Freedom House on Iceland

Politics - January 6, 2022

Sometimes freedom is restricted in the name of democratic diversity…

On 16 December 2021 the annual report on the Human Freedom Index was published. It has been constructed jointly by experts at the Fraser Institute in Vancouver and Cato Institute in Washington D.C. and is used to measure human freedom in a broad sense, both personal and economic, around the world. The data were derived from 165 jurisdictions for the year 2019. It was somewhat surprising to see that of the five Nordic countries Iceland was in fourth place according to the Index: Of the 165 jurisdictions, Denmark was number 3, Finland number 6 (tied with Canada), Sweden number 9, Iceland number 12, and Norway number 13. I would have thought that Iceland would have been in first or second place, although the fact is of course more significant that all five Nordic countries were in the freest quartile of countries. The explanation seems to be that Iceland got less than full marks in a few categories according to one source of the Index, the annual report on Freedom in the World by Freedom House, published in 2020 about the year 2019. I would however disagree with some of the estimates and assertions made by the staff at Freedom House, even if I am sure they were doing their best. I hope they will consider my objections with an open mind.

Two Indicators Refer to Samherji

One indicator in Freedom House’s survey of freedom in Iceland in 2019 was the answer to the question: ‘Are the people’s political choices free from domination by forces that are external to the political sphere, or by political forces that employ extrapolitical means?’ Iceland was marked down and given three out of four (which would translate to 7.5 in the Human Freedom Index) with the following explanation: ‘No military, foreign, or religious entities exert undemocratic influence over voters’ choices. However, some politicians and parties are closely linked with businesses, which in turn exert significant political influence. Fisheries minister Kristján Þór Júlíusson is closely affiliated with Samherji, an Icelandic fishing company that was implicated in a scheme to bribe Namibian officials in November 2019.’

Another indicator in the survey was the answer to the question: ‘Are safeguards against official corruption strong and effective?’ Again, Iceland was marked down and given three out of four (which would translate to 7.5 in the Human Freedom Index) with the following explanation: ‘In November, Icelandic fishing firm Samherji was implicated in bribery after the release of the so-called “Fishrot Files;” they revealed that Samherji bribed Namibian government officials to secure fishing rights as far back as 2012. Samherji CEO Þorsteinn Már Baldvinsson resigned later that month after the files were released by WikiLeaks, but fisheries minister Júlíusson resisted calls to step down after admitting that he spoke to Baldvinsson over the allegations.’

The First Samherji Affair: Abuse of Power

These statements in the Freedom House report are highly misleading. In fact there are two Samherji affairs, not one, and the conclusion of the first one explains to some extent the beginning of the second one. Samherji is indeed one of the largest Icelandic fishing firms, benefitting from the system of individual transferable quotas in the fisheries which Iceland developed in the 1980s and 1990s. This is, as I have argued in two books in English, a sustainable and profitable system. Samherji’s success is resented by many, and at a party in early 2012 a former fisheries inspector told a journalist at the government-owned National Broadcasting Service, NBS, Helgi Seljan, that he thought Samherji had been manipulating the price of the fish it sold to its foreign subsidiaries (the lower the price of a certain amount of fish, the less of a share the crew of the fishing vessel harvesting this amount would receive). Seljan, a former left-wing activist, duly notified people from the Capital Controls Surveillance Unit at the Central Bank of Iceland. The Unit had been set up when Iceland adopted draconian capital controls in 2008, after the bank crash.

In the next few weeks the Unit enlisted the Special Prosecutor for Economic Crimes in an investigation of Samherji while Seljan waited in the wings, closely following the case. The Special Prosecutor struck on 27 March 2012, with a dramatic raid on Samherji’s premises, seizing the company’s books. Well-prepared, NBS reported immediately and extensively on the raid and on Samherji’s alleged violations of the capital controls. It eventually emerged however that there was no basis for the accusations. The criminal investigation of Samherji was dropped, and the Supreme Court in 2018 annulled an administrative fine which the Central Bank had imposed on the company. Whereas the NBS refused to give Samherji access to the email exchanges between Seljan and the Director of the Capital Controls Surveillance Unit before the raid, they were released by the Central Bank in 2020. They showed that the original tip came from the NBS journalist, Seljan, and that he and the Director of the Unit frequently consulted before the 2012 raid. Thus, the first Samherji case was about the abuse of power, but it was the power exercised by the authorities at the Central Bank and the Special Prosecutor, acting in conjunction with NBS journalists.

The Second Samherji Affair: An Unreliable Whistle-Blower

Probably Seljan and his NBS associates did not particularly relish their total defeat in the first Samherji case. They may therefore have been less than critical when a disgruntled former employee of Samherji, Johannes Stefansson, approached them, claiming to have evidence of the company’s wrongdoings in Namibia where he had directed its operations. He alleged that he, on behalf of Samherji, had bribed Namibian politicians and officials in order to obtain fishing licences in Namibian waters. Stefansson did not tell the full story, however. He had directed Samherji’s operations in Namibia between 2012 and 2016, but he had been peremptorily fired in the summer of 2016 when Samherji discovered that he had been trying to sell his services, including his Namibian business contacts, to another large Icelandic fishing company. His behaviour on the job had also become increasingly erratic, possibly because of his riotous personal life. To confirm his claims, Stefansson brought with him most, but not all, of the emails he had exchanged with Samherji’s managers and with others in the years leading up to his dismissal, in addition to some other documents. This time, Seljan was working not with the Icelandic authorities, but with a group of journalists in Iceland and abroad. They struck on 12 November 2019 when Stefansson’s emails and other documents were published on WikiLeaks, while the NBS presented a long and well-prepared television documentary about Samherji’s alleged wrongdoings, not only bribes in Africa, but also tax evasion and money laundering.

Understandably, the Icelanders were shocked. Samherji’s Director, Thorsteinn Mar Baldvinsson, fiercely denied Stefansson’s charges, but he stepped aside while the matter was being investigated (he did not however ‘resign’, as Freedom House asserts). Something was obviously rotten in the state of Namibia, and indeed two Namibian government ministers immediately resigned after the Wikileaks revelations upon which they and their associates were arrested and an investigation started into their possible crimes. But in his dealings with the Namibians, was Stefansson acting on his own or on behalf of Samherji? Perhaps unsurprisingly, a thorough study made by a Norwegian law firm for Samherji did not reveal evidence of any complicity by Samherji’s Icelandic managers in Stefansson’s dealings. More importantly, the investigations of the matter so far by others have not turned up any such evidence. In October 2021, after two years, Namibian prosecutors brought charges against ten Namibian politicans and businessmen involved in the case, but not against anyone from Samherji. (Apparently, three Icelanders who had been employed by Samherji’s subsidiary in Namibia had not been investigated or charged because the prosecutors had been unable to reach them.) Allegations of money laundering through a Norwegian bank were found to be baseless, and that case was dropped. Baldvinsson resumed his duties as Director of Samherji in March 2020, and in the summer of 2021 he publicly apologised for the ‘reprehensible’ operations of Samherji’s subsidiary in Namibia which he blamed on lack of oversight.

Samherji’s Vigorous Defence

Although Samherji is a big and strong company, in this case it was the prey rather than the hunter. But it certainly defended itself vigorously, even aggressively. For example, it filed a complaint to the NBS Ethics Committee, accusing journalist Helgi Seljan of having violated the NBS Code of Ethics which stipulates that reporters should not take a public stand about contentious issues on social media. Samherji pointed out that Seljan had published many hostile comments about the company on his Facebook and Twitter accounts. The Ethics Committee found Seljan guilty of having violated the NBS Code of Ethics, and that his violation was serious. Samherji also employed a private investigator who may have shown excessive zeal in approaching Seljan, for which Samherji later apologised. Apparently, all this took a toll on Seljan. In an emotional interview on NBS in October 2021, he said that his critics had exploited the fact that he was vulnerable: he had for a while had to spend some time on a psychiatric ward, he revealed. Publicly, Samherji also pointed out that the company had made an overall loss on its Namibian operations, and that anyway they had not been a significant part of its total operations. A new episode in the bitter feud between Samherji and left-wing journalists took place in May 2021 when two online magazines—which had previously cooperated with NBS in the Samherji affair—published leaked emails from Samherji employees about how the company was organising its public relations. Full of sarcastic comments, the emails did not reflect well on Samherji, although they showed no criminal intent.

It was no secret how WikiLeaks obtained its material about Samherji. It was Johannes Stefansson who provided it (probably in violation of Icelandic privacy law). But who provided the material from the Samherji staff? It seems that somebody broke into the smartphone of a Samherji employee while he was unconscious in hospital and that this digital burglar copied all the material he (or she) found there. The police is still investigating the case. A usually well-informed Icelandic blogger writes that the police knows who stole the smartphone and that the material on it was copied by technicians and reporters at the NBS. I find this hard to believe. But the fact is that in the course of a few months leading up to the end of 2021, almost everyone at the NBS with any connection to the Samherji affair had quietly left his or her job, including the News Editor. Perhaps they know something that we do not know.

The Conflict Between Freedom and Democratic Diversity

The Icelandic investigation of Samherji as a result of the 2019 Wikileaks revelations is still going on, as far as I know, but it is unlikely that it will lead to any charges. It is therefore misleading to say, like Freedom House does, that Samherji is implicated in a bribery scandal in Namibia. It is Johannes Stefansson who is personally and directly implicated in this scandal, with some Namibian businessmen and politicians. It is even more misleading to see this as a sign of corruption in Icelandic politics. It is true that former Fisheries Minister Kristjan Thor Juliusson was close to Samherji’s Thorsteinn Mar Baldvinsson, as Freedom House states, but this was to expected as Samherji is one of the biggest private companies based in Juliusson’s constituency. Juliusson served on Samherji’s Board for five years, long before he became a Member of Parliament. In fact, the income of the Icelandic political parties mostly comes from government, and there are strict legal limits on what companies can donate to them (about $2,500 each annually). For example, the pro-business Independence Party to which Juliusson belongs derives less than 2 per cent of its total income from fishing firms. It is also unclear why Juliusson should have had to resign even if the Director of a Samherji subsidiary in Namibia was implicated in a bribery scandal. It took place in Namibia, not in Iceland. Incidentally, the Icelandic fishing licences, the individual transferable quotas, are not allocated politically. In the most important fisheries, they were initially allocated in 1983 on the basis of catch history, and since then they have been freely transferred between fishing firms. Politicians and bureaucrats have no control over them.

The whole affair shows how deceptive first appearances can be. Possibly the journalists attacking Samherji were operating in good faith. But they had adopted a cause: they were preaching rather than reporting. Some of them are also quite partial. The Icelandic Union of Journalists has twice passed resolutions condemning Samherji for defending itself publicly (in videos on Youtube and newspaper advertisements). It has not always been as keen on freedom of expression. When an Icelandic businessman who supported left-wing causes took advantage of the strict libel laws in England and the exorbitant legal costs involved, to bring action against me before an English court in 2004 for unflattering comments about him at a journalists’ conference in 1999, the Union of Journalists refused to support me publicly. (This man who had moved to London in 2003 obtained a default judgement against me which was later invalidated, but the whole affair nevertheless cost me about £170,000.)

I must however note that laws limiting contributions by individuals to political parties have to be regarded as restrictions on freedom. They deprive individuals of their right financially to support the causes in which they passionately believe. They also create an unfair advantage of incumbents, at the expense of newcomers. Is this not an example of a possible conflict between liberty and democratic diversity? I should also note that Freedom House describes the Icelandic National Broadcasting Service as ‘autonomous’ and states that it competes with private radio and television stations. But the NBS is financed by government. It is not subject to the test of consumer choice like the private media. Icelanders have a right to cancel their subscriptions to private television stations and newspapers, but they cannot cancel their subscription to NBS. Is this not a case of freedom being reduced rather than extended?

A Tempest in a Teapot

Most of the 2020 Freedom House report on Iceland in 2019 is reasonable and moderate in tone. There is one glaring exception, for the indicator which was the answer to the question: ‘Does the government operate with openness and transparency?’ Iceland was marked down and given three out of four (which would translate to 7.5 in the Human Freedom Index) with the following explanation: ‘In 2018, six PP and CP parliamentarians were secretly recorded making misogynistic, anti-LGBT, and ableist remarks about colleagues at a Reykjavík bar. An uproar ensued after the woman who recorded the conversation leaked it to the media. Four of the legislators involved petitioned the Reykjavík District Court to pursue charges against her for violating their privacy, but the court dismissed their claims that December.’ This is more or less an accurate description of what happened. But I find it extraordinary that this insignificant incident was used to mark Iceland down as a free country. The Members of Parliament for the People’s Party and the Centre Party were all in opposition. They had got into a drunken brawl at the bar and had been recorded without their knowledge. I think this was indeed a violation of their privacy, but I fail to see the relevance of this incident to the question whether the Icelandic government operates with openness and transparency. This was a tempest in a teapot. It should be pointed out that four of the sex MPs involved in the case (if case it was) are no longer in Parliament. My conclusion is that Iceland is by no means a perfect country, but she is nonetheless one of the freest countries in the world. She deserves higher marks than given in the Human Freedom Index or by Freedom House.