Wednesday, November 19, 2014 1:53 pm
The former head of Icelandic bank Landsbanki, the country’s second-largest before the collapse of the financial sector in 2008, was handed a 12-month sentence on Wednesday over his role in the crisis.
A Reykjavik court sentenced Sigurjon Arnason, 48, to 12 months in prison with three months served over artificially boosted stock prices.
Two former executives from the bank were sentenced to nine months with three months served over the same allegations.
Landsbanki executives were accused of manipulating the bank’s share price by lending funds to investors on condition they buy shares.
Iceland’s banks had gone on an international buying binge in the early 2000s fuelled by cheap foreign loans.
But the global financial crisis in 2008 froze credit markets and Iceland’s banks quickly collapsed, plunging the island’s economy into a deep recession.
Iceland’s then prime minister Geir Haarde has been found guilty of one minor charge but cleared of serious accusations relating to his handling of the banking collapse.
The heaviest sentences have been handed out to three former directors of what was once Iceland’s biggest bank, Kaupthing. They were sentenced to between three a half and five and a half years in prison in December 2013.
A cash injection to Kaupthing from Qatari investor Mohammed bin Khalifa al-Thani in late September 2008 — when Iceland’s banking system was in free fall — was hailed by the management as a sign that the bank was on a sound financial footing.
Amid the financial crisis, Iceland was unable to save its three biggest banks — Kaupthing, Landsbanki and Glitnir — and allowed them to fail before dismantling them.
Haarde, who was later named Iceland’s ambassador in Washington, has argued that the government’s choice to let the banks fail and repudiate their foreign debts saved the country from bankruptcy.