7 November 2024
By Aðalsteinn Kjartansson and Heli Seljan
“Samherji’s African activities in Namibia” often, and about transactions that are now being investigated as bribery. This can be seen in the board’s minutes over a seven-year period.
During the investigation of the Samherji case in Iceland, nine current and former employees of the company became defendants.
This is due to suspicion of bribery, money laundering and enrichment offences.
In addition to Thorsteinn Már Baldvinsson, we can mention Ingvar Júlíusson, the chief financial officer of Samherji’s foreign operations, and Adalsteinn Helgason, who was in charge of the company’s African operations until he retired due to age in 2016.
Both of them were responsible for payments to drawer partners in Dubai and Namibia, which were used to deliver bribes to influential Namibian people.
More people connected to the company have been called as witnesses.
Among them is Arnar Árnason, Samherji’s accountant for many years, and co-owner of the audit giant KPMG.
During a hearing in March last year, Árnason was presented with documents that KPMG handed over to the district prosecutor, all of which were related to his work on the audit of Samherji’s parent company.
Among the data was an overview of unexplained payments from the Namibian connection with Samherji in 2012.
It deals with unexplained cash withdrawals and payments that have naturally raised questions.
The answers to them should have set off a warning light.
One example was a cash withdrawal of up to 10 million Icelandic krona (ISK) (approximately N$1.3 million), marked ‘fishing licence costs’, for which no invoice was found.
In the explanations, the following is said: “Facilitation fee due to the trust quota. Jóhannes is going to provide an account.”
It says millions were withdrawn from a bank in Namibia and used to pay an ‘agency fee’ to an unnamed party due to the allocation of quotas to Samherji from a public fund in Namibia.
Another cash withdrawal is also on the list of payments that need clarification for the same reasons.
The explanation is provided as: “Adalsteinn agreed, Jóhannes has to provide an account.”
‘ACTUAL CONSULTING COST’
Another document submitted to the auditor, which may have been included in his working documents, contains a summary of over 10 entries in the books in Namibia.
Four transactions worth a total of ISK150 million (approximately N$15 million) over a period of just over one year, marked only as consulting payments, attract obvious attention.
Yet another example is in a document submitted to Samherji’s accountant in Iceland, containing a breakdown of the so-called quota costs of Samherji in Namibia, payments in quota fees to the state and profit sharing.
These are said to be included in the calculations, but records also list ‘actual consulting costs’ without further clarification.
The accountant’s records show he had a lot of contact with managers in Namibia, and one in Cyprus.
For example, Árnason went to Namibia and had a meeting there, and also went over the situation in relation to the settlement of the Samherji group in detail.
At the same time, Samherji’s subsidiaries paid close to two billion krona (N$256 million) due to invoices for unclear consulting payments, up to 70 million krona (N$9 million) in a single transaction, to an unknown drawer company in Dubai.
KPMG’s auditor Árnason’s only comments regarding Samherji’s activities in Namibia are about the repeated lateness of Namibian colleagues.
His audit reports do not show that during the entire time Samherji worked in Namibia, comments or warnings were extended regarding these exorbitant payments by the subsidiaries in Cyprus and Namibia.
CLEAR INSTRUCTIONS FOR AUDITORS
The guidelines of KPMG, which is an international accounting firm, draw lines regarding the auditor’s obligations to be alert to indications of bribery or corruption.
It is specifically pointed out that three quarters of all the largest bribery cases in recent years are characterised by the fact that bribes were paid through intermediaries in the form of consulting payments.
In particular, a warning was extended that auditors need to be especially alert to the risk of bribery when it comes to activities in countries where the risk of corruption is considered higher than most, and that the risk is especially high when the business is in some way related to government representatives, employees or public sector institutions.
Does the subject have an international footprint and does it operate in countries where corruption is common?
Does the subject work in an industry where contact with public officials is extensive?
Does the entity use a significant number of third parties to manage its sales or operations in other countries?
Judgements can be sought abroad where similar payments have been discussed.
KPMG in the United Kingdom was fined the equivalent of 650million krona (N$83 million) in 2022 for not fulfilling its obligations and reporting clear signs of abnormal business practices, when Rolls Royce paid bribes to gain valuable business relationships in India in 2010.
The auditor of KPMG, who himself was fined the equivalent of tens of millions of ISK, was said to have overlooked obvious signs of abnormal business practices due to two payments, worth ISK800 million (N$103 million), that Rolls Royce paid to an Indian intermediary in order to enter into valuable business with the Indian government.
Rolls Royce had been fined close to ISK40 billion (N$5 billion) for numerous bribery offences.
WORKING FOR THE BOARD AND SHAREHOLDERS
The auditor’s carelessness was said to be particularly serious, given that at the time of the audit, there was discussion about the risk of bribery in the same sector, as well as the fact that intermediary payments were the most common form of bribery.
KPMG in Iceland and Samherji announced, shortly after the Samherji documents came to light at the end of 2019, that their business relationship was terminated and another company would be in charge of the audit of Samherji Holdings, which, at the time, was responsible for all of Samherji’s foreign operations.
No explanation was given for this by representatives of Samherji and KPMG.
The source spoke with Hlyn Sigursson, the managing director of KPMG, over a year ago, and in that conversation he said that he did not want to discuss the termination of the business relationship at the end of 2019.
When asked what the responsibility and role of the KPMG auditor was, if they suspected something abnormal or illegal in their work, and whether they had an obligation to report it to the authorities, Sigursson said: “It is not our job to do that.”
“Our responsibilities are primarily to the board and shareholders. If something illegal is seen, it is our duty to report it to the board and shareholders. Our responsibilities are primarily to them.”
In addition to auditing the accounts of the members of the group, Árnason seems to have been brought in to scrutinise and plan the transfer of ownership of the entire Namibian fishing company from the UK.
In a document that appears to have been in the records of KPMG’s audit of Samherji companies in 2015, it is discussed in some detail how Samherji companies in Namibia are going behind their Namibian co-owners in business and talk about the need to keep it secret.
At the same time, this document specifically deals with Samherji’s two million krona (N$256 000) annual ‘consulting payments’ to his ‘son-in-law’ for going quarterly and looking after the fish shops that Samherji established there at the request of the locals.
However, Samherji had to continue paying these same consultancy payments for three years, after the fish shop was closed.
The accountant’s notes also says that Ingvar Júlíusson, the finance director of Samherji’s foreign operations, was requesting that the “definition of related parties be reduced” as it would be “politically sensitive” if it was revealed that Samherji had full control over its shipping company Katla in Namibia, although it was made to appear that the company was majority owned by Namibians, which was a condition for being allocated a quota in Namibia.
There is also a detailed overview of Samherji’s complex operations and how the Namibian operations went from being owned by a British Samherji company to being owned by an offshore Samherji company in Mauritius.
The transfer of ownership and the fact that the income generated in Mauritius was not declared were some of the big reasons why Samherji had to correct its tax returns in Iceland and pay hundreds of millions of krona in taxes and fines.
One of these documents is the minutes of the meeting of the auditors of the Samherji companies in Namibia, at the beginning of 2015.
It specifically discusses the influence of the drawer company Mermaria Invest, which Samherji founded in Mauritius, in order to bring profits out of Namibia and in to Europe, without paying tax.
The Mauritian company is said in the auditor’s notes to change the fact that one of Samherji’s subsidiaries in Namibia will subsequently be run at zero and only what is necessary will be kept in the company.
Árnason did not want to comment.
Timeline
The following meeting minutes indicate that the Samherji board was well informed of developments in Namibia.
June 2011
The minutes of the Samherji’s board of directors notes that Alsteinn Helgason, who at the time was in charge of Samherji’s African fishing operations, noted a trip to Namibia to search for new fishing areas on the coast of Africa.
17 November, 2011
Samherji board meeting minutes note that Helgason was “in Namibia, looking for fishing permits” and that he was “optimistic about a good allocation, although contracts were ready but not signed”.
Earlier in November, Helgason met Tamson Hatuikulipi, the son-in-law of Namibia’s fisheries minister Bernhard Esau. Hatuikulipi showed him photos of his wedding. Jóhannes Stefánsson noted that he facilitated the contact between Helgason and Hatuikulipi, who had no experience in fishing or fish trading. Hatuikulipi and drawer companies were set to receive hundreds of millions Icelandic krona (ISK) from Samherji in both Cyprus and Namibia for the next eight years. Since then, Hatuikulipi and Esau have been in police custody and are awaiting trial due to their dealings with Samherji.
2 February, 2012
A memo is sent to Orstein Más Baldvinsson at his request, due to a presentation he intended to make to the Samherji board the next day.
Helgason sent a note to Baldvinsson and his secretary detailing Samherji’s relationship with Namibian politicians and their relatives.
“The son-in-law of the [Namibian fisheries] minister plays a key role in the relationship between [Samherji] and the minister who is told to do many things for Samherji” and “come up with a plan” that will deliver tens of thousands of tonnes of quota to Samherji. It has to be done through an intermediary, bending the rules, as Samherji does not have the rights to that as a foreign company.
Samherji has already received a quota from the public fund, through an intermediary, with the help of the minister. Later in the same month, the equivalent of 10 million ISK (N$1.28 million) in cash is withdrawn from a Namibian bank and, later on, an agent’s salary – a bribe – is paid at the request of Helgason. You have to buy a fake invoice from an unrelated company, in order to embellish Samherji’s accounting, he notes.
The minister’s group consists of politicians, civil servants and powerful businessmen. The minister is said to support Samherji 100% but wants Samherji’s communication with him not to go through the minister’s office, but directly through him.
3 February, 2012
Helgason informs the Samherji board that the subsidiary in Namibia has “received a quota and will be sending a ship there shortly”.
May 2012
A secret meeting takes place between Namibia’s fisheries minister and Baldvinsson on the minister’s farm about [200] kilometres from the capital. The meeting was described as a key meeting where Samherji’s cooperation with the minister and his men was sold, and the minister promised that Samherji would get access to valuable quotas, which were then in the hands of other companies. The minister said they were going to find a way to bring quotas to Samherji, which would then have the “comfort” of use for several years. In the minutes of the meeting, it is detailed how Samherji can avoid the rules of Namibian ownership with the help of lip service, which “puts a black face” on a company that is actually owned and controlled by Samherji.
22 November, 2012
Baldvinsson delivers the chief executive’s report to the Samherji board. It tells about “the situation in Africa, both in terms of hunting and obtaining fishing licenses, but Helgason is working on these issues and has made little progress so far”, the minutes note. It is clear that Baldvinsson does not think things are moving fast enough in terms of the Namibian minister’s promise.
5 December, 2012
Samherji’s board immediately receives better news about the African fishing quote from Baldvinsson. Under the heading: “The situation in Namibia” in the minutes of the meeting, it is stated that the board members were informed about “the situation and progress in hunting license cases in Namibia, where licenses are being issued for the next seven years”.
2013
In 2013, Namibia was also discussed at a board meeting, which then became Samherji’s only company in Africa.
2014
In 2014, a special item is marked “Angola/Namibia”, but the minutes of the board’s meeting say verbatim: “[Baldvinsson] discussed and showed pictures from projects in Africa, where one ship, the Heinaste, is in operation. A company has been established with the Namibians and a partnership is being established in Angola.”
February 2015
Namibia was discussed at the meeting of the board and in the minutes it was said: “[Baldvinsson] reviewed the fishing industry in Africa.” An association has been established with the Namibians and work is being done to establish cooperation in Angola.
The business that he describes there, the establishment of a company in Namibia and a partnership in Angola, is one of the two major criminal charges against Samherji and the Namibian politicians. Officials have been charged in Namibia and are being investigated.
March 2015
Stefánsson is a guest at a board meeting, where he “told about the operation of Esja Fishing [the parent company of Samherji’s Namibian operations] and compared key figures between the years 2013 and 2014”. He “reviewed the quota situation in 2015”.
April 2015
Samherji’s board is said to have reviewed Baldvinsson’s memo on the situation in Namibia and ideas for organisational change, which the board agreed to continue, but there is little information about the contents of that or the memo.
15 October, 2015
Baldvinsson meets Namibia’s fisheries minister at the home of the minister’s son-in-law in Windhoek, where the meeting between the two, who were referred to as ‘Big Boss’ and ‘Big Man’ by their subordinates, had to take place in secret.
February 2018
Baldvinsson is said to have presented the board of Samherji with a purchase offer that was received in “Samherji’s African operations in Namibia”. There was a Russian fishing company travelling there, the same one that had bought the largest part of the fishing [operations] that Samherji had bought from Sjólaskip and had operated from the Canary Islands, fishing off the coasts of Morocco, Mauritania, Senegal and elsewhere, until 2013.
May 2018
Baldvinsson says formal negotiations have begun regarding the sale, which would be favourable at that point, even if there would not be much profit from the sale. The board of Samherji instructed him to continue working on the case and finish it.
