Iceland Monitor 26 Jan 16: “Shock” acquittal of Icelandic bankers

Three senior executives of Iceland’s now defunct Kaupþing bank accused of lending unauthorised money have been cleared of all charges by a Reykjavik court this morning.

Hreiðar Már Sigurðsson (former Director of the bank), Sigurður Einarsson (former board chairman) and Magnús Guðmundsson (former CEO of Kaupthing Luxembourg) were charged with breach of trust after lending over €500 million to two foreign companies in 2008 without authorisation from the bank’s lending committee.

The total lent corresponds to just under ISK 70 billion at 2008 rates.

Prosecutor pushed for extended sentences

The case has become known in Iceland as the ‘Chesterfield case’ after the name of one of the companies receiving money from Kaupþing.

The three defendants were acquitted this morning by Reykjavik District Court in a ruling described as “shocking” by prosecutor Björn Þorvaldsson.

Owing to previous convictions, Sigurðsson and Guðmundsson had already received six years in prison – the maximum total for fraud offences – but Þorvaldsson was pushing for this to be extended to nine, as provided for in Icelandic law.

The sentence requested for Einarsson was one year to bring his current five years in jail up to the full six.

State to pay legal costs

The prosecutor was “most surprised” at the ruling, considering Chesterfield to be similar in nature to the previous ‘Al-Thani case’, in which the three defendants – together with a fourth executive – were found guilty by both district and supreme courts.

As a consequence of the acquittal, the Icelandic State must pay the legal fees of the defendants, which amount to ISK 31.7 million (approx. €225,000).

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