Great Britain’s Serious Fraud Office (SFO) has expanded its investigation to include Landsbanki, with a particular focus on Icesave.
As many are by now aware, the collapse of the Icelandic bank system in 2008 left many foreign depositors empty-handed. Icesave, effectively an electronic branch of Landsbanki, has been a matter of contention between Iceland and the UK and Holland, with the governments of the latter countries covering deposits. The current agreement between the three countries stipulates that the Icelandic government must cover what Landsbanki cannot.
The Telegraph reports that the SFO is “keen to track the movement of funds, much of them generated through the bank’s UK subsidiary Icesave, prior to the bank being taken over by the Icelandic government.”
The investigation, which is also being conducted in Luxembourg, intends to take a closer look at what are known as “share support mechanisms”, which is essentially when the bank buys shares in its own stock, inflating its value artificially.
Landsbanki has come under increasing fire at home lately as well, as it has come to light that top managers have been awarding themselves pay raises since 2008, even while aggressively pursuing foreclosures on homes behind on their mortgages. Many opponents of signing the Icesave agreement, up for referendum on 9 April, have argued that Icelandic taxpayers should not be obliged to cover the debts of Landsbanki. At the time of this writing, public opinion is almost evenly divided on Icesave.