From Iceland — Eva Joly Says Magma Energy Deal Is Unbelievably Bad Business

Eva Joly Says Magma Energy Deal Is Unbelievably Bad Business

Published October 14, 2010

Eva Joly spoke out against the sale of HS Orka to Magma Energy at a press conference yesterday afternoon. There she joined Björk Guðmundsdóttir, Jón Þórisson and Oddný Eir Ævarsdóttir, who together have been working to stop the government from selling its energy resources.
Eva said Iceland is giving away its resources for nothing, and to a man who has not proven anything. She pointed out that Magma Energy had losses in 2008 and its experience is limited to harnessing a small amount of geothermal energy in Nevada, nothing compared to the current operation in Iceland. Furthermore, she said they are not very well capitalized and capital is needed to build up the plants.
“They are not even able to pay for the acquisition,” she said. “If the figures I read are right, they bought the whole Magma participation for 11. 5 billion Icelandic krónur, but only 3.6 was paid in cash. And it was not paid in US dollars. It was paid in Icelandic krónur. And, 8.4 billion is to be paid in bonds – bonds from a company that has no existence yet.”
“This is unbelievably bad business – bad business for you”
Eva continued, “What kind of deal is this, where it is the seller who is financing the buyer? It’s a kind of bullet loan, and I can tell you I have seen a lot of these bullet loans. They are coming from Glitnir. That is the way they did it. This is unbelievably bad business – bad business for you.
“I think this should be looked into,” she said. “If I was a state prosecutor in this country, I would start a criminal investigation into this,” she added.
Eva explained that two bad deals are suspected. She pointed out that for a country in need of foreign currency, it should ensure a better deal and work with someone financially capable. She also said there was reason to investigate this deal because it has been pursued despite the resistance of the people. Furthermore, she pointed out that Magma said they were operating from subsidiary in Sweden. Yet, everybody knows its only a PO box company.
“Either he is lying or he is totally ignorant”
“We have Ross Beaty on record – either he is lying or he is totally ignorant about the business he is about to enter – he says that geothermal energy goes on forever, for thousands of years. But we have Icelandic scientists, including Stefán Arnórsson who say that you can deplete an energy source in 50 years,” Jón Þórisson said.
Jón also pointed out that on their website, Magma says they have access to some 400 MW in Iceland. This is nowhere near to be the correct figure. With lenience, you could say you could go for another 100 MW. And that’s it. Where he is getting the 400 we have no idea. Either he doesn’t know what he is talking about or he is deceiving his investors.”
Getting the government’s attention
Jón said the government has been largely non-responsive to their requests for information on the HS Orka sale to Magma Energy, despite information laws mandating their access. He said the Ministry of Foreign Affairs and the Ministry of Finance have not replied to their letters, surpassing their legally allotted time to do so.
Lára Hanna, who writes a popular blog in Iceland, asked what the public could do to help. Björk said they need 15.000 additional people to sign the petition at That would bring the total to 35,000 people calling for a referendum on the HS Orka sale to Magma Energy. “Thirtyfive thousand signatures are hard to ignore,” she added.

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