Report On Bank Sale Finds Numerous Errors, Finance Minister Back In Spotlight

The Icelandic National Audit Office (INAO) has just released their report on the sale of a 22.5% share of Íslandsbanki last spring that even the government has characterised as deeply flawed. The report states that numerous mistakes were made in the sale process, in particular with Icelandic State Financial Investments (ISFI), but Finance Minister Bjarni Benediktsson is also getting his share of criticism again.

As reported, Íslandsbanki has been owned by the Icelandic treasury since the wake of the 2008 financial crash, but Bjarni has been very keen on selling shares of the bank to private interests again. The March 2022 sale of shares amounting to a 22.5% stake in the bank has caused considerable criticism, not least of all when it was revealed that one of the share buyers in the closed and discounted sale of shares was none other than Bjarni’s father.

While Bjarni has denied any knowledge that his father was amongst the buyers, the law on selling government shares of financial institutions outlines the process for this sale. Article 4 clearly details: “When an offer [to buy shares] is submitted, Icelandic State Financial Investments [ISFI] submits the offer to the Minister with the reasoning for the sale. The Minister decides whether the offer will be accepted or denied and signs the agreement on behalf of the government on the sale of the shares.”

This being the case, either this process was not followed, the Minister did not review the share offers very carefully, or the Minister was less than forthcoming about his knowledge of his father’s role in the sale.

Furthermore, the shares themselves were sold a steep discount at a price set by ISFI. This drew criticism from INAO, who said that ISFI should have set the highest possible price for the shares instead of offering them at a reduced price. The report adds furthermore than ISFI did not adequately prepare for the sale, and did not do enough to inform Parliament of the nature of the sale.

For his part, Bjarni believes the report vindicated him, showing that nothing illegal transpired and he is therefore off the hook. However, Kristrún Frostadóttir, the chair of the Social Demcrats, contended that it was not the job of INAO to determine whether or not the minister had broken the law; instead, this is something that would need to be determined by a parliamentary committee.

While members of Parliament are divided on whether or not Bjarni does bear responsibility, This report might not be the end of the road for the controversial Íslandsbanki sale. Þórunn Sveinbjarnadóttir, the chair of the Constitutional and Supervisory Committee, told RÚV that the report still left a lot of questions unanswered.

All this being the case, Parliament may decide to move forward with its own investigations into what has been a rollercoaster of a bank sale from the very beginning.