Politics

Report: Local newspaper issued gag order after covering shady business dealings of PM

By Staff

Failed bank Glitnir The smallest of the three major Icelandic banks who collapsed in 2008. Bjarni Benediktsson's father and immediate family were among the largest shareholders and customers of Glitnir. Photo/Vísir

The local newspaper Stundin and the investigative journalism team Reykjavík Media have been issued a gag order, barring further coverage of documents from the failed Icelandic bank Glitnir. Stundin and Reykjavík Media have in recent days been covering the documents which outline questionable business dealings by the current Prime Minister and chairman of the conservative Independence Party, Bjarni Benediktsson.

The UK newspaper the Guardian has covered the findings of Reykjavík Media and Stundin. It is unclear whether the holding company of Glitnir will request a gag order on the coverage of the Guardian. The holding company has recently hired a UK law firm to look into the matter.

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The gag order has re-ignited a debate about the toxic relationship between wealth and politics which led to the collapse in 2016 of Sigmundur Davíð Gunnlaugsson's center-right coalition government amidst the fallout from the Panama-papers. Bjarni Benediktsson was the minister of finance in this government.

An attack on the freedom of the press

The gag order has come under intense criticism from academics, journalists and the general public. Jón Ólafsson, a professor of philosophy at the University of Iceland and the chairman of the Icelandic chapter of Transparency International has described the gag order as an attack on a foundational pillar of Icelandic democracy. Icelandic journalists have argued the ban is an attack on the freedom of the press.

Representatives of the Left Green Movement and the anti-establishment Pirate Party have requested that the Parliamentary Oversight committee meet to discuss the gag order.

Shady business dealings

On Friday Stundin published its first installment in its coverage of the documents. The documents show that Bjarni, who was a powerful conservative MP at the time, was also far more intimately involved in the management of his personal fortune than was previously known. Some of the revalations appear to directly contradict previous statements by Bjarni who has always maintained that he never received any special treatment from the bank, and that he did not use his political powers or insider information gained as a member of parliament to help rescue his personal or family wealth as the Icelandic economy was collapsing.

The documents show that Bjarni transferred large sums from a troubled money market fund in the very day that the government passed an emergency law in response to the imminent collapse of the banks. The documents also show that the bank allowed a holding company registered to Bjarni's father to take over a 50 million ISK (475,000 USD/400,000 EUR) personal debt from Bjarni. The holding company, which had zero assets, was later declared bankrupt, with the bank holding the loss.

The transfers raise serious new questions about Bjarni's statements in one of the most controversial criminal cases stemming from the banking crash of 2008, The Vafningur-case, which involving an extremely complex web of transactions involving a major stake in the failed bank Glitnir and tens of billions of Icelandic krona and a 240 million Euro large loan from the US investment bank Morgan Stanley.

The prosecution maintained tha companies owned by Bjarni's immediate family members, including his father, had participated in what amounted to a looting of Glitnir. Bjarni's name does pop up in these transactions, but he has always maintained that he had no involvement or knowledge of the transactions. Neither Bjarni, nor none of his family members. have been found guilty of any wrongdoing in the lead-up to the collapse of the banks in the fall of 2008.

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This is not the first time questions have been raised about the business dealings of Bjarni and his immediate family. His unwillingness to take decisive action or discuss the findings of a government report on the use of tax havens was seen by many as proof that he, or his immediate family members had something to hide. Bjarni has always denied any wrongdoing and has so far been able to weather these questions and allegations.

Protecting people's personal financial information

Glitnir HoldCo, the estate of Glitnir, one of the three large Icelandic banks which collapsed in the fall of 2008, demanded the gag order on Friday, the day Stundin began it's coverage, arguing that the documents contained personal financial information about thousands of former customers of Glitnir. The estate maintains that the documents and data used by Stundin and Reykjavík media contain personal information of thousands of former customers of Glitnir, and that it felt necessary to request the gag order to ensure the personal information of these thousands of customers would not be revealed in the media.

Stundin and Reykjavík Media have exclusively focused on the business dealings of the Prime Minister and his immediate family, including his father, Benedikt Sveinsson. The conservative led coalition government of Bjarni Benediktsson collapsed after it was revealed that he had hid the fact that Benedikt Sveinsson, his father, had written a letter of recommendation for the pardoning of a notorious child molester.

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Benedikt's business dealings, including those in the immediate lead up to the collapse of the Icelandic banking system in the fall of 2008, have on several occasions been the focus of highly critical attention. His son has largely escaped this negative attention.