the right bid had come along. Retired after battling cancer. Family benefitted directly monetarily from the fishing quota system his party helped build and sustain.

3. Valgerdur Sverrisdottir & Geir Haarde
Every villain needs a trusty sidekick which is both scary in the lenghts it will go to please its captain but pitiful all the same. Valgerdur was the middle-woman when Iceland sold its soul at Karahnjukar and the person who made the privatization of the banks happen into the right hands. Her education at a Berlitz languague school probably made her most qualified. Geir Haarde was handed the atomic bomb with 10 seconds to go on the clock, which was somehow fitting as he’d been one of the chief engineers as a Finance Minister to David Oddson. Of course it was going to end up blowing in their face. Geir now battles a serious case of cancer. Valgerdur was appointed to head a committee by rival party minister Ossur Skarphedinsson, so don’t worry about the co-operative of politicians not taking care of each other.

4. Finnur Ingolfsson
When you are a simple Minister of Commerce and Industry one day and a humble Central Bank Governor the other, and then suddenly a billionaire after being handed a state bank through privatization, well then you just have to be either a brilliant businessman or an incredibly corrupt poltician who knows no shame. And Finnur Ingolfsson ain’t no brillant businessman. Is probably negotiating a nice loan-remittance for himself at the banks right now.

5. Bjorgolfur Gudmundsson & Bjorgolfur Thor
Bankrupt a shipping company, run a few risky and failing businesses, go to post-communist Russia and make a buck, get a loan from a newly privatized bank to buy another bank because you are acceptable to the Independence Party, line the bank’s top positions with the Party’s favorite sons and daughters, run it almost to the ground, start a shady pyramid scheme called IceSave, destroy the lives of your countrymen and then ask for a discount on your loans. Last year Bjorgolfur Thor said that he had acquired all money could buy and now he was most concerned about leaving a great reputation. Might qualify for any worldwide list of top ten disastrous businessmen. Are now being battered from all sides, which is not surprising as they owe more money than the population of Central America. Recently asked for a discount on the loan they took from Bunadarbankinn to pay for Landsbankinn in the beginning, probably challenging the world record for chutzpah. Will probably continue to live in luxury with the money they’ve got stashed away in tax-havens.

6. Sigurdur Einarsson (Kaupthing), Bjarni Armannsson (Glitnir), Hreidar Mar Sigurdsson (Kaupthing), Sigurjon Arnason (Landsbankinn), Halldor J. Kristjansson (Landsbankinn), Larus Welding (Glitnir)
CEO’s and chairman of the boards of the companies that built the smoke and mirrors of the “Icelandic Economic Miracle”. Middle-men in the transfer of Icelanders wealth into the pockets of a few chosen ones. Tax-evading enablers par-excellence who paid themselves a Croesian sum through bonuses and dividends that had no grounds in reality. You will find them as highly paid consultants today, as they are too well-connected to ever go to jail like you would.

7. Jon Asgeir Johannesson (Baugur), Hannes Smarason (FL Group), Palmi Haraldsson (Fons), Karl Wernersson (Milestone), Agust & Lydur Gudmundsson (Bakkavor)
Parasites of the business world whose magic revolved around leveraging everything through the roof, and making away with what owners equity they could find. It is easy to buy what you want with a loan when you own a bank. Shamelessly neuveu-riche, typical Icelandic car-salesmen who’d gone upscale. Were never favored by David Oddson which made them tolerable to a large part of the nation. Hiding abroad, investing their loot.

8. Olafur Olafsson
The money behind the Progressive Party, which he aquired through the Party’s connections and consent. Became a billionaire through close connections with Valgerdur Sverrisdottir and Halldor Asgrimsson who left no good morals unbroken in bringing Bunadarbankinn into his hands. Was the main player in a massive market manipulation swindle when a sheik from Kuwait was supposed to have shown his trust in Kaupthing with a 5% share purchase. Again, too connected to ever go to jail.

9. Kjartan Gunnarsson
You are the Independence Party CEO and on the board of state-owned Landsbankinn. It is privatized and you are still on the board. The whole bank is filled with party hopefuls. The bank introduces IceSave and deliberately ties the knots so that the Icelandic state is responsible if it goes bust. It does.

10. Ingibjorg Solrun Gisladottir
Could have offered a stark alternative to the disastrous regime of David Oddson’s Independence Party. And for a while she was harshly critical. But when things seemed rosier than ever during the “economic miracle”, she formed a government with the party she loved to loathe. If she’d let the Left Greens form the government instead in 2006, the economic crash would have happened under political explosions. Instead we got scared little mice running into cover as her party had become the second fiddler as the nation burned. Yet another one who’s having to fight cancer right now.

Honorable mention: Olafur Ragnar Grimsson
Hey Mr. President! We haven’t forgotten about you even if you seem to prefer being in hiding these days. An Icelandic president is supposed to unite the nation, support its people’s endeavors and protect its image. He is not supposed to be an on-call PR person for venture capitalists. Building his own dynasty, Olafur left a stain on a beloved institution. The first president to obviously honor greed as good. And that “You Ain’t Seen Nothing Yet” speech completes the icing on the cake on the Icelandic nation’s ridicule. Has mysteriously disappeared from the nation’s consciousness, another magical PR trick from him.

Sticking Us With The Bill

Dadi — Tue, 28 Jul 2009 12:43:52 +0000

Now that they are safe with the money they managed to transfer abroad, the chief architects of the Icelandic “economic miracle” are leaving the country. So no help with the IceSave bill from them.

Hannes Smarason and Bjorgolfur Thor have been hiding in London and Cyprus according to the media. Bjarni Armannsson ran away to Norway last year and is now investing his loot in the UK. Jon Asgeir Johannesson is trying to get into the fashion game in the US and now Hreidar Mar Sigurdsson is opening up a consultant business in Luxembourg, conveniently located when you think about where all the money went from Iceland.

Halldor J. Kristjansson of Landsbankinn is off to Canada to run a bank. Brace yourselves, Canadian savers.

Good riddance and thank you for sticking us with the bill.

The Rats Who Jumped Ship

Dadi — Mon, 27 Jul 2009 22:22:14 +0000

Every day brings a new queasy revelation in the country which the Germans now call Crisisland. Today I met someone who is leaving the country, relieved to get away from all the negativity that has infiltrated every thread of society. Another friend said he foresaw the future in the same way. Occasionally you will find a happy camper who is trying to keep head above water but the mood mostly turns grim once people get past the how are you’s.

Tonight Channel 2 and the State Broadcasting Channel reported that according to secret reports from Ernst & Young and information from the collapsed banks, billions were transferred to tax-havens such as Tortola, Luxembourg, Hong Kong, Bermuda, Cayman Islands and the British Virgin Islands by top management and owners of the doomed banks as they were being taken over by the state. As the Icelandic people stare the abyss of IceSave in the eye, it is infuriating to hear that Bjorgolfur Gudmundsson, Bjorgolfur Thor Bjorgolfsson, Magnus Thorsteinsson and Karl Wernersson transferred billions of ISK away from the storm and into new currencies and made even more once the ISK went into free-fall. Apparantly they used Straumur Burdaras bank to create hundreds of new accounts abroad for several top customers. This began on the same day the state declared it would take over 75% in Glitnir.

And Glitnir’s top brass, Bjarni Armannsson, Larus Welding and Einar Sveinsson were active transferring their own money away from the bank in September. Larus Welding removed 318 million ISK from his account and then a transfer abroad was made in his wife’s name for 325 million ISK. Bjarni Armannsson, moved 262 million ISK in seperate transfers into funds and to Nordea Bank in Norway. Einar Sveinsson transferred 170 million ISK to Norway days before the bank was nationalized.

So the rats jumped ship like everyone suspected and we can expect this list to grow longer day by day. But the thought of these people “rebuilding” Iceland in the future might be just enough to convince more and more people to leave their country behind.