Icelandic pension funds under investigation
ICELAND - Iceland's special prosecutor is investigating five pension funds over claims they exceeded the investment limits laid down by law.
Ólafur Þór Hauksson, appointed to the new role on 1 February 2009, confirmed his office has launched an investigation following a claim from the Financial Supervisory Authority (FME).
The investigation relates to claims that five pension funds, "all in the possession of Landsbanki", invested more than the legal limit in certain assets, as Icelandic law specifies the maximum amounts allowed in an effort to distribute risk.
The five pension funds under investigation are: the Icelandic Pension Fund, (Íslenski lífeyrissjódurinn), the Eimskip pension fund (Lífeyrissjódur Eimskipafélags Íslands), the dentists pension fund (Lífeyrissjódur Tannlaeknafélag Íslands), the Kjölur pension fund, (Kjölur lífeyrissjódur) and the Airline Pilots pension scheme (Eftirlaunasjódur íslenskra atvinnuflugmanna).
As the investigation has only just started information is limited however Hauksson told IPE the next steps will involve his office "going over the relevant documents" before an inquiry will be started that includes taking evidence from those involved at Landsbanki in running the mandates.
Depending on the results of the inquiry, the Special Prosecutor, responsible for public investigation and prosecution and in particular investigating "suspicions of criminal actions in the period preceding, in connection with or in the wake of the collapse of the Icelandic banks", can bring charges against those concerned.
Following the start of the special investigation, the Ministry of Finance published an update of the investment limits for pension funds in its weekly newsletter as it stated "there has been some discussion of late of the authority of pension funds to invest".
It confirmed the main provision of the legislation, designed to distribute risk, is:
Additional regulations which came into force on 31 December 2008 permitted pension funds to increase their investment in unlisted securities from 10% to 20% in response to the financial crisis, but it warned, "this ratio will have to be reviewed, once the financial market stabilises".
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