Posts Tagged ‘Social Security Number’

A Business Friendly Country

Wednesday, March 10th, 2010

Through elaborate twists and turns Catharine Zeta-Jones had to risk her life in a break in to get her hands on the jewels she coveted in Entrapment.

But if you happen to own or control a business which has been bankrupted in Iceland in the last couple of years, the way back to 2007 is made easy by the country’s banks, accountants and business laws. Through those channels, twisting and turning is made strikingly less hazardous.

DV reports that the owner of Leonard, one of Iceland’s most prestigious stores handling jewellery and fine watches transferred the operations onto a new social security number and signed an agreement with his wife that she would assume control of the new company. Last week he was declared bankrupt himself. But through this manoeuvre the couple has managed to get rid of the old debts but still keep the store.

This is not an exceptional case, but a blueprint for why so many of the most reckless business people of the last decade are still heading the companies they’ve run into the ground.

This is why Geir Haarde and David Oddson used to say their aim was for Iceland to become a “business friendly” country.

I for one don’t understand why business schools bother with explaining basic rules in finance and economics to their students anymore. Why are they still teaching that “those who assume the greatest risks also should reap the greatest rewards because they can also incur the greatest losses”?

Why don’t they just teach students how to create two business entities and shove debts into one and assets into the other? You keep your assets and the debts fly off to “money heaven”.

Wasn’t that also how IceSave was supposed to work for Landsbankinn’s owners and management team?

Related posts:

  1. The Icelandic Discourse in A Nutshell
  2. Just Some Private Business Downtown
  3. Why The Fuzz About A Man Getting A Job?

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Leave The Fish Alone

Friday, August 21st, 2009

“Yes, yes, we just got the go-ahead from the banks to move this onto another social security number. They were in on it,” said Jakob Valgeir Flosason, the name behind Stim ehf. (a shelf company used by Glitnir to keep the price of its stock artificially up) when talking about his business leaving behind debts and liabilities with the old social security number and forming a new company where they moved assets such as trawlers and the most valuable asset of all, fishing quota.

See here

Magnus Kristinsson is an Independence Party-made billionaire from Vestmannaeyjar who used the assets from his fishing business to borrow heavily to invest in the Toyota dealership in Iceland, the Domino’s pizza franchise, investment funds and other businesses related ot his core business of fishing. Magnus is also one of the main lunatics who have advocated for an undersea tunnel to be made from mainland Iceland to the Vestmannaeyjar islands where he lives (pop. 4.000) and the strongest hand behind shamed local MP Arni Johnsen. Magnus is now supposed to be granted a 50 billion ISK write off at Landsbankinn, as his investments have been typically Icelandic, over the top. But of course they will not pursue his fishing quota.

All of this is done with the blessing of the banks’ solvency committees, in the name of “reorganization”. Basically it means that some people in Iceland can continually run their businesses into the ground as long as they have friends in the banks that allow them to “reorganize”. It is terrible for creditors, namely the banks and their owners (formerly shareholders, now the state) but brilliant for the lucky business geniuses who can siphon out cash from the operation for themselves or use it as collateral against loans used to invest more.

The only logical explanation behind people like Jakob Valgeir and Magnus not losing their company must be that the law sees the relationship between the men and their yet uncaught fish as something sacred, like a parent’s and child’s. And therefore they are leaving their fish alone.

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Company vs. Individuals – An Unfair Advantage

Friday, August 7th, 2009

I thought this comment from nn should get a bit more attention. It captures in short the disparity between individuals and companies in Iceland. At the risk of sounding too socialistic it creates a system where capital owners are freely able to manipulate the system to their benefits, provided they have money and lawyers. Add to this the fact that capital gains taxes have been between 10-14% in Iceland, while individuals’ income tax has been between 35,5%-38.7%.

This is why Ingunn Wernersdottir and Lilja Palmadottir, two of Iceland’s richest females don’t pay any income tax at all.

Bankruptcy laws in Iceland are extremely hard on individuals. In essence, the debt of an entity can be linked to their kennitala (Social security number) until it’s declared dead – claims are supposed to expire in 7 years or so, but the debtor can refile it indefinitely if he so pleases.
Individuals can not get a new “kennitala”, so unless the debtors write off the debt they remain bankrupt until everything has been paid off with interest or to the day they die.

It’s very inhumane, but it’s the law here.

On the other hand – for company owners it’s disgustingly easy to start a new company under a new “kennitala”, moving the assets there and leaving the dept in the old company, which essentially “dies”.

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For Those That Get Away We Salute You

Friday, July 10th, 2009

One of the more serious frauds regarding the Icelandic banks revolved around the small business that nobody had heard about, Stim ehf.

On November 14, 2007, a company called FS37 bought shares worth 16.4 billion ISK in Glitnir at 25,5 and 8,4 billion ISK worth of shares in FL Group at 22,05, amounting to 4,3% of Glitnir and 4,1% of FL Group. A few days later FS37’s name was changed into Stim ehf.  The only person registered for Stim was Jakob Valgeir Flosason, owner of a fishery in Bolungavik in West-Iceland, the company shared an adress with Saga Capital investment bank in Akureyri.

The owner of the shares turned out to be Glitnir itself and Stim also borrowed from Glitnir to buy the shares. Note that the duty of reporting insider trading starts at 5%. When pressed about this by Morgunbladid, Jakob said that he knew about Stim but didn’t want to talk about it. “I have made a decision not to talk about this company. I can’t be bothered to say yes or no.” Turns out the whole deal was a smoke and mirrors show for the market, basically a manipulation of the stocks’ worth but at the time, Glitnir and FL Group whose majority owners were the same, were already heading for the iceberg.

And Jakob Valgeir and his father are in the news again today. They have changed the name and social security number behind their fishery, with the blessing of their banks Islandsbanki (formerly Glitnir) and Landsbankinn. Jakob tells DV hat by changing the social security number they intend to run away from their debts and liabilities and save the largest assets, the trawler Thorlakur and 40% of the fishing quota registered to the old business.

“Yes, yes, we just got the go-ahead from the banks to move this onto another social security number. They were in on it,” says Jakob adding that through this they wanted to ensure the continuing operation of the fishery (the potentially profitable part of their business) and separate it from the investment part (the astronomical losses dumped on the banks).

Funny how all the nice people who own fisheries and fishing quota always seem to have an extremely risk-taking investment part to their company. And Jakob and his father are practicing the age-old Icelandic art of “kennitöluflakk”, i.e. changing of social security numbers behind companies, leaving behind liabilities and protecting assets, this time into state-owned banks.

For those that get away, like Jakob Flosi Valgeirsson, we salute you. The more things change, the more they stay the same.

PS: What is in a name like Stim ehf? Is it “full steam(stim) ahead” or is it just empty steam?

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Online Iceland phone book in English for first time

Thursday, June 11th, 2009

fireshot-capture-156-leit-a-korti-ja-er-svaric3b0-ja_is_kort_qindex_id3a1349710x363724y405681z9Iceland’s unusually comprehensive phonebook has been around for more than a hundred years and has also been available online since 2005. It has since become one of the most used websites in the country. The telephone and general information site www.ja.is has recently undergone a redesign and is now available in English for the first time, along with a huge selection of helpful new features.

Following the latest redesign, ja.is is now a good general site for Iceland travel information, with details of almost every business and individual in the land at the click of a mouse. The Yellow Pages of Iceland offers a quick and reliable way to find details of companies and individuals all over Iceland.

Searched for information can be carried out by geographical location, by name, or by category and results include name, telephone, fax, email, street address and website.

All entries are also available plotted on a convenient and accurate map of Iceland which can be switched seamlessly between graphic and aerial photo mode, thanks to GPS location technology.

ja.is Iceland maps are a source of more general travel information as well, because users can quickly see the locations of all the best fishing spots in Iceland and where all the golf courses and campsites are, as well as hospitals police stations and petrol stations as well.

One of the other useful tools on the newest version of ja.is is the VCard, which allows users to get information sent to them direct to their email software, such as Outlook or Notes.

Business entries come with the addition of other crucial information for users, including registration details such as social security number, official headquarters address, VAT number and business type.

The makers of Ja.is took the site overhaul extremely seriously. As 86 percent of Icelanders regularly use the website and it has become an important part of daily life, there was no room for error. The new English option now brings the best way of getting information about Iceland to a whole new audience: namely all the many people in Iceland who do not speak Icelandic.

Those in the country just to visit Iceland have already become acquainted with ja.is and finding it a liberating tool in finding what they need in an unfamiliar new country.

Iceland’s answer to the Yellow Pages is available now at http://en.ja.is

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