From Iceland — City Council Minority Wonders When Investigation Will Begin

City Council Minority Wonders When Investigation Will Begin

Published May 30, 2011

Members of the opposition parties of Reykjavík city council have raised questions as to when a proposed investigation of Reykjavík Energy (OR) is supposed to begin.
Two months ago, mayor Jón Gnarr said that the beleaguered power company would be investigated, to see exactly how things went so wrong so quickly with their finances. This investigation was, according to Gnarr, supposed to create peace regarding the company, diminish scepticism and increase trust.
Vísir now reports that city councilpersons representing the Independence Party and the Leftist-Greens have said that they have seen no signs that any investigation has yet begun. They asked what work has been engaged towards this end.
City council chairperson Dagur B. Eggertsson said that the work required to organise a work group for the investigation has taken longer than expected. He added that it was natural that a case of this magnitude would take time to prepare for properly.
OR has been in serious financial trouble for some time. Last March, OR chairman Bjarni Bjarnason, in an interview on the television show Kastljósið, spoke candidly about the company’s financial situation. He said in part that they would not even have been able to pay their staff this summer if nothing had been done; that the company had experienced a complete “drying up of funds”.
To make matters worse, he said that the company’s financial situation wasn’t even clear until late last January. At that time, it became apparent that the company could not rescue itself. When asked why it had been so unclear where OR’s finances stood, he replied that he did not know.
An annual report showed that in September 2010, OR was in debt to the tune of some 230 billion ISK. This prompted the company’s largest investors to decide not to lend to OR anymore, although the Nordic Investment Bank has offered to alter the interest rates on an older loan. This, however, would be under the condition that the owners of OR put up 8 billion ISK of their own money, which puts the burden squarely upon the city – the company’s largest shareholder.

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