Where Exactly Is "Money Heaven"?

When one of the billionaires behind the collapsed internet bank Icesave in relations to a new film was asked what happened to all the money, his answer was astonishingly nonchalant: “A lot of money goes to money-heaven,” shrugged Björgólfur Thor Björgólfsson, the Londonbased investor who co-owned 41% of Icesave’s parent bank, Landsbanki.

“They have evaporated. It’s a common misunderstanding to ask;  where did the money go.”

Björgólfur Thor Björgólfsson

No wonder the people of Iceland are really pissed off. Sure, the money has “evaporated”, but Icesave’s €4 billion debts remain and are now the subject of fury in Mr. Björgólfsson’s home country.

Icelanders were set to become the world’s first rebels against the idea of clearing up after the mess made by a reckless private bank.

This popular insurrection has been watched anxiously by the governments in Greece, Ireland, eastern Europe – and even Britain – concerned that this defiance could become contagious.

Almost 18 months after its financial system, currency and government went into meltdown, the country is still spiralling downwards into what one economist has called a “vortex of debt default, unemployment, and an exodus of people”.

Public outrage has been brought to a peak by the fact that there are now 43 cases of alleged criminal activity under investigation in connection with the country’s scandal-hit financial institutions, including Landsbanki, and, in the country’s first referendum, the 320,000 people of the island were expected to vote against a deal to compensate the UK and the Netherlands for the failure of Icesave.

So,what really happened?

Here’s a little – but very interesting – piece of news broadcasted by Iceland Radio on October 15th 2008:

“Islands Radio reports that the Icelandic Finance Council was started to investigate a series of mysterious transactions prior to the collapse of Landsbanki.”

“17 percent of the bank’s shares changed hands on October 3. The price was 5 percent above market price. October 3, 2008 was the last day of trading with the shares of Landsbanki. The day after the authorities suspended trading, and four days later the bank was taken over by the Icelandic government. According to Icelandic radio, it is unclear who has bought or sold shares in Landsbanki.”

All the three major Icelandic banks, Landsbanki, Kaupthing and Glitnir, was later declared bankrupt.

We have never heard another word on what happened to the investigation of the mysterious transaction.

But it gets even better

“Landsbanki’s biggest owners, Mr. Björgólfur Thor Björgólfsson, and his father, the ex-owner of West Ham FC, Björgólfur Gudmundsson – two Icelandic businessmen with close links to the country’s ruling Independence Party benefited from Iceland’s move to privatize its banks in the early 1990s, despite the fact that Mr Gudmundsson had a conviction for false accounting, following the collapse of his shipping empire in 1985,” according to The Telegraph.

The pair had no experience in banking and were not the highest bidders. However, the privatization helped catapult Mr. Björgólfsson on to the Forbes list of richest people.

At the peak of his wealth he had an estimated fortune of $3.5bn – now an estimated $ 1 billion.

No one quite knows how Landsbanki and the other Icelandic banks managed to grow so big, so quickly. But it is now well-documented that some of the biggest shareholders of the banks were lending each other vast sums of money in a complex network of mutually beneficial business relationships.

This had begun to worry financial observers by March 2006.

Richard Thomas, an analyst at Merrill Lynch, said at the time: “We are seeing the classic signs of a over-leveraged banking system and this has flashed a red alarm signal.”

And there’s  more

In September last year The British Serious Fraud Office sent a team of investigators to Iceland to get to the bottom of the suspicion that there had been any criminal offense in connection with the collapse of the banks, and whether it had any connection to London.

As expected, very little have come out of this investigation, so far.

More than 30 houses on the Island have been ransacked by police and more than 60 people have been brought to interrogation.

The international corruption investigator, Eva Joly, who is brought in as a consultant for the Icelandic government, believe this might be the biggest criminal case Europe has ever seen.

Eva Joly told The Telegraph last year that the British authorities must take their share of responsibility because they have did not have a good enough supervision of the Icelandic banks.

“They received several warnings about banks, but they did nothing. In my opinion that has been very harmful,” she said.

Personally, I can’t wait for the next shoe to drop in this case, (and perhaps somebody finally will tell us where money-heaven is – that answer is long overdue.)

In the meantime; the hardworking people of Iceland needs our support.

Related by the Econotwist:

Iceland Refuse To Accept Debt

Iceland Voting Over Icesave Repayments

Iceland Debt Talks Collapse

På (litt) lenger sikt


Iceland rejects plan to repay Icesave debts

Reblog this post [with Zemanta]

0 thoughts on “Where Exactly Is "Money Heaven"?

  1. Simply desire to say your article is as surprising. The clearness in your post is just nice and i could assume you are an expert on this subject. Well with your permission allow me to grab your RSS feed to keep updated with forthcoming post. Thanks a million and please carry on the enjoyable work.

  2. You actually make it seem so easy with your presentation but I find this topic to be really something which I think I would never understand. It seems too complicated and very broad for me. I am looking forward for your next post, I’ll try to get the hang of it!

  3. Its like you read my mind! You seem to know a lot about this, like you wrote the book in it or something. I think that you could do with a few pics to drive the message home a bit, but instead of that, this is fantastic blog. A great read. I’ll definitely be back.

  4. Great post. I just stumbled upon your blog and wanted to say that I have really enjoyed browsing your blog posts. In any case I’ll be subscribing to your feed and I hope you write again soon!

  5. You’re really a good webmaster. The website loading speed is amazing. It seems that you are doing any unique trick. In addition, The contents are masterpiece. you have done a magnificent job on this topic!

  6. My wife and i felt glad when Albert managed to do his investigation from your ideas he was given through your web page. It is now and again perplexing just to continually be releasing guidance that many some other people could have been trying to sell. Therefore we grasp we need you to appreciate because of that. The main illustrations you made, the straightforward site navigation, the friendships you give support to engender – it is mostly exceptional, and it’s aiding our son in addition to our family reckon that that concept is enjoyable, which is certainly pretty fundamental. Many thanks for the whole lot!

  7. My dog Chester had once this idea to play with me when I was asleep. When he finally woke me up, his eyes expressed the same feeling I have now looking at your site. It’s just one big “COOOOOL” ;).

  8. I would like to voice my affection for your kind-heartedness in support of individuals who have the need for guidance on this important question. Your very own dedication to passing the solution all through came to be pretty practical and has constantly made some individuals much like me to realize their objectives. Your own interesting tutorial indicates a whole lot a person like me and far more to my office workers. Many thanks; from each one of us.

  9. The thing about corporatewear is that most people think you always have to be suited up all the time, which you dont. You can look just as great whilst still looking the part with whats known as the Australian look. Smart trousers, a smart shirt with no tie pleae make a note of that those people who are tiephobic. One of the biggest impressions to to make sure you have a nice hair cut and please make sure your finger nails are clean and do not look like they have been chewed by a dog.

  10. The subsequent time I learn a weblog, I hope that it doesnt disappoint me as a lot as this one. I mean, I do know it was my option to learn, however I truly thought youd have one thing fascinating to say. All I hear is a bunch of whining about something that you could repair should you werent too busy in search of attention.

  11. Thanks for all of the efforts on this blog. Kate really loves engaging in investigation and it’s simple to grasp why. Almost all notice all relating to the lively tactic you produce worthwhile strategies by means of your website and as well as increase katalogowanie programy response from other ones about this area and our favorite princess is studying so much. Enjoy the rest of the new year. You have been doing a stunning job.

  12. There are some interesting points in time in this article however I don’t know if I see all of them heart to heart. There’s some validity however I will take maintain opinion till I look into it further. Good article , thanks and we would like more! Added to FeedBurner as nicely

  13. Great blog. Lots of blogs like this cover subjects that just arent covered by magazines. I dont know how we got by 10 years ago with just magazines and newspapers.

  14. Normally I don’t learn article on blogs, however I wish to say that this write-up very forced me to take a look at and do it! Your writing taste has been surprised me. Thank you, quite great post.

  15. Hi You All I read the information you posted here and I wanted to say you guys need to continue to add more articles. It’s really fascinating to me and I will probably be back. I will recommend with my online buddies. Keep it rolling!

  16. Pingback: Media Activist Jay Baker » Blog Archive » The Iceland Meltdown: Smoke and Mirrors

  17. Pingback: Where Exactly Is “Money Heaven”? « Econotwist's Blog | bllogger

  18. Pingback: Where Exactly Is “Money Heaven”? « Econotwist's Blog | bllogger

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s