JURIST - Paper Chase: Iceland ex-PM facing charges over financial crisis

[JURIST] The Icelandic Parliament [official website, in Icelandic] on Tuesday voted [materials, in Icelandic] 33-30 to refer charges against former prime minister Geir Haarde [official profile, in Icelandic] to the Landsdomur, a special court created to try government ministers. Haarde is the first world leader charged [AP report] in relation to the financial crisis, and, if convicted, he could face two years in prison. Haarde is accused of intentionally or grossly negligently failing to prevent the 2008 Icelandic financial crisis [resolution, in Icelandic]. The Special Investigation Committee (SIC) [official website, in Icelandic], convened in 2008 by Parliament to investigate the collapse of the country's three largest banks, determined that Haarde and former central bank head David Oddsson [official profile, in Icelandic] knew that banks were assuming overseas debt but took no action to prevent or mitigate the effects of the accumulation. The SIC released a report [materials, in Icelandic; JURIST report] in April claiming that seven Icelandic government officials acted with gross negligence in their management of the country's financial system prior to a 2008 bank collapse. The SIC also found that former minister of finance Arni Mathiessen, then-banking minister Bjorgvin Sigurdsson, former Financial Services Authority [official website] director Jonas Jonsson and central bank officials Eirikur Gundason and Ingimundur Fridriksson failed to take appropriate action when presented with information about the poor state of the country's financial sector.

Iceland was hit hard [BBC backgrounder] by the financial crisis [JURIST news archive] that emanated from securities related to the US mortgage market. When Kaupthing, Landsbanki and Glitnir [corporate websites] were taken over by the Icelandic government in 2008, they were holding debt equal to more than 900 percent [AFP report] of Iceland's gross domestic product, causing the country's economy to collapse and the government to rely on loans [IMF materials] from the International Monetary Fund (IMF) [official website] to meet its obligations. The country began considering [JURIST report] whether to seek EU accession [criteria materials] last year, with Prime Minister Johanna Sigurdardottir [official profile] arguing that adopting the Euro would help stabilize the country's economy. In 2008, the UK used anti-terrorism laws to freeze $4 billion [JURIST report] in assets held by Landsbanki after its takeover by the Icelandic government.