Crime

Report: Former conservative city councilman under investigation for tax fraud, money laundering

By Staff

Two of the most prominent and powerful men in Icelandic Society Júlíus Vífill (left), heir to one of the largest business fortunes in Iceland and formerly one of the leaders of the conservative Independence Party,Sigurður G. Guðjónsson (right) a high powered attorney and businessman. Photo/Vísir.

A former member of the Reykjavík City Council is under investigation for large-scale tax fraud and money laundering, the Icelandic National Broadcasting Service RÚV reports. Júlíus Vífill Ingvarsson, a former city councilman for the conservative Independence Party and one of the party's leaders in the Capital, resigned last year following the revelations of the Panama Papers.

Read more:Councilman resigns, another pledges to cooperate with ethics probe as Panama Papers shake City Hall

Yesterday the Supreme Court of Iceland ruled that Júlíus' lawyer, Sigurður G. Guðjónsson, could not represent him in the case, as Sigurður is a key witness, as well as being suspected of having potentially conspired with Júlíus Vífill to help him evade paying taxes on money he had hidden in off-shore tax havens.

Both Júlíus and Sigurður deny the allegations, calling them absurd.

A tale of lost millions and a family feud

The case of Júlíus Vífill is one of the most closely watched financial fraud cases in recent history in Iceland. At the heart of the case is the inheritance of Júlíus' father Ingvar Helgason, the owned one of the largest car dealerships in Iceland and one of the wealthiest people in Iceland. When Ingvar died in 1999 his son Júlíus took over the company, but due to gross mismanagement and failed investments the company had been declared bankrupt in 2011.

After the bankruptcy Ingvar Helgason's widow and other children tried to locate foreign bank accounts the family patriarch was known to have owned. The heirs suspected that their brother, Júlíus Vífill, of having concealed the funds with the intent of looting them, effectively stealing the family wealth.

The Panama Papers seemed to have proven these suspicions.

Large scale fraud over 5 year period

The Panama Papers also revealed that Júlíus had owned significant assets which he had not disclosed to the tax authorities. The District Prosecutor launched a tax fraud investigation into the finances of Júlíus Vífill on January 5 of this year. According to RÚV the fraud took place in the years 2010-2015, but the investigation also extends to Júlíus' continued attempts to avoid paying taxes off the money since then.

The investigation took a new turn in late March when the prosecutor received a recording from a meeting between Júlíus Vífill and his siblings. On the recording Júlíus Vífill and his attorney can be heard talking about transferring some of the assets Júlíus had hidden in tax havens back to his siblings in Iceland, without paying taxes on the transactions.

A prominent defense attorney

Sigurður G. Guðjónsson is one of the most prominent lawyers in Iceland. He was also a prominent businessman in the pre-crash years, and a board member of the failed Icelandic bank Glitnir until the bank's collapse in 2008. He was also the campaign manager of former President of Iceland Ólafur Ragnar Grímsson in 1996, 2000 and 2008. Ólafur Ragnar Grímsson withdrew his bid for re-election in 2016 after it was revealed he had connections to an offshore company in a notorious tax havens.

Read more: New documents show that President of Iceland had connection to offshore company in tax haven

Since 2008 Sigurður has defended a number of former bankers and corporate Vikings.