Roubles to Reykjavik: Moscow money leaves lessons to be learned

Icelandic society is broadly split into three camps at the moment. There are those who blame the current financial crisis on the government’s irresponsible, almost total, liberalisation of the banking sector. Then there are those who blame the bankers for unnecessarily abusing the freedom given to them. The other group are the less discriminatory ones who blame everyone.

Last week’s interviews from billionaire father and son tycoons Bjorgolfur Gudmundsson and Bjorgolfur Thor Bjorgolfsson therefore created a lot of debate in Iceland and elsewhere.

The businessmen many are blaming for the country’s problems did not earn any respect for staying silent as long as they did. But when they finally spoke, their words were so calm, reasonable and seemingly honest, that they won back some of their lost respect.

Of course, sceptics quite reasonably argue that a silver-tongued billionaire’s self defence means nothing unless supported by thousands of files made public.

Whoever turns out to be right, and whether or not it even matters, Bjorgolfur Thor Bjorgolfsson’s comments on Russia were rather eloquent and thought-provoking.

Bjorgolfur Thor Bjorgolfsson was a major shareholder in Landsbanki and the chairman of both Straumur investment bank and Actavis. His father, Bjorgolfur Gudmundsson was Landsbanki’s majority owner and chairman.

After graduating university in the USA, Bjorgolfsson went to Russia where he started up the Bravo Brewery which was eventually sold to Heineken for USD 400 million and spring boarded the entrepreneur on his course to the financial big league.

Bjorgolfsson was very much active in Russia at the time of the economic collapse there in the 90s; and he believes Iceland can now learn from Russia’s economic recovery. It is an ironic twist that Iceland is still negotiating a possible large loan from Russia to help it avert catastrophe.

“I have experienced exactly this kind of crisis myself. In ´98 I was in Russia when the PM appeared on TV on a Monday saying that Russia was unable to pay its debts as a nation and the country collapsed,” Bjorgolfsson says. “Total chaos ensued for a whole year and it took several years for Russia to work its way out of this. There I was on the ground, friends, colleagues and others, credit cards didn‘t function, the rouble dropped like a brick. The exact same thing happened as in Iceland, except in a harsher way. I was at the scene, I had a job, I was able to work myself out of it, the Russians were able to work their way out of it, and Iceland will do the same. I have seen this before.”

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