New probe on Iceland ‘money laundering’

Investigators looking into the collapse of Iceland’s financial system are re-examining allegations that its banks may have been involved in money laundering.

Documents relating to the allegations are believed to have been circulated last week between officials in Iceland, Denmark and the Serious Fraud Office in London.

A wide-ranging inquiry into the collapse of Iceland’s banks has started to unravel a complicated network of unconventional loan agreements between the banks and high-flying entrepreneurs.

Kaupthing, Iceland’s biggest bank, which attracted British savers’ money through the Kaupthing Edge savings account, has fiercely denied allegations it was involved in money laundering in the past.

The bank sued a Danish newspaper at the High Court in London in 2006 over allegations related to holding companies in Luxembourg set up for a Russian oligarch. The claims were settled out of court.

It is understood that the money laundering claims are not central to the core investigations into Iceland’s collapse but are being reviewed as part of the broader inquiry.

Each of the three big banks — Kaupthing, Landsbanki and Glitnir — loaned large sums to their biggest shareholders on favourable terms.

It has emerged that at the time of Glitnir’s collapse, the 15 biggest creditors were all connected to FL Group, its largest shareholder, which was controlled by Jon Asgeir Johannesson, the boss of collapsed Icelandic retail group Baugur.

Meanwhile, allegations of market manipulation in Icelandic companies have ensnared British entrepreneurs such as Kevin Stanford, the boss of the All Saints fashion chain, and the property and mining tycoons Moises and Mendi Gertner.

Stanford said he had not been contacted by investigators about the Icelandic collapse. A Gertner spokesman said loan deals offering to buy shares in Kaupthing were pushed as part of broader dealings with the bank.

“There was an understanding that if these shares were taken up then they would be in a beneficial position to secure funding from Kaup-thing in the future,” he said.

Source: Times Online