Iceland Indicts Ex-FL Group Chairman Smarason for Embezzlement

Iceland’s special prosecutor indicted Hannes Smarason, the former chairman of FL Group hf, on charges of embezzling 2.875 billion kronur ($23.5 million) from the investment company before it was renamed Stodir.

Smarason in 2005 transferred the cash from an FL Group account to one controlled by a friend, who used the money to buy Sterling Airlines A/S, according to a copy of the indictment e-mailed by prosecutors today.

Smarason didn’t answer two calls to his mobile phone seeking comment.

He stepped down as CEO of FL Group in December 2007, a year in which the company lost 67.2 billion kronur, according to its financial statements. FL Group changed its name to Stodir hf after placing a moratorium on its debt payments at the end of September 2008. Creditors of the company agreed in 2009 to swap debt for shares in Stodir.

To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik at

To contact the editor responsible for this story: Jonas Bergman at

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