Trial begins for Iceland ex-PM over role in banking collapse

[JURIST] The trial of former Icelandic prime minister Geir Haarde [official profile, in Icelandic] began on Monday, on charges that he was grossly negligent for failing to stop the nation's banking collapse during the 2008 financial crisis [JURIST news archive]. Court convened in the Landsdomur, a special court to try cabinet ministers, with Haarde's lawyers requesting a dismissal of all charges, which carry a maximum penalty of two years in prison. Haarde argued for dismissal on six points: no proper probe had been conducted before the charges were brought against him; the indictment was vague and unclear with no specific arguments to back up the indictment; a conflict of interest with the prosecutor [RUV report, in Icelandic] in the case who advised the parliamentary committee that proposed the indictment; the procedural rules in Landsdomur court are unclear; and a lack of equal treatment guaranteed in the constitution by the court only indicting Haarde, as opposed to all four ministers implicated in the Special Investigation Committee (SIC) [official website] "Truth Report" [text, PDF]. Haarde previously pleaded not guilty in June [JURIST report]. The court is expected to rule within four weeks.

Last September, the Icelandic Parliament [official website, in Icelandic] referred charges to the Landsdomur after the SIC released a report 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 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 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 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.

 

About Paper Chase

Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

© Copyright JURIST Legal News and Research Services, Inc., 2013.