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Former Baugur boss sued for £30m by nationalised Icelandic bank

Jon Asgeir Johannesson, the former boss of collapsed Icelandic investment vehicle Baugur, is being sued by nationalised Icelandic bank Glitnir for £30m over claims that he used his influence as a major shareholder to secure a personal loan.

Johannesson, whose Baugur investment vehicle held stakes in UK retailers including Karen Millen, Oasis, Debenhams, Jane Norman and Whistles prior to its collapse in February 2009 , was one of Glitnir’s biggest shareholders before its collapse in September 2008 contributing to the fall of the Icelandic economy.

According to the Telegraph, the bank’s winding-up committee has filed a claim against its former part owner and five other men linked to the bank following an investigation by financial intelligence firm Kroll.

The claim, filed in Reykjavik’s District Court, alleges that a loan secured against shares in the jewellery chain Goldsmiths was partly used to channel money to Johannesson and another major shareholder Palmi Haraldsson. Johannesson

Glitnir demands that Johannesson, who is still a director of department store House of Fraser, and Haraldsson and the bank’s former chief executive Larus Welding and three other executives pay compensation for the loan.

The lawsuit focuses on a 6bn kronur (£30m) loan made in July 2008 to Fons, the company which at one point owned British toy company Hamleys and was controlled by Haraldsson.

Kroll discovered evidence which suggests that Johannesson and Haraldsson put pressure on the bank’s management to push through the loan which did not meet the bank’s risk guidance rules.

It is also alleged that the value of Goldsmiths was inflated, allowing higher loans to be awarded by Glitnir without the transaction going through the proper risk-management process.

Johannesson denies all wrongdoing and claims Glitnir has misrepresented his emails.

The case will be heard on April 27.

The email evidence

According to the lawsuit, one email, sent by Glitnir’s head of corporate finance Einar Orn Olafsson, to the chief executive on May 23 2008, said: “I have a feeling that our good owner is putting you in an awkward position with this email. For example, Goldsmiths is worth only 1.5bn kronur (£7.5m), not 4bn (£20.5m) kronur.”

A second email, sent by Olafsson on July 11 2008, said: “I must admit I don’t understand why we don’t simply lend Palmi 2bn kronur (£10.3m) to stash in Cayman before he goes bankrupt, instead of going through all this Goldsmith exercise.”

 

Readers' comments (1)

  • Maybe this is the start of the unravelling of Baugur's web of investments and funding.
    Will House of Fraser want to keep Johannesson on as a director after this, whether the lawsuit is successful or not?
    What a difference a year makes.

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