Words by

Haukur S. Magnússon

@haukursm

Pretty much every worst thing the public believed about the reasons
behind Iceland’s banking collapse has been confirmed by Alþingi’s
Special Investigative Commission report, out this morning. If you missed
out on our live-Facebooking off the press meeting this morning, you can
read our WTFs and LOLs here,
read the very brief English version of the report here, and read on for a recap of
what the local media has been saying.
Which has been a lot, frankly. And we’ve nowhere near heard the end of this…
Now. Eyjan states that according to the report, the banks embarked upon business ventures that were frankly ridiculous in scope. The committee’s argument points to the fact that Baugur Group’s total debt/financial commitments to all the banks totalled 700 billion ISK at the end of 2008. This debt, even when divided evenly between the banks, was high above regulation. It goes on to say that had Baugur, the Björgólfur duo or Ólafur Ólafssonar gone under at any point, it would likely have been enough to take the banks down.
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Former Minister of Finance (and current veterinary) Árni Mathiesen is quoted in the report as saying that Björgólfur Thor and every bank manager had knowingly lied to authorities about the banks’ standing the weekend before the collapse, Vísir reports. “The worst one was Björgólfur [Thór Björgólfsson] […] and he lied to the others too, and they came over that night and said, “This man cannot be believed,” They were trying to find a way to merge Kaupthing and Landsbankinn so they could honour their commitments, and Björgólfur just said: We’ll take care of it, and well take care of it.”
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Political talk show host, blogger and current Grapevine columnist Egill Helgason summarizes the committee’s finding thusly on his blog: “Greedy and out-of-control bankers and bank owners; poor and paralysed administration.” 
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“Accountants smacked by investigative committee,” reads one headline on Vísir. The story goes on to quote the report as saying that during the lead in to the crash, accountants for major accounting firms and companies failed to do their duty (in 2007 and 2008 returns). The committee calls for a special investigation into accountants’ roles in the crash.
One law cited states that if an accountant becomes aware of serious problems with the way a business is being run (internal affairs, debt collateral or other factors that can weaken the companies’ standing) they are required to immediately inform the companies’ boards and the Financial Supervisory Authority.
Another Vísir report finds that – according to the report – the banks’ growth was so large and risky that it couldn’t ever comply with a healthy bank’s long-term interests. On the other hand, strong motives for growth were present within the system.
“The motives were, among other things, to be found in the banks’ reward systems and also in the huge debt accumulated by the banks’ owners. The committee finds that supervisory authorities should have been aware that such stimuli were present in the system, and that their quick growth was a cause for concern. On the other hand, it is clear that the Financial Supervisory Authority, which was the banks’ main supervisor, did not grow in accordance with the growth of the parties they were supposed to monitor and was thus poorly equipped to do its job.”
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Pressan.is editor and former Progress Party dude (and wannabe business journalist/bankster) Björn Ingi Hrafnsson announced his temporary stepping down as editor while allegations of his benefiting from shady business dealings (as noted in the report) are handled. Statement here (in Icelandic, but of course).
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The above of course correlates to another of the report’s findings, which Mbl.is summarizes nicely here. The committee investigated the media’s role in the collapse extensively, and found that two media personalities, Björn Ingi Hrafnsson (of Pressan, also formerly editor of Fréttablaðið (or was it 24 Stundir)’s business supplement) and Óli Björn Kárason (once owner and co-editor of DV, then Viðskiptablaðið, later founded right wing nut teabagger aspirational weirdo site AMX.is) had borrowed over 500 billion ISK. Former Morgunblaðið editor Styrmir Gunnarsson owed over 100 million ISK.
The committee sees special reason to alert the special prosecutor of Kaupþing Bank’s loans to Björn Ingi through his LLC, Caramba.
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Morgunblaðið also reports that Iceland’s president went rather far in service of “outvasion Vikings” and businessmen, according to the report.
“When the democratically elected president of a country speaks publicly, as representative of his nation, he is usually listened to. This is why it matters what he says and who he speaks to. Therein lies his responsibility.
The president employed his office vigorously to portray a cosmetically enhanced, proud and nationalistic image of Icelanders’ superiority that was based on their heritage. It is interesting to note that some of the qualities that the president attributed to the ‘Outvasion Vikings’ are exactly those that caused the collapse,” the report says.
The committee goes on to suggest that Iceland’s president adopt certain codes of conduct and ethics, to prevent such things from happening again.
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Eyjan has discerned from the report that the groups Exista, Kjalar, Baugur and Jötunn vacuumed the Icelandic currency market dry, thereby causing the collapse of the Króna.

“They vacuumed up the currency market, and when they were done they stopped quoting into the swap market, which made it so that in March 2008 the Króna collapses completely and we had no means of responding,” says Sturla Pálsson, Executive Manager of the National Bank of Iceland’s international and marketing division in the report.
The currency collapse obviously affected every single person in Iceland greatly.
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Of all the media chiming in on the REPORT today, DV.is has been providing the most consistently entertaining and thought provoking reports. Their headlines have also been ruling pretty hard.
They reported that current Minister of Foreign Affairs (then Minister of Industry, Energy and Tourism), Social Democrat Össur Skarphéðinsson was butt naked at the World Class gym when Glitnir bank fell.
“I mean, I was standing naked in the dressing room of World Class, was going to take a sauna on a Sunday and was working hard at the gym because I had an appointment with a tailor for the first time in my life. And I looked at my phone before entering the sauna and saw I had received really many phone calls and text messages from Einar Karl [Haraldsson, Social Democrat go-to official], who was in Glasgow telling me that everyone was looking for me, that there was some sort of crisis going on and I would have to call Ingibjörg Sólrún [Gísladóttir, then-head of the Soc. Dems and Minister of Foreign Affairs]. These quotes from Össur come from chapter 20 of the report, speaking of the day Glitnir fell (all this is being taken from DV.is, again).
Another interesting story from the report noted by DV details then Minister of Commerce Björgvin G Sigurðsson and then Head of central Bank Davíð Oddsson’s dealings. In short, they can be described as: “childish” and “over the top.”
The minister and the bank manager did not speak for an entire year leading up to the crash, after a heavy argument regarding the EU at a Central Bank meeting in November of 2007 (!). Davíð apparently spewed bile all over the minister, who responded harshly.
The did not meet in person after that meeting until at a government meeting one year later.
When the committee asked Davíð Oddsson whether he didn’t believe there was cause to confer with the Minister of Commerce more often, he remarked
“[…] to tell it like it is – people didn’t dare say anything to the minister that was supposed to be kept out of the public eye […] I think that position determined why he wasn’t called to a meeting alongside the Prime Minister and Minister of Foreign Affairs with the Central Bank management. […] it was widely known that the minister was prone to call reporters, even those who were strangers to him, and tell them news “off the record,” as it was called. That just doesn’t work in governance.”
DV has also dug up remarks from then Minister of Finance Árni Mathiesen in the report that he considered calling up his wife to ask her to go to the store and stock up on milk (!!!!) after being confronted by Davíð Oddsson’s descriptions of the bleak economic outlook for Iceland.
Says the minister, remarking on Davíð’s descriptions at a government meeting on September 30, 2008: “Well, it was just terrible and I nearly called home to ask my wife to go to the store to get milk, so we’d be certain to have it in the fridge, that’s how he described the impending circumstances as he saw them.”
DV (my how we love them) also dig up some juicy points from the report on Davíð Oddsson’s involvement.
Under one of our favourite headlines of theirs (which translates thusly – “Össur: Geir shook and rumbled from fear of Davíð”), they recount the story of when Össur Skarphéðinsson had to break it to Prime Minister and Independence Party chairman Geir H. Haarde that the Social Democrats would not accept Davíð Oddsson as head of an emergency committee in the lead up to the crash of October 2008.
Össur is said to describe the situation so that the PM was jittery with fear of having to tell Davíð Oddsson that he would not be accepted as the chairman of Iceland’s emergency crisis committee.
“He shook and crumbled. He [Geir] said: “You cannot do this to me. I cannot go up there and say that to Davíð,” to which Össur said he replied: “You’ll just have to do it” and then hearing Davíð lurching heavily out of the office.
In a second story – “Össur on Davíð: “A mixture of nervous shock and insanity” – they quote Össur further.
He describes Davíð’s conduct when sitting in on a government meeting on September 30, 2008, as a “mixture of nervous shock and insanity,” and that Davíð was arrogant to the government during the meeting, frequently cutting in as the PM spoke.
Davíð Oddsson himself is quoted – when remarking on said meeting – that he was there to recommend the forming of a national government as soon as possible. Furthermore that…
“Suddenly, and to my surprise, this became the main subject matter of the meeting. Two ministers, Þorgerður Katrín Gunnarsdóttir [then Minister of Education and current Vice Chairman for the Independence Party] and Össur Skarphéðinsson became very angry, saying that the head of the Central Bank had no authority to enter a government meeting and order that a national government be formed. I asked to speak again, and told them that I hadn’t been giving any orders.”
Geir Haarde describes the meeting thusly: “The phone rang after the meeting started. Davíð Oddsson wanted to enter to account for how things were developing. […] Before he started discussing that he made some remarks that might better have been left unsaid, but still weren’t said with the intention of making matters worse, I think. When he enters the meeting he and is about to take a seat he says: “The situation is now such that if we were ever in need of a national government, I believe that time is now.”
Minister of Commerce Björgvin G. describes Davíð’s entrance thusly: “All of the sudden Davíð storms into the meeting, appearing very upset and dishevelled […] and clearly had a lot on his mind. And he says that the Icelandic financial system is on the verge of going, and at that very moment we need to start work on taking all the banks from their owners, right away, the Icelandic operations and cutting the “Outvasion Vikings” off, that have indebted the nation to the point of treason, is what he said.”
Thank you, DV!
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Lastly, here are some interesting numbers dug up by Eyjan. According to the report,the 20 biggest debtors to the Icelandic banks at year-end 2007 were these:
  1. Róber Tchenguiz 113,4 billion ISK
  2. Jón Ásgeir Jóhannesson 102,0 billion ISK
  3. Ólafur Ólafsson 61,1 billion ISK
  4. Hannes Þór Smárason 51,8 billion ISK
  5. Ása K. Ásgeirsdóttir 50,8 billion ISK
  6. Ingibjörg Pálmadóttir 50,7 billion ISK
  7. Jóhannes Jónsson 50,5 billion ISK
  8. Björgólfur Guðmundsson 47,3 billion ISK
  9. Pálmi Haraldsson 39,9 billion ISK
 10. Björgólfur T. Björgólfsson 39,3 billion ISK
 11. Lýður Guðmundsson 36,5 billion ISK
 12. Ágúst Guðmundsson 36,4 billion ISK
 13. Jóhannes Kristinsson 35,4 billion ISK
 14. Magnús Kristinsson 31,4 billion ISK
 15. Lóa Skarphéðinsdóttir 28,4 billion ISK
 16. Gervimaður útlönd 28,3 billion ISK
 17. Jákup á Dul Jacubsen 27,9 billion ISK
 18. Jón Helgi Guðmundsson 26,0 billion ISK
 19. Karl Emil Wernersson 23,2 billion ISK
 20. Hreinn Loftsson 22,9 billion ISK
[Note that “Gervimaður útlönd” – who occupies no. 16 on the list – is not a real name. It translates as: “Fakeman international”]