Iceland's investigator fixes frosty gaze on banking elite

ANALYSIS:Eva Joly's tough approach to the banking inquiry has made her popular with the public

THERE’S MORE than just one letter differentiating Ireland and Iceland. When it comes to banking inquiries, the major difference is Norwegian-born French financial investigator, Eva Joly (67).

In March, 2009, Joly was appointed by the Icelandic government as a special adviser to support a criminal investigation into possible white-collar crime being led by police commissioner Olafur Hauksson. "She is a very strong character," Hauksson said in an interview last November with the Financial Times. "We are agreed on some parts [of the investigation] and not agreed on others but that is the natural way."

Joly's work is largely behind the scenes, although the Icelandic public is well aware of her role. "My work here [in Reykjavik] is not to go into the details of the cases," she told the FT. "My work is to make people believe that they can do this, to help them see the traps and make the strategy."

The cases she worked on in France include the political and business scandal involving the French state-owned oil company Elf Aquitane, which Joly investigated at the request of the Paris stock market regulator in 1994 . Joly was the juge d'instruction, or examining magistrate, in the Elf probe. As such, she directed the investigation in the course of which she faced regular death threats, her telephones were tapped and her home and offices burgled several times. But as a result of her work, 30 people were convicted and senior members of president Mitterrand's government were implicated.

The Icelandic inquiry is examining whether market manipulation helped inflate the balance sheets of three banks, Kaupthing, Glitnir and Landsbanki, while, as the FTput it, "the clique who ran them doled out cheap credit to some of their biggest shareholders and favoured foreign clients".

After three months in the job, Joly showed she was not shy about flexing her muscles. In an interview on Icelandic television last June, she raised concern about the potential conflict of interest represented by Iceland’s state prosecutor, Valtyr Sigurdsson, whose son was chief executive of Exista – the major shareholder in Kaupthing.

As a result, Ragna Árnadóttir, Iceland’s justice minister, began drafting a law to create another state prosecutor and Sigurdsson has declared that he would not participate in the banking investigation.

Joly also criticised a lack of political will in the government to bring to justice anyone who has committed economic crimes.

Not surprisingly, Joly has become popular with the public. But while Icelandic banks and those who ran them bear responsibility, Joly believes ultimate responsibility rests with the greed culture spread by Wall Street and the City of London. She has no time for free market capitalism, which she regards as intrinsically corrupting. She dislikes ordinary people paying for the errors of the bankers, politicians and regulators. "This is what you see all over the world," she told the FT. "The rules are not for the elite."

She described the Icelandic investigation as “huge” by comparison to the Elf probe. She said: “It will involve other European banks. It will show that what happened in Iceland is not just an Icelandic problem.”

She is strongly critical of demands from the British and Dutch governments that their citizens who opened deposit accounts with Icelandic banks, lured by the promise of high returns and who lost everything, should be reimbursed by Iceland to the tune of some €4 billion plus interest. Such demands are immoral, she said last August.

In an article published in several European newspapers, she said the UK and Dutch governments shared moral responsibility for what had happened.

“These countries are concerned by the failure of the Icelandic banks because they had welcomed their subsidiaries and branches with open arms, even though their authorities had been at least partially alerted to the risks,” she wrote, according to a version republished in Iceland by Alda Kalda, a freelance writer.

In a version printed in August 2nd, 2009 by the Daily Telegraph, Joly continued: "Gordon Brown is wrong when he says that he and his government have no responsibility in the matter . . . he has a moral responsibility, having been one of the main proponents of this model."

Joly believes the EU and the IMF need to examine their role in the global banking crisis. She has written: “The irresponsible attitude of certain countries, the EU and the IMF to the collapse of the Icelandic economy demonstrates their inability to learn from the dramatic undermining of the model that it embodied: one of excessive deregulation.”

Last year, Joly was elected to the European Parliament as a French Green Party MEP. She played a leading role last week probing the credentials of Rumiana Jeleva, nominated by Bulgaria to the international co-operation, humanitarian aid and crisis response portfolio.

Jeleva was accused of failing to disclose that she remained the owner and manager of Global Consult Ltd from 2007 to 2009. She asserted that the company was not operating in 2008 and 2009 and claimed “unfounded rumours” were spread by another Bulgarian MEP, believed to be Antonyia Parvanova.

When Parvanova came before the committee and accused Jeleva of lying about Global Consult, Jeleva’s fate was clear. In a letter to her prime minister on Tuesday resigning as a commission nominee, Jeleva accused Joly of bias and the committee as being prejudiced against her.

It is clear that Eva Joly takes no prisoners.