Economic Disaster Area » Halldor J. Kristjansson

Aliber In Iceland 2008 – Just A Nice Old Man On A Visit

Dadi — Wed, 25 Aug 2010 10:20:16 +0000

I thought that I should help Hakon with his request from the Mishkin post from yesterday. Asking about one of the most serious cases of the systematic silencing of the academic community, this description of Robert Z. Aliber’s visit to Iceland should offer a glimpse of the “silenced-society” Iceland had become.

I translated this from the Special Investigation Committee’s report, vol. 8, pg 225-226.

Robert Alibert’s visit

Gylfi Zoega arranged the Iceland visit of Robert Aliber, professor emeritus in international economics and finance at the University of Chicago in the spring of 2008. Aliber had met Gylfi in June 2007 and predicted a collapse within a short time period. Gylfi had collected money for the visit of Aliber and received donations from the prime ministry, ministry of economic affairs and the Icelandic Financial Services Association amongst others.

He says that the reaction of bankers and some sections of the media to Aliber’s lecture made sure that his message was not delivered properly. Morgunbladid had a decent coverage of Aliber’s lecture, even if the headline had been peculiar and against Gylfi’s advice. He penned an opinion column in the paper the next day to correct different misleading emphasis in the paper’s story and used the opportunity to repeat Aliber’s main conclusions. Frettabladid had a relatively neutral coverage of the lecture. The opinion columnist Odinn made fun of Aliber in Vidskiptabladid and the banks got the message through that Aliber was not knowledgeable about the situation in Iceland. Vidskiptabladid also mocked Morgunbladid’s coverage, “Odinn has mostly stopped reacting to business headline news on Morgunbladid’s front page, but the headline “The Beginning of a Bank Run” outdid anything he could have imagined. The lecture was based on the former professor’s assumptions, where it emerged that he “suspected” this or that and “guessed” that and the other. He did not provide any evidence for his assumptions but it did not hinder Morgunbladid from making it headline news”.

After the lecture, Gylfi received a call from Gudjon Runarsson, the CEO of the Icelandic Financial Services Association who complained about the lecture. At a meeting few days later, which Thorolfur Matthiason also attended, Gudjon told the two professors that his association would not be supporting any more lectures at the economics department at the University of Iceland. Speaking to the Special Investigation Committee, Gudjon said that this was because he had been mislead regarding the topic and content of the lecture. It had come from a totally different direction than expected. Halldor Kristjansson, the chairman of the association also published an article on its behalf. “The Icelandic Financial Services Association is making some serious reservations regarding the statements of a former economics professor, Robert Z. Aliber in his lecture at the University of Iceland this week. His statements on the Icelandic financial system showed a lack of understanding and seemed to be subjectively based, rather than based on objective research.” In his article, Halldor picks apart the Aliber’s main points of criticism and states amongst other things on his issue number three that “furthermore, the proportion of savings versus loans has been raised and the banks are now less dependant on short term financing. The Icelandic banks are therefore not run as funds but as responsible corporations with strong equity and therefore Aliber’s statement is out of line with real facts.” What Halldor is referring to there is due to the IceSave accounts his own bank Landsbankinn had begun operating. Aliber’s suggestion had been that the banks should be split into investment bank and retail bank units and that the state should only guarantee the latter.

Halldor’s last point is as follows, “My fifth point is that Aliber believes that the Icelandic banks are young and have no capabilities to evaluate risk. Here he is also in breach of the truth. The Icelandic financial system is based on old foundations and has accumulated experience in evaluating risks and business profitability. Aliber also indicates that information about the profitability of the banks’ operations are not available. The banks are listed companies and publish thorough quarterly statements according to international standards. It is important that the coverage of the Icelandic economy and the financial system is of an appropriate quality now that the eyes of the financial world are pointed towards the country. Unsubstantiated exclamations can have serious effects and therefore it is imperative to seek the advice of responsible people to such statements before they are published.”

Gylfi Zoega managed to get Aliber a meeting with Geir H. Haarde and the director of his ministry, Bolli Thor Bollason where he repeated his belief that it was important to split each of the Icelandic banks into separate domestic retail and foreign investment units. Geir showed considerable lack of interest on the subject but preferred general chit chat with Aliber on a common acquaintance from the US, but Aliber had taught at Geir’s alma mater Brandeis University as a young man and was very familiar with one of his former professors. When asked about Aliber’s visit Geir responded, “He did not talk the whole thing down as he did in his lecture, he was just a nice, old man on a visit“.

IT SHOULD BE NOTED THAT ALTHINGI HAS STILL NEGLECTED TRANSLATING THE WHOLE REPORT IN ENGLISH AND ITS SPOKESPERSONS EVEN COMMENTED THAT THEY FOUND IT UNNECESSARY THAT IT SHOULD. OBVIOUSLY SUCH A STANCE HINDERS ACADEMICS ABROAD FROM DOING MEANINGFUL RESEARCH ON THE CAUSES AND CONSEQUENCES OF THE ECONOMIC CRASH.

Inept Government Part II

Dadi — Mon, 12 Jul 2010 13:21:02 +0000

The Iceland Weather Report has put together most of what you need to know about the current Magma Energy debacle.

But the revelation that it needed two unpaid bloggers, Lara Hanna and Teitur Atlason to uncover and expose the whole affair reminded me of a call I got last year from a representative of the government.

He asked me about the whereabouts and affairs of Halldor J. Kristjansson, the former Landsbanki CEO. After ten minutes on google.ca and two phone calls I could tell him that Halldor was working in Canada for Cash Store Financial. I was stunned that people from within were calling me for such information.

After befriending Gerard Van Vliet, the representative of the Dutch savers who lost their money on IceSave, I have seen glimpses of how inept the whole system is in dealing with things and persons foreign to it. Meetings are repeatedly called off at the last minute, with people having flown in from Europe. Email is left unanswered, people arrive unprepared for meetings. Members of the government’s coalition parties shun each other.

There are probably too many people in the system whose main qualifications include working for and within their party for a long while.

No Vote In IceSave Referendum

Dadi — Fri, 26 Feb 2010 12:04:34 +0000

I for one am not going to participate in this distortion of democracy which has brought us a national referendum on IceSave.

Of course I would say no to paying for the insane way Landsbankinn went about its business. Today, Halldor J. Kristjansson, one of their CEO’s is on record saying that there were meetings in February 2008 between the banks and the government about an impending collapse, yet they continued on to open the IceSave accounts in the Netherlands two months later.

But in a discussion dominated by the frantics, Bryndis Hlodversdottir, law professor at Bifrost University has come up with the most rational input regarding the referendum so far. In order for it to be democratic the following has to apply:

1) The question has to be clear and answerable with a yes or a no

2) All relevant information must be openly available for the public to be able to form an opinion.

3) The consequences must be clear.

None of these parameters are met with this ridiculous referendum. So for the first time since I was old enough to vote I will stay away from the voting booth. This farce served up by a lame-duck president and a Progressive Party pressure group called InDefence has nothing to do with democracy and I want nothing to do with it.

The IceSave Memorial: How We Got To Where We Are

Dadi — Wed, 06 Jan 2010 10:09:51 +0000

The idea of an IceSave memorial is a great one. So here is a homage to the people who got us IceSave.

As Prime Minister and Finance Minister, David Oddson and Geir Haarde privatized Landbankinn into the hands of Bjorgolfur Gudmundsson, who had no experience in banking but had served a sentence for his part in the bankruptcy of Hafskip and made a mint in post-communist Russia. Half of the purchasing fee was borrowed from Bunadarbankinn (which became Kaupthing) and never repaid. Landsbankinn returned the favour for their Progressive Party counterparts.

Bjorgolfur Gudmundsson and his son, Bjorgolfur Thor wasted no time and appointed a host of Independence Party members to key positions in the bank. They also used the bank as their own personal piggy bank, borrowing billions upon billions to acquire publishing houses, newspapers, pharmaceutical companies, telephone companies to name a few businesses. Landsbankinn’s loans to connected individuals were way above anything which could have been considered as normal in banking. Or imagine Fred Godwin borrowing billions from RBS to buy Penguin, The Telegraph, Vodafone etc.

The father and son retained Kjartan Gunnarsson as the chairman of the board. Meanwhile he was also the CEO of the Independence Party. It was a cosy relationship. A few days before the Independence Party government approved a new law limiting the amounts of grants political parties could accept, 25 million ISK found their way from the bank to the party. A big chunk but still just a part of the pie as MP Gudlaugur Thor Thordarson’s finances have revealed.

The man who approved the huge grant was former youth officer of the Independence Party and then CEO of Landsbankinn, Sigurjon Th. Arnason. A new employee at Landsbankinn in 2007 recounted how when he started working there, Sigurjon’s friend from the Independence Party and mid-level manager told him about the “real organization chart”, which showed how things really worked if you wanted to get ahead in the world of Landsbankinn’s type of international banking.

The other CEO, Halldor J. Kristjansson had been the assistant of Progressive Party minister who turned billionaire through the privatization of Bunadarbankinn into Kaupthing. When financing the risky model that Landsbankinn like the other Icelandic banks were running, the bank came up with IceSave.

Alistair Darling is the finance minister of the UK. The UK allowed Landsbankinn to prey on the savings of the Brits when it should have been clear that the Icelandic Central Bank had no way of acting as a lender of last resort.

But neither did his Dutch counterpart and the Dutch National Bank do their homework. They allowed Landsbankinn to move in on the Dutch when one simple look at the Central Bank of Iceland’s foreign reserves should have told them not to.

They should have stopped it because this guy wasn’t going to. Jonas Fr. Jonsson was the CEO of the Financial Authorities in Iceland and an Independence Party member. His job safety depended on not rocking any boats.

And guess who was by then calling the shots at the Central Bank of Iceland?

New chairman of the Independence Party, wasted no time in using IceSave for the political gain of his party. By screaming from the top of its lungs the party has managed to divert attention from its own role in the economic collapse of Iceland. No other issues have been able to hold the spotlight, such as the several times larger bankruptcy of the Icelandic Central Bank under the management of David Oddson, a review of the bank privatization process or the finances of the political parties.

Of course, distinguishing the Independence Party from IceSave is a hell of a task. Thorlindur Kjartansson and Erla Osk Asgeirsdottir ran for Althingi in 2008 as the young, shining stars of their party. They had just come off their jobs at Landsbankinn where they were supposed to do market research into which other countries Landsbankinn could launch IceSave. If they are next in line to succeed on the party’s behalf then surely a diversion tactic is needed to cast the blame for IceSave elsewhere.

The smoke and mirrors game also suited the old ally of the Independence Party, the Progressive Party under new leader Sigmundur David Gunnlaugsson who has cried wolf from the top of his lungs on the IceSave issue. The Progressive Party has a long history of chasing easy votes. It was not hard to convince a large part of the Icelandic nation that it might not have to honour its obligations.

So the InDefence group was formed. Behind the group which sort of promised Icelanders who signed their petition that they would not have to pay the IceSave debt is a nice little group of Progressive Party members, such as economist Magnus Arni Skulason who had to resign from the board of the Central Bank earlier this year for trying to assist wealthy parties in by-passing the currency restrictions in place in Iceland. A trustworthy and honest group if you ever saw one.

And the unloved lame-duck president bought the hype.

Finally we can only have ourselves to blame. For not being more alert to people who had grown so accustomed to running the country that they considered it a birthright. For not being more critical until after the crash. We were too busy keeping our jobs, TV’s and our cars safe that we forgot our basic rights and liberties. The Icelandic people allowed this to happen by becoming oblivious to criticism and celebrating cronyism. And for not wanting to learn from what has just happened.

Obviously the government of the Social Democrats and the Left Greens approved the IceSave agreement at the end of 2009. But it is sort of ridiculous and evil even to blame the cleaning crew for the mess left behind from the party.

Isn’t it?

Halldor J. Kristjansson In Canada

Dadi — Fri, 27 Nov 2009 09:05:04 +0000

Where is former Landsbanki CEO Halldor J. Kristjansson and what is he doing? This has been a question on many Icelanders’ minds since Halldor disappeared to Canada and soon afterwards Ross Beaty of Magma Energy showed up to make the deal of a lifetime in geothermal energy.

According to the website of Cash Store Financial in Canada “the former CEO of a European bank” is working for the company, whose chairman and CEO is Gordon Reykdal, the honorary consul for Iceland in Canada.

In the good times, it was often said that the CEO’s and top management of the banks needed to be paid ridiculously high amounts and next to nothing in taxes because their skills were in so much demand outside of Iceland that they would otherwise leave. So Halldor is probably proving them right? Right?

Funny thing is that a week ago a government official called to ask me if I knew where Halldor was and what he was doing? So I told him. And then all of a sudden stories of Halldor’s new employment is all over the internet. I wonder if the Icelandic secret service has ever heard of google.ca

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.

Former Bankers’ Threats & Gruesome Grip On Icelandic Society

Dadi — Fri, 11 Sep 2009 18:16:23 +0000

How tight was the grip Icelandic banks had on their society in the last decade?

Journalist Anna Kristine Magnusdottir tells of the death threats she received while she was working on a piece for DV in 2007. The story was about the mistreatment of children at a juvenile home at Kumbaravogur. Out of nowhere she got a phone call where an audibly upset man threatened her that he knew where she lived, what her car’s number was, what kind of make it was and that this story should not be published. Other people who had tried to spread these terrible lies about this nice old man (who ran the juvenile home) Kristjan Fridbergsson had been killed before.

Shortly thereafter Anna Kristine was grocery shopping when the cashier told her that her card had been declined as it had been reported stolen. The store intended to call the police but a nationally recognised woman stepped forward and paid Anna Kristine’s groceries and vouched that she was really the card’s owner (all debit and credit cards in Iceland also have a photo of the person on the back).

Anna says she had been scared enough to not run the story, she felt humiliated and didn’t think this sort of stuff could happen in Iceland. The story of Kumbaravogur was part of an extensive investigation DV made into the maltreatment of children in juvinile centers around Iceland decades ago and the paper was rewarded by the Icelandic Journalist Association for investigative reporting because of the series in 2007.

Kristjan Fridbergsson was Landsbanki CEO Halldor J. Kristjansson’s father. When she brought up that her card had been stolen with Bjorgolfur Gudmundsson, his assistant asked beforehand whether she was asking because of that connection.

Bjorgolfur himself has earned notoriety for threats and action. Last year, DV editor Reynir Traustason admitted to his tape-recording employee that he would not run a story because Bjorgolfur would ruin their paper. The Bjorgolfur’s were said to be thinking of buying the paper to shut it down because of critical reporting.

The fear might have been justified. When Gudmundur Magnusson wrote a book about the Thors family, which includes Thora Hallgrimsdottir, Bjorgolfur Gudmundsson’s wife and Bjorgolfur Thor’s mother, the publisher had the whole first edition destroyed. The book’s publisher was Edda Publishing, owned by…you guessed it, Bjorgolfur Gudmundsson. The book included a chapter on Thora’s previous marriage with American George Rockwell which was little known about in Iceland.

Rockwell is described by Wikipedia as “a Navy Reserve Commander (Naval Aviator) and founder of the American Nazi Party. Rockwell was a major figure in the Neo-Nazi movement in post-war United States, and his beliefs and writings have continued to be influential among white nationalists and neo-Nazis.”

Halldor Kristjansson has now moved to Canada to take up a position with an investment firm in the energy sector. Bjorgolfur Gudmundsson’s house of card has come down tumbling, but he has managed to leave large chunks of his debts with Icelandic taxpayers through IceSave. And probably has enough left through his son in the Caribbean or Cyprus to live in luxury.

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.

Landsbankinn Assured The Dutch That Iceland Would Pay

Dadi — Tue, 23 Jun 2009 09:09:20 +0000

Sigurjon Th. Arnason and Halldor J. Kristjansson, CEO’s of Landsbankinn sent a letter to the Dutch Central Bank and the Icelandic Financial Authorities on September 23. last year where they said they were convinced that the Icelandic state would guarantee minimum deposits in Icelandic banks.

Morgunbladid reports this today and has a copy of the letter, sent to Jonas Fr. Jonsson, former head of the Financial Authorities. The letter was sent in response to the Dutch Central Bank demanding that Landsbankinn stopped accepting more deposits in Holland. The reason for that demand was that the Dutch worried about the state of the Icelandic economy and the ability of the Icelandic state to meet its obligations.

Yet another proof of Landsbankinn’s reckless behavior throughout the IceSave affair.