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    Dealing with the arm’s length of the minister and the Banking Authority

    People got heated at a meeting of the Constitution and Control Committee of Alpingi this morning, where the so-called arm’s length between the Banking Administration and the Minister of Finance and Economy was discussed.

    The guests of the meeting were Jon Gunnar Jonsson, director of the Swedish Banking Authority, Larus L. Blondal, chairman of the Swedish Banking Authority, Ottar Palsson, attorney at Logos, and Maren Albertsdottir, attorney at Logos.

    Eyjolfur Armannsson, Member of Parliament for the People’s Party, asked the representatives of the Banking Authority several times what the Minister of Finance and Economy’s arm’s length was in the process of selling the government’s share in Islandsbanki.

    “He actually entrusts us with the execution of the sale and then during the period, while the sale is ongoing, we request that representatives of the ministry attend a certain meeting that day, but of course, the minister was not there, but then it is his role to ultimately after we have executed the sale to make this decision on the final sale price and distribution, and that is exactly what happened,” answered Larus.

    He said that the minister had made a decision on the final selling price and quantity.

    “So he accepted 117 [krona selling rate]? There is no arm’s length in it,” said Eyjolfur then.

    Larus said that Bank County had made a decision on the suggested selling price.

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    No mess

    Eyjolfur said that the minister was responsible for “the mess that the Bank County is making during the sale, as stated in the report”.

    Jon objected that there had been a mistake in the sale. He said that it is very clear in the law what the responsibilities are between the minister and the Banking Administration of the State.

    “Because you are talking about the arm’s length, it basically means that the minister is not interfering with how the Banking District casts its vote at shareholder meetings and so on,” said Jon.

    Eyjolfur then asked why the Banking District called the minister to determine the sale price.

    Jon replied and said that the minister is responsible for the sale of state assets.

    “It goes without saying that the minister is informed at all times about the progress of the sales process. He makes a decision according to the law.”

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    Jon said that the Banking Administration had not taken any power from the minister.

    “According to the nature of the matter, the Banking Administration is the implementing party, and we are responsible for the implementation of the tender,” said Jon, pointing out that in a letter to the minister, the Banking Administration had requested his authorization to finalize contracts and allocate according to criteria.

    “So it was all legal.”

    The only option

    Orri Pall Johannsson, Member of Parliament for the Left Greens, asked if the Banking Administration would recommend this sales method again after the criticism that has been expressed.

    “In the run-up to this tender, various sales methods were discussed and they were explained and this sales method was then chosen, and it was not flawless. We explained what the shortcomings were there. I can say that this is by far the most popular and common sales method in the secondary sale of shares in the whole of Europe and is also very widely used by state funds,” said Larus.

    “In itself, it’s not about this method being unacceptable or anything like that. It has certain advantages, great advantages. For example, she made it possible for us to tender this at this point in time,” said Larus, adding that he believed it was the only option at this point.

    “But on the other hand, if people are going to make a decision about a new tender. Then of course people will look at what can be learned from this and what were the flaws in this tender and were the flaws so big that we don’t want to go this way,” he said.

    Jon agreed with Larus and pointed out that the advantages of the arrangement were enormous, “, especially in light of the fact that we believe that with this we achieve the highest price and minimize the risk”.

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