It has long been a mystery just how Iceland supposedly generated the wealth to go on its acquisition sprees around Europe. For a country with just over 300,000 people, and seemingly very little in the way of industry other than cod fishing and aluminium smelting, Iceland certainly punched way above its weight.
The long-touted rumour was that it was basically being used as an offshore centre to launder dodgy money flowing out of Russia. This didn’t seem to stop people doing business with it or even depositing money in its banks – including many local authorities in the UK. In recent times, Iceland has been able to buy a few trophy assets, and a few that no one else really wanted, such as West Ham United Football Club.
As the country’s banking system collapsed this week, its government seemed to admit that its wealth had been built on money-laundering. I reached this conclusion by adding two and two together and hopefully coming up with four. I can’t think of any other reason why Russia would so generously pump in €4 billion to help it through the current crisis. If I was the chief executive of an Icelandic bank, though, I would be feeling extremely nervous about the whole thing; after all, there are certain people whose money it is best not to lose.