Iceland bank Glitnir accuses former shareholder, CEO, and PwC of fraud in lawsuit

Icelandic bank accuses former CEO of fraud

WASHINGTON — An Icelandic bank that collapsed during the financial crisis sued its former chief executive, leading shareholder and other former directors, saying that they stole from the bank.

The lawsuit, filed in New York state’s Supreme Court by a committee representing creditors of Glitnir Bank, also names the bank’s former auditor, PricewaterhouseCoopers.

The suit alleges that Jon Asgeir Johannesson, who owned about 39 percent of the bank, took control of Glitnir in April 2007 and fraudulently used $2 billion of its funds to support his other businesses. The money was lost and the bank was placed under bankruptcy protection in October 2008.

Glitnir’s creditors have also sued Johannesson and others in Iceland.

The suit in New York also alleges that Johannesson, CEO Larus Welding, and several of the directors concealed the bank’s true financial condition when they raised $1 billion from investors in New York.

As a global recession spread in 2008, Iceland’s economy collapsed. The nation’s three big banks went belly up within a week of each other and the government was ousted in a “Saucepan Revolution,” so named because of protesters took to the streets banging pots and pans.

Last week, two former executives of collapsed Icelandic bank Kaupthing were detained while persecutors consider a criminal case against them.