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Former Iceland prime minister on trial for role in banking crisis

Geir Haarde was one of four former Icelandic government ministers blamed in a report last year for contributing to the country's stunning financial sector collapse in 2008, when all its major banks failed in a matter of weeks.

REYKJAVIK // Iceland's former prime minister, Geir Haarde, became the first political leader to be tried over the global financial crisis on Monday as proceedings began to decide if he can be held accountable for the collapse of his country's banking sector.

Mr Haarde, 60, who arrived minutes before proceedings began, looking cheerful and accompanied by his wife, asked the court for a third time to dismiss the charges, which he has called a "farce".

Mr Haarde was one of four former Icelandic government ministers blamed in a report last year for contributing to the country's stunning financial sector collapse in late 2008, when all its major banks, which at the time held assets equal to 923 percent of gross domestic product, failed in a matter of weeks.

But parliament, now majority-held by Mr Haarde's left-leaning opponents, voted last September that he was the only one who should be charged with "gross neglect" and he will thus become the first person to go before the Landsdomur, a never-before used special court for current and ex-ministers.

Upon arriving at the Icelandic Culture House in Reykjavik, chosen because it is large enough to house the proceedings and considered neutral ground, Mr Haarde, wearing a dark suit and blue tie, told AFP he had yet to decide whether he would make a statement after the day's hearing.

"I'm thinking about it," said Mr Haarde, who headed the right-leaning Independence Party and held the reins of government from mid-2006 to early 2009, when his coalition was ousted amid public uproar over the crisis.

His legal team meanwhile sent AFP a document showing the former prime minister would present six grounds for dismissal Monday.

First, he argued no proper probe had been conducted before the charges were brought against him, that the indictment was vague and unclear, and that there were no specific arguments to back up the indictment.

The document points out that the prosecutor in the case, Sigridur Fridjonsdottir, had acted as an adviser to the parliamentary committee that proposed the indictment and therefore had a conflict of interest.

It also insists the rules of the procedures in the special Landsdomur court were unclear, and finally claims the parliament "ignored the constitutional rule of equal treatment under the law" when it opted to only indict one of the four ministers a special parliamentary committee had suggested be held accountable.

In addition to Mr Haarde, the so-called "Truth Report" published in April 2010 laid the blame for the crisis on the former ministers for finance and banking, as well as on David Oddsson, another former prime minister who was head of Iceland's central bank at the time of the economic implosion.

The heads of the failed banks and the former head of the country's Financial Supervisory Authority were also handed a large portion of the blame.

According to the report, Mr Haarde and Mr Oddsson had among other things in the spring of 2008 withheld information from relevant ministers and the government indicating that the country was headed for a major financial crisis.

In an interview with AFP in July, Mr Haarde insisted that the whole trial was "a political farce motivated by some old political enemies who are cloaking this farce under the cover of a political trial."

Iceland's current finance minister, Steingrimur Sigfusson, one of Mr Haarde's toughest opponents, has meanwhile argued the case is important in principle.

"When it became clear we were heading towards catastrophe, the record shows very little was done to avoid it," Mr Sigfusson told AFP recently, explaining why he felt the trial was needed.

The bank failure plunged Iceland into a deep recession and sent the value of its currency spiralling.

The economy has gradually returned to growth and observers say it may not need to draw on the last instalments of an International Monetary Fund bailout.