When Iceland's banks collapsed last autumn, a defining image of the end of the boom was Jn sgeir Jhannesson's black jet taxiing out of its hangar. But the "poster boy" of Iceland's audacious raids abroad couldn't escape the mess, says The Sunday Times. Last week he was brought to earth when his main creditor, the now-nationalised Landsbanki, pushed the UK unit of his investment vehicle Baugur into administration. A giant question mark now hangs over great swathes of the British high street.
How Iceland population: 300,000; main industry: cod became a significant player in global retail and finance has never been clear, says The Times. "Doubters pointed darkly at the easy airlinks with Moscow." Whatever the truth, Jhannesson was brilliantly placed to benefit from the credit bubble blown by the island's three main banks: Landsbanki, Glitnir and Kaupthing. An entrepreneur to his fingertips (he is said to have started his first business at 13), his rock-star looks and air of derring-do epitomised everything that was vigorously Viking. "Nobody was really taken seriously outside Iceland until Jn sgeir," one Icelandic businessman told The Guardian.
Having set up a discount supermarket with his father in Reykjavik in the late 1980s, the pair quickly became Iceland's biggest retailers. Jhannesson, now 40, exploded on to the British retail scene in 2001, snapping up 20% of Topshop-owner Arcadia, and netting a £100m profit when he sold out to Sir Philip Green. It was the start of a debt-fuelled bonanza, says The Sunday Times. Baugur accumulated investments "like a gambler hoarding chips at a blackjack table". At the peak in 2007, the Icelanders had stakes in businesses employing about 65,000 people, turning over £10bn across 3,800 stores. House of Fraser, Hamleys, Whistles, Oasis, the frozen-food store Iceland... the list went on and on. As, indeed, did the trail of opaque shareholdings and strange structures stretching back to Iceland, says The Sunday Telegraph. When Glitnir advanced cash to Baugur, Johannesson repaid the compliment by taking a stake in the bank. "These were deals done in the sauna."
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Jhannesson had all the right trappings of business success: a beautiful girlfriend, Ingibjrg Plmadttir, whom he married in a sumptuous ceremony in 2007; the yacht (called Viking, naturally); the houses. But there were hints of demons within. His "intriguing back story" includes allegations from an embittered former partner about wild parties aboard the Viking and bills for Miami escort girls that went through the books as "retail services". Jhannesson has always maintained these are smears and has long waged a bitter feud with key characters within Iceland's "small but highly fissionable political class".
So it is unsurprising that he reacted with fury when the central bank moved to nationalise Glitnir last October. It was, he said, "the biggest bank robbery in Icelandic history". It was also the beginning of the end. Jhannesson used to colour-code his assets with a traffic-light system: green for safe, yellow for potential problems, red for "special attention". Last week, at the Baugur HQ in Reykjavik, all the lights were out.
Will the Baugur collapse bring down the British high street?
Jn sgeir Jhannesson was notorious for his dislike of paperwork and seemed happy "to let the individual satrapies of his empire go their own way", says Martin Waller in The Times. Industry experts praised his hands-off style. With hindsight, it should have rung warning bells.
The same is true of Jhannesson's apparently scatter-gun approach to acquisition, says Alex Brummer in the Daily Mail. It was a mystery why Baugur snapped up anything going on the high street, whatever its state of health. Baugur never smelt right, claims analyst Nick Bubb, "but a formidable PR machine tried to tell us otherwise". Yet surely its eventual collapse was "about as obvious as an out-of-control double-decker bus," says Jeremy Warner in The Independent. "How on earth apparently rational financiers and bankers allowed Jhannesson to get away with this bizarre construct, we may never know."
Jhannesson described Landsbanki's action to force the group into administration as "a kick in the balls" and railed against the "British vultures" poised to snap up his assets. Store groups Debenhams and House of Fraser distanced themselves from the collapse by stressing Baugur's minority holding. The group most exposed to the threat of a firesale or wind-up is Mosaic (Karen Millen, Principles, Warehouse, Coast) in which Baugur had a 49% stake. But, in the short term, Landsbanki is likely to hang on to the assets, says The Times: not least because potential "vultures" are showing little appetite. The message for the 50,000 British workers affected by Baugur's collapse is "don't panic" yet.
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