Baugur boss Jón Ásgeir Jóhannesson accused of ‘looting’ Icelandic bank

In a lawsuit filed in the New York Supreme Court by Glitnir, Johannesson and some of his associates are accused of alleged fraud and draining funds from the bank before it hit the buffers.

Baugur held investments in swathes of the UK high street including House of Fraser, Whistles, Karen Millen, Oasis and Warehouse and held stakes in publicly listed businesses including Debenhams and French Connection before its own collapse in February 2009. It also had a 39% stakeholding in Glitnir.

PricewaterhouseCoopers, Glitnir’s auditor, has also been accused of being complicit in the fraud by Glitnir’s winding up board, appointed by the Icelandic court to supervise the bank’s liquidation.

The suit names six other defendants, including Johannesson’s wife Ingibjorg Palmadottir.

It is claimed that Johannesson orchestrated a series of transactions that left Glitnir “heavily exposed to the global credit crunch”.

The board added that “Johannesson and his co-conspirators” had “conspired to systematically loot Glitnir Bank in order to prop up their own failing companies”.

It continued: “The Johannesson transactions made no economic sense for Glitnir or its creditors and placed the bank in extreme financial peril.”

The board estimated the losses from the allegedly fraudulent transactions at more than $2bn (£1.3bn). Proceedings were launched after a 14 month inquiry by Kroll, the corporate investigator.

Johannesson has denied the allegations. He told Bloomberg: “It’s just politics. I have full proof that we were repaying loans that were maturing 20 to 40 days later. This was just the refinancing of older loans.”

PwC added that it stood by the opinions it have on Glitnir’s accounts “based on information and data the accountants had access to at that time.”

Glitnir has also secured a freezing order from the High Court in London against Johannesson’s worldwide assets including two apartments in New York for which he paid about $25m (£16.9m).

The collapse of Glitnir was followed quickly by that of Iceland’s two other largest banks Landsbanki and Kaupthing which were taken over by the state.

According to the Glitnir statement Johannesson is believed to be living in Britain and “still holds a number of high-profile directorships there including…House of Fraser.”

It added: “On behalf of Glitnir’s creditors, the winding-up board is determined to pursue recovery of assets looted from Glitnir by Johannesson and the other defendants,” claiming that the bank was “robbed from the inside”.