[JURIST] Seven Icelandic government officials acted with gross negligence in their management of the country's financial system prior to a 2008 bank collapse, according to a report [materials, in Icelandic] released Monday by a parliamentary panel. The Special Investigation Committee (SIC), convened in 2008 by the Icelandic Parliament [official website] to investigate the collapse of the country's three largest banks, determined that then-Prime Minister Geir Haarde and former central bank head David Oddsson [official profiles, 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. 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. A parliamentary panel will decide whether to take legal action [Reuters report] against the officials.

Iceland was hit hard [BBC backgrounder] by the financial crisis [JURIST news archive] that emanated from securities related to the US mortgage market. 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 United Kingdom used anti-terrorism laws to freeze $4 billion [JURIST report] in assets held by Landsbanki after its takeover by the Icelandic government.