The following is a compilation of posts I have written this week on my Facebook page, about a corruption scandal in Namibia that has caused a massive tremor among the Icelandic population. Primarily because it mirrors our situation here at home. Warning: it’s long.
Photo of a fishing boat near Dalvík, via VisualHunt.
This week I’m going to devote posts to a matter that has caused a major uproar in Icelandic society in the last few days—a news exposé that via Wikileaks revealed that Icelandic company Samherji has (in all likelihood) been callously exploiting the fishing resources of Namibia, Africa, via a thick web of corruption, bribery and other ugliness. Namibia—a country that is already steeped in poverty.
I know what you are thinking: “What’s the big deal? So big business is fleecing a vulnerable population in a remote part of the world … what else is new?
True. Sadly this is not an uncommon occurrence. Yet for us Icelanders this holds a much deeper significance. In fact, the whole thing feels like someone detonated a bomb last week and we have been dealing with the fallout ever since. Very little else is talked about. As one commentator put it, “It is the biggest shock the Icelandic nation has sustained since the economic meltdown.”
It is so significant that it would be remiss of me not to write about it. However, given that it is both overarching and complex (although not that hard to understand) I’m going to break it down into bite-sized chunks, posting a little each day.
So. First, some background.
In Iceland, we have a system for managing fisheries, called the quota system. Each year the Marine Research Institute assesses the condition of different fish stocks, and then issues quotas ruling how much can be caught in order for the species to sustain itself.
Meaning if you have a boat in Iceland and want to supplement your income by fishing, you are not allowed to. You need a quota.
Those quotas are highly coveted. The fish in the sea can make people very rich—and it has. The biggest and wealthiest companies in Iceland are its fishing companies. They pay enormous amounts in dividends to their shareholders every year—though, infuriatingly, not so much back to the Icelandic community that owns the resource. More on that anon.
So how does one obtain a quota? Well, they are allocated according to rules set by the government, and as it happens, almost all of them go to individuals who are favoured by the ruling party in government. In turn, unsurprisingly, those who receive the quotas are strong supporters of said party. Indeed, some people would say that they effectively “own” that party.
And when I say “party” I am speaking of the Independence Party. The IP always rules, even when it is in a coalition with other parties. It has been in government in Iceland ever since the country became a republic in 1944, with the exception of one four-year term. That was post-economic meltdown in 2008, when people were so outraged at the IP’s mismanagement that they voted them out of office. But lo! four years later they were back.
The “quota barons”, as they are dubbed, have placed their people in strategic positions throughout Icelandic society: in politics, the media, other positions of influence. To wit: our current minister of fisheries, Kristján Þór Júlíusson (IP, of course), used to be the Chairman of the Board of Samherji (which happens to be the biggest fishing operator of them all), and has close ties with the company. Indeed, when word got out that RÚV, the national broadcaster, was investigating Samherji’s offenses in Africa, the minister called Samherji’s CEO Þorsteinn Már Baldvinsson (who founded the company and has become synonymous with it) on the phone, to ask “how he was feeling”.
The fishing companies are powerful in other ways. They can “own” entire fishing towns, where they are not only the biggest employer, but also the main benefactor (think sports stadiums, sponsorship of various festivals, etc.). This makes it very hard for people to take any sort of position against them. This past week we have seen this play out in Dalvík, north Iceland, where Samherji hold enormous power (and where they are the main sponsor of Fiskidagurinn mikli – the big fish festival held in August each year that draws thousands of visitors). The people on the streets of Dalvík, interviewed in the media this week, have been reluctant to breathe a word of criticism, while the rest of the country is livid. They know that opposing those in power can have a serious effect on their livelihoods.
Another devastating side to the quota system is the way quotas are transferrable between companies. If you have been allocated a quota, that means it is yours, and you can sell it to the highest bidder. Many a fishing town in Iceland has been laid waste because the main fishing operator has sold its quota to someone else, meaning that practically from one day to the next there is no longer any work in the town, and people’s livelihoods are eliminated.
Photo of a desert in Namibia via VisualHunt
Namibia is a republic in southwest Africa, with a coastline bordering the Atlantic Ocean. After centuries of colonization during which the country was subjected to genocide (perpetrated by German colonizers), apartheid (under South Africa) and guerrilla warfare, it finally gained independence from South Africa in 1990. Today the main economic sectors are mining, agriculture, manufacturing and tourism. There is a massive gap between rich and poor, with 10% of the population earning some 52% of the country’s income. According to Wikipedia, nearly 18% of the population subsists on USD 2, though whether that is per day or month isn’t stated (maybe someone can clarify). Namibia is the driest country in sub-Saharan Africa, with rainfall of only 14 inches per year.
Soon after Namibia gained independence it sought assistance from Iceland to help develop its burgeoning fishing industry. Experts from the Icelandic branch of the International Development Agency went there and worked to develop the sector—a venture that was a success and something both countries could be proud of. They stayed there until 2008, when Iceland stopped all developmental aid in the wake of the economic meltdown. Two years later, Samherji moved in.
The allegations of their criminal activity, that the chair of the OECD Working Group on Bribery deems “credible”, is staggering in scope. In a nutshell, Samherji paid huge bribes to three high-ranking government officials, including the minister of justice and minster of fisheries. This way Samherji was able to usurp quotas from Namibian fishing companies, some of which were wiped out in the process so that thousands of already impoverished families lost their livelihoods.
Samherji allegedly was instrumental in altering legislation in the country to meet their ends—easy to do, I suppose, when you have the minister of justice in your pocket.
So Samherji obtained the rights to trawl fish in Namibian waters, pushing out locals in the process. Having done that they did not even bother to land the fish in Nambia for processing, which might at least have provided a few measly jobs. With their state-of-the-art ships they simply siphoned up the fish, froze it on board, then had another vessel come to fetch it and take it to market.
All the trust and goodwill that had been forged between Iceland and Namibia through the building up of the fishing industry, not to mention the prosperity—gone. Destroyed by the greed of a few corrupt individuals.
Having taken what they wanted, Samherji set about systematically figuring out how they could get away with paying no taxes in Namibia—and found a way, of course. None of the profits ever made it to Namibia. The fish was sold on markets elsewhere, and the revenues sent to tax havens, most notably in Cyprus. All of this was highly systematic, as leaked emails and other documentation reveal. In fact, a book just published about the matter reveals that an investigator who had worked for Iceland’s Special Prosecutor’s Office into financial crimes (set up after the meltdown) actually worked for Samherji in Namibia, presumably with his expert know-how of how to hide funds through sophisticated offshore dealings.
The investigation by RÚV, Al-Jazeera, Stundin and others is thorough and supported by extensive documentation. Those documents include photographs of the three Namibian officials, who are dubbed “the sharks”, in various locations in Iceland, including on fancy glacier tours wearing 66°N outfits (no doubt supplied by the good Samaritans at Samherji).
The bribes that Samherji has paid in Namibia to the three sharks amount to ISK 1 billion, or USD 8 million, at the very least. That should give us some indication of how valuable those fishing grounds are, if those are JUST the bribes.
Imagine if that money had gone to the Namibian people.
Incidentally, it should be said that bribing foreign officials is a criminal act punishable by law, in Iceland and most other Western countries.
The investigation into the misdeeds of Icelandic fishing company Samherji and its dealings in Namibia was partly prompted by the reports of a whistleblower, an Icelander named Jóhannes Stefánsson. He worked for Samherji in Namibia, but was dismissed from the company in 2016.
Prior to the exposé last week, Samherji was already in damage control mode. Evidently having caught a whiff of what was about to go down, its CEO Þorsteinn Már Baldvinsson had contacted RÚV news editor Rakel Þorbergsdóttir and invited her to meet with Samherji execs in London (at their expense) to go over the allegations. She declined. They then offered to meet with her in Reykjavík. She agreed, on the condition that all that was said at the meeting would be on the record. Samherji declined.
And so, the story ran, to everyone’s shock and outrage … including, apparently, Samherji’s. The following day the company issued a statement expressing its “disappointment” in its former employee, who “might” have got the company tangled up in something illicit down in Namibia. The poor, unsuspecting CEOs of Samherji evidently had NO IDEA of anything untoward happening. I mean, there they were just going about their business in good faith, and the whole time this dude Stefánsson was colluding with Bad People behind their backs and getting them into big trouble. Imagine!
For the record, apparently Jóhannes Stefánsson, the whistleblower, was complicit to some degree. But shifting the entire blame onto him … nah, it leaks like a sieve. First off, he was not the main profiteer from those shenanigans. Second, he was fired in 2016, yet hefty bribes were still being paid until January this year. Third, he was not authorized to make bank transfers in such large amounts. And so on.
(Aside: you’d think with all their dosh old Samherji could have hired competent PR advisors, just sayin’.)
When these lame attempts at deflecting blame resulted in little more than ridicule and scorn, Samherji tried another tack. Its CEO Þorsteinn Már headed to Dalvík (you remember, that little fishing village they own) to address Samherji workers. There he called the media reports “an attack on Samherji’s employees” and announced that he would step down temporarily as CEO, to protect his staff. “I feel that these attacks on you and other Samherji employees in Iceland, who have been doing good work, must stop,” he said. Whaddaguy.
Employees, many of whom are foreigners, were also instructed to “ignore negative news about the company”.
Next, in a TV interview (with Iceland’s Channel 2 … he has refused to talk to RÚV, of course) Þorsteinn Már hauled out the big ammunition: “They [employees] … have families, children who do not understand the words that are being used, or why their father, or mother, are being dragged into this discourse created by sensationalist press reports.” Yes, think of the children!
Around this time, news began circulating that there had been a meeting between Þorsteinn Már, the three Namibian “sharks” and … wait for it … OUR Minister of Fisheries Kristján Þór Júlíusson. Yes indeed.
When prompted, Kristján Þór confirmed this, but denied that there had been a formal meeting. He had simply “dropped in” to Samherji’s offices on that particular day, and Þorsteinn Már had wanted to introduce them.
According to Jóhannes Stefánsson (whistleblower), who was also at the meeting, Þorsteinn Már did indeed introduce Kristján Þór to the three Namibian officials. In fact, he introduced him as “our man in government”.
Yup. Our man.
Our man, who used to be Samherji’s chairman of the board. Our man, who used to be mayor of Akureyri, Samherji’s home town. Our man who, when word got out that Samherji was being investigated, called Þorsteinn Már on the telephone, to ask “how he was feeling”. Our man, who is now a cabinet minister—the minister of fisheries—in the Icelandic government.
In 2010, following the economic meltdown and subsequent civil unrest, a reform of the Icelandic constitution began. Or, rather, work began to create the first constitution of the Republic of Iceland. The constitution we’d had up until that time was one left over from colonial times, and when Iceland gained full independence from Denmark in 1944 was simply amended to call the head of state “president” instead of “king”.
Given the upheaval we had seen in the previous two years, there was a loud demand for a new constitution. The method for the reform was considered radical, as it was the first constitution in history that was to be crowdsourced using the Internet. A number of regular citizens were elected by the general public to form a constitutional reform committee. The public could also get involved via a website set up for that purpose. The whole process was new, fresh and very promising, and it caught the attention of the entire world.
Finally, after months of debate, a new constitutional draft was ready. It did not differ dramatically from the old one, though it did contain some new clauses, including this one: “Iceland’s natural resources which are not in private ownership are the common and perpetual property of the nation. No one may acquire the natural resources or their attached rights for ownership or permanent use, and they may never be sold or mortgaged. … On the basis of law, government authorities may grant permits for the use or utilisation of resources or other limited public goods against full consideration and for a reasonable period of time. Such permits shall be granted on a non-discriminatory basis and shall never entail ownership or irrevocable control of the resources.”
This clause pertains to all natural resources, including the fishing grounds around the country. It was considered a very important part of this new constitutional amendment because of the system we have been discussing this week, that allows government officials to allocate fishing quotas to their cronies and financial backers, a system that has made a handful of people – and only a handful – exceedingly wealthy.
You see, thus far, “full consideration” (aka a fair price) for use of the fishing grounds has not been in place. Parliament can decide at any given time how high, or low, that fee should be. As we have already established, the fishing moguls have had every government in their back pockets ever since Iceland became a republic, excepting the left-wing government that governed for a four-year term in the wake of the meltdown. The fee, therefore, has been … let’s say NOMINAL.
But back to the constitutional amendment. The proposals were put to a national referendum in 2012, and an overwhelming majority of those who turned out voted to pass the new constitution. The question pertaining to the natural resources clause had a nearly 83% approval rate.
So the nation – the part that voted, at least – was in agreement. The final stage in the reform process was for Alþingi, Iceland’s parliament, to pass the new constitution. Yet before that could be done, it was time for new elections. The same parties that had virtually bankrupted the nation four years earlier were voted back into power. Those very same parties who have a vested interest in keeping the natural resource clause OUT OF the new constitution, because that would mean that an “appropriate fee” would have to be paid by the fishing moguls, which in turn would mean that they could continue getting rich – just not *disgustingly* rich – at our expense. It would mean that they would have to pay a decent fee into the common coffers. A fee that would inject much-needed capital into our ailing health care system, welfare system, educational system, child-care system, infrastructure, law enforcement, or whatever system is needed to successfully run a society.
Anyway, the new government that took office in 2013, a coalition between the Independence and Progressive Parties, took the constitutional draft and stuck it deep into a drawer, where it has remained ever since.
This year, the government – which you may remember is led by the “egalitarian” and “environmentalist” Left-Greens, began a NEW constitutional reform. That’s right. Even though we have a perfectly good constitution draft just waiting to be ratified, that was overwhelmingly approved in a national referendum in 2012. But no – they want to create their own new constitution … and you can bet that the natural resource clause will not be in it.
Just some quick numbers: Samherji’s profits last year alone were ISK 8.7 billion (USD 70 million). Samherji’s share in the total allocated quota was 7,1% (the maximum that one company can legally own is 12% … however it has since come to light in the Wikileaks documents that Samherji has actually exceeded that ratio through hidden ownership of another company). CEO Þorsteinn Már Baldvinsson earned ISK 5.4 billion (USD 43.7 million) last year.
The combined fishing fee paid by all Icelandic fishing companies for quotas was ISK 7 billion in 2018. The government is currently working hard to lower that fee to ISK 5 billion. That sum is LOWER than the amount needed to administrate the fishing industry – in other words, the sum paid by the taxpayer to keep the industry on track would be HIGHER than the fee paid by the quota barons. Also, the fee Samherji paid for a mackerel quota in Iceland is LOWER than it paid for a mackerel quota in Namibia – and that is BEFORE the colossal bribes are factored in.
Photo by Art Bicnick
This week I’ve written daily posts on the horrific business practices of Icelandic fishing company Samherji in Namibia, and how it is all tied in with the prevalent and rampant corruption in Icelandic politics. Grabbing quotas, exploiting the fishing grounds for their own gain, and paying virtually nothing to the owners of the resource is precisely how Samherji operates in Iceland – not only with the government’s blessing, but their outright assistance. The main difference between their actions in Namibia and Iceland is that here in Iceland they don’t have to pay bribes to obtain the quotas. They get them handed to them on a silver platter in full view of everyone. And they get away with it because that’s how the system is designed. By them, and for them.
And lest anyone doubt that the fishing companies have certain members of the government in their pockets, consider the case of Kristján Loftsson, the man whose name is synonymous with whale hunting. Despite the fact that a large portion of the Icelandic population is opposed to whaling, Kristján Loftsson regularly gets handed whaling quotas. This is because in addition to owning Hvalur hf. (Whale Ltd.) he is also the owner of one of Iceland’s largest fishing companies, HB Grandi. Whaling is just a sideline for him – a pet project that he can’t seem to let go of, even though the market for whale meat within Iceland is virtually nonexistent.
Earlier this year a story broke via a leaked email: Loftsson had been disgruntled about a certain regulation that made it less convenient for his company to cut and work the whale carcasses, so he wrote an email to his namesake Kristján Þór Júlíusson, minister of fisheries (you remember him), and requested that he change the regulation. Thee months later, the regulation was changed as per Loftsson’s wishes.
I could go on. And on. The Samherji affair is by no means the only corruption scandal involving the Icelandic government. In fact, there are so many of them, and they come at us so furiously, that it barely affords us time to catch our breath before the next one is upon us.
Some people, when they learn of how things are here, are amazed and indignant that we Icelanders are not rioting in the streets. I get that. I cannot explain it, though I suspect much has to do with the effects of colonial oppression, that still have deep roots in our Icelandic mentality. Many, many people here feel most comfortable as subservient minions, with overlords that they gaze up at in admiration. That mindset has been passed down through generations, and is not easy to shake.
The rest of us, those of us who want change, who long for change … we’re tired. Worn out. We’ve shown up for countless demonstrations in the past ten years. We’ve marched. Shouted ourselves hoarse. Banged pots and pans, thrown eggs and skyr, set things on fire. Voted for the parties that we think are going to make a difference. Nothing makes a difference. No matter what we do, the Independence Party wins. Last election I voted for the Left Greens. They had all the right ideologies, made all the right promises. Not in my wildest dreams did I envision them in a coalition with the IP. I don’t think anyone who voted for them did. Yet here they now are, letting their ideology be bulldozed by the IP on a regular basis. In the end, the IP always gets its way.
Sadly, when the Namibian story broke – the one that is so inextricably tied up with present-day Iceland – the prevalent feeling among most Icelanders, after the initial shock and fury, was one of resignation. Yet another scandal. Yet another outrage. Yet another violation that must be endured. Nothing will ever change.
Tomorrow, Saturday, at 2 pm, yet another demonstration is planned. Its heading is DEMOCRACY, NOT PLUTOCRACY—THE RESOURCES BACK IN OUR HANDS. There are three demands:
1. Resignation of the minister of fisheries
2. For the profits from our common resources to go into a fund that benefits our community
3. For parliament to ratify the constitution that was approved in a national referendum in 2012
I am tired, weary. But I will be there.
/Thanks for reading.