Former poster boy of Icelandic boom charged with criminal offences Jon Asgeir Johannesson once had a personal fortune esimated at £600m. Photograph: Jonathan Banks/Rex Features Fallen Icelandic retail tycoon Jon Asgeir Johannesson, once one of the most powerful tycoons on the UK high street, has been charged in Reykjavik with criminal offences relating to allegations he exerted improper influence on the failed Icelandic bank that financed much of his business empire. Johannesson - whose Baugur investment vehicle owned stakes in All Saints, House of Fraser, Hamleys, the Iceland frozen food chain and Woolworths - became the poster boy of Iceland's boom up until 2008 and his personal fortune was estimated at £600m. At the height of his success in 2007, his seemingly insatiable appetite for UK high street investments led to him being named the third most powerful retailer in Britain by Retail Week. But Baugur, run from Johannesson's offices in Mayfair, came crashing down in the wake of Iceland's 2008 financial meltdown. Since then questions have been raised about whether the relationship between Johannesson's empire and Glitnir - one of three Icelandic banks that fell in the crash - had become too close. Johannesson's Baugur group and linked businesses borrowed more than €1.5bn (£1.2bn) from Glitnir before the country's financial meltdown, making them by far the bank's biggest exposure to risk. Meanwhile, companies linked to him had large shareholdings in the bank. Alongside Johannesson on the indictment is Glitnir's former chief executive Larus Welding. Charges against them and two associates have been filed by Iceland's special prosecutor, Olafur Hauksson, who is pursuing multiple criminal inquiries stemming from Iceland's financial crash. Johannesson and Welding, who both live in London, are understood to deny wrongdoing, as do their co-accused. Charges relate to allegations concerning a loan from Glitnir which was used by companies allegedly linked to Johannesson and his associates to finance a purchase of shares in Aurum Holdings, the UK firm behind jewellery chains Mappin & Webb, Watches of Switzerland and Goldsmiths. The inquiry does not relate to the current activities of Aurum, which was sold this month to US private equity group Apollo. Hauksson's officers conducted searches on 16 properties in connection with its investigation into Johannesson and former Glitnir bankers two years ago. Months earlier, administrators to Glitnir had gone to the British courts to secure a worldwide asset-freezing order against Johannesson, citing a civil claim being brought against him in Reykjavik over the controversial Aurum loan. They told Mr Justice David Steel that Johannesson and a business partner had become controlling shareholders in Glitnir through a complex web of companies, and that the Baugur boss had been closely involved in the appointment of Welding. This was denied by Johannesson. Lawyers acting for administrators to Glitnir told Steel that loans to finance the purchase of Aurum shares were then advanced, in part on Johannesson's instruction, to a company owned by a business associate of the Baugur boss. They claim this was "manifestly contrary to the bank's interest" and led to a huge loss for the bank. Lawyers for Johannesson insisted it had been a proper commercial loan. Upholding the freezing order the judge said: "Even if Mr Johannesson has some prospect of answering the claim in Iceland, nonetheless the prospects of establishing that he had no control over the bank and/or that the loan was a bona fide commercial transaction looks somewhat forlorn." The criminal case against Johannesson is not the first time prosecutors have targeted suspected improper client relations at one of Iceland's big banks before the 2008 crash. Britain's Serious Fraud Office conducted a four-year investigation into suspected corruption between fellow failed bank Kaupthing and its largest borrower, the Mayfair investment tycoon Robert Tchenguiz. The investigation was dropped in October, when SFO director David Green QC said there was "insufficient evidence to justify its continuation." Tchenguiz is now suing the SFO. In April 2010 an Icelandic parliamentary truth commission published a 3,000-plus page report into the nation's financial crisis. On the relationship between Baugur and Glitnir it noted: "A change occurred in Glitnir's credit facilities to Baugur and related parties after a new board took over at Glitnir in the spring of 2007. The new board took over after parties related to Baugur and FL Group significantly increased their shares in the bank. A month later parties acting for creditors to Glitnir launched a $2bn (£1.2bn) lawsuit in New York against Johannesson, Welding and others claiming the Baugur boss had led a "sweeping conspiracy to wrest control of Glitnir and fraudulently drain more than $2bn out of the bank to fill their own pockets and prop up their own failing companies." The claim was thrown after a judge ruled there were insufficient grounds to bring such an action in America.