Reykjavik Transit

Bayrock’s “white elephants” included the 46-story Trump SoHo condo-hotel on Spring Street in New York City, for which the principle developer was a partnership formed by Bayrock and FL Group, an Icelandic investment company. FL Group’s willingness to generously finance Bayrock’s its rather poorly-conceived Trump projects, peculiar Russian/FSU/Brooklyn team,  and its purported tax dodging were about Iceland’s “special” relationship with Russian finance. In this regard, there are several puzzles to be resolved.    Bayrock Group LLC, a spectacularly unsuccessful New York real estate development company that surfaced in the early 2000s and, by 2014, had all but disappeared except for a few lawsuits. As of 2007, Bayrock and its partners reportedly had more than $2 billion of Trump-branded deals in the works. But most of these either never materialized.

First, it turns out that FL Group, Iceland’s largest private investment fund until it crashed in 2008, had several owners/investors with deep Russian business connections, including several key investors in all three top Iceland banks.

Second, it turns out that FL Group had constructed an incredible maze of cross-shareholding, lending, and cross-derivatives relationships with all these major banks, as illustrated by the following snapshot of cross-shareholding among Iceland’s financial institutions and companies as of 2008.
This thicket of cross-dealing made it almost impossible to regulate “control fraud,” where insiders at leading financial institutions went on a self-serving binge, borrowing and lending to finance risky investments of all kinds. It became difficult to determine which institutions were net borrowers or investors, as the concentration of ownership and self-dealing in the financial system just soared.

Third, FL Group make a variety of peculiar loans to Russian-connected oligarchs as well as to Bayrock. For example, as discussed below, Alex Shnaider, the Russian-Canadian billionaire who later became Donald Trump’s Toronto business partner, secured a €45.8 million loan to buy a yacht from Kaupthing Bank during the same period, while a company belonging to another Russian billionaire who reportedly owns an important vodka franchise got an even larger loan.27

Fourth, Iceland’s largest banks also made a series of extraordinary loans to Russian interests during the run-up to the 2008 crisis. For example, one of Russia’s wealthiest oligarchs, a close friend of President Putin, nearly managed to secure at least €400 million (or, some say, up to four times that much) from Kaupthing, Iceland’s largest bank, in late September 2008, just as the financial crisis was breaking wide open. This bank also had important direct and indirect investments in FL Group. Indeed, until December 2006, it is reported to have employed the FL Group private equity manager who allegedly negotiated Felix Sater’s $50 million deal in early 2007.28

Fifth, there are unconfirmed accounts of a secret U.S. Federal Reserve report that unnamed Iceland banks were being used for Russian money laundering.29 Furthermore, Kaupthing Bank’s repeated requests to open a New York branch in 2007-08 were rejected by the Fed. Similar unconfirmed rumors repeatedly appeared in Danish and German publications, as did allegations about the supposed Kazakh origins of FLG’s cash to be “laundered” in the Kriss lawsuit.

Sixth, there is the peculiar fact that, when Iceland’s banks went belly-up in October 2008, their private banking subsidiaries in Luxembourg, which were managing at least €8 billion of private assets, were suddenly seized by Luxembourg banking authorities and transferred to a new bank, Banque Havilland. This happened so fast that Iceland’s Central Bank was prevented from learning anything about the identities or portfolio sizes of the Iceland banks’ private offshore clients. But again, there were rumors of some important Russian names.

Finally, there is the rather odd phone call that Russia’s Ambassador to Iceland made to Iceland’s Prime Minister at 6:45 a.m. on October 7, 2008, the day after the financial crisis hit Iceland. According to the PM’s own account, the Russian Ambassador informed him that then-Prime Minister Putin was willing to consider offering Iceland a €4 billion Russian bailout.

Of course this alleged Putin offer was modified not long thereafter into a willingness to entertain an Icelandic negotiating team in Moscow. By the time the Iceland team got to Moscow later that year, Russia’s desire to lend had cooled, and Iceland ended up accepting a $2.1 billion IMF “stabilization package” instead. But according to a member of the negotiating team, the reasons for the reversal are still a mystery.
 An Icelander involved in the country's fraud investigations said that substantial Russian funds are likely to have moved through the banks there, but that it’s a subject Icelanders prefer to avoid -- even though the first country that offered financial aid to Iceland when the 2008 meltdown occurred was Russia, and even though legions of Russian oligarchs frequently jetted in and out of Reykjavik.
The late Boris Berezovksy, once one of the wealthiest and wiliest of Russia's oligarchs, thought the Russia-Iceland connection was obvious. He told a SkyTV interviewer in 2009 that if you wanted to look for where "Putin and his cronies" might be laundering money, well, "the best example, definitely, is Iceland."
Berezovsky was found with a length of his favourite black cashmere scarf around his neck, and a second length was tied around a shower rail above his head on March 23, 2013 in Titness Park, London
  Mr Berezovsky’s death is among up to 14 being reviewed by police and MI5 in light of the nerve agent attack on Sergei Skripal and his daughter in Salisbury.  The Trump administration’s trade team is still not fully in place, Hamilton points out. “And it’s up to its eyeballs in trade conflicts and negotiating efforts with NAFTA partners as well as others such as China and the EU.”  Although the administration has stated a preference for bilateral rather than multilateral agreements, the next priority for a new bilateral agreement in Europe would likely be with the post-Brexit U.K. government.   But as Iceland’s place in the Cold War shows, its bilateral agreements with the United States have a long history. Iceland may be prepared to wait.
 Three prominent Icelandic politicians have come forward after emails from Trump in which he pledged to personally match any donations they made. Katrín Jakobsdóttir, head of the Left Green Party, said the letter, in which Trump bashed “Crooked Hillary” her “pathetic cronies” and the “dishonest liberal media,” had left her speechless.
“I have no idea why he emailed me the letter,” MP Guðlaugur Þór Þórðarson, a member of the Independence Party (Sjálfstæðisflokkurinn) and one of the emails recipients,
 "There isn’t enough information to say whether these foreign solicitations were intentional or the result of incompetence,” said Brendan Fischer, an associate counsel at the Campaign Legal Center.

https://www.the-american-interest.com/2016/12/19/the-curious-world-of-donald-trumps-private-russian-connections/

http://icelandmag.is/article/donald-trump-asks-icelandic-mps-financial-assistance