Geir Haarde, Iceland's Ex-PM, The First World Leader To Face Criminal Charges Over Financial Crisis

REYKJAVIK, Iceland — A former prime minister of Iceland on Monday rejected charges he failed to adequately protect his country's economy from financial shocks, as he took the stand in the first criminal trial of a world leader to result from the 2008 financial crisis.

Geir Haarde said neither he nor financial regulators knew the real state of Icelandic banks' precarious finances until they collapsed in October 2008.

"I reject all accusations and believe there is no basis for them," Haarde said. He said it was the first chance he had to answer questions in the case.

Haarde became a symbol of the bubble economy for Icelanders who lost their jobs and homes after the country's main commercial banks collapsed in the course of one week in 2008, sending its currency into a nosedive and inflation soaring.

Prosecutors opened the case at the Landsdomur, a special court being convened for the first time in Iceland's history.

Part of their case hinges on a charge that Haarde failed to implement recommendations that a government committee had drawn up in 2006 to strengthen Iceland's economy.

Haarde told the court the committee's work could not have prevented Iceland's economic crash.

"Nobody predicted that there would be a financial collapse in Iceland" in 2008, he said, adding that the government did not fully understand how much debt the country's banks had on their books.

"The bankers did not realize that the situation was as dire as it was," Haarde said. "It was not until after the crash that everyone saw it coming."

Iceland's banking sector ballooned during a decade of boom, growing to nine times the tiny nation's annual gross domestic product, before collapsing under the weight of its debts.

Haarde told the court the banks' size would not have been a problem had it not been for two things: their fiscal recklessness and the global credit squeeze.

"We knew about the crisis, but not the banks' lack of accountability and their illegal activities, which not even the Financial Supervisory Authority seems to have realized," he said.

Haarde is accused of negligence for failing to prevent the financial implosion from which the small island country is still struggling to recover.

In the crisis' immediate aftermath – as unemployment and inflation skyrocketed – many sought to affix blame for the havoc across the 330,000-strong nation. A wave of public protests forced Haarde out of government in 2009.

Haarde has pleaded not guilty and sought to have all charges dismissed, calling the proceedings "preposterous."

He has insisted Icelanders' interests were his "guiding light," and he blamed the banks for the crisis, saying government officials and regulatory authorities tried their best to prevent the crisis and that his "conscience is clear."

The trial is expected to last until mid-March, with the court taking another four to six weeks to deliver its verdict.

Comments

[Kald]

08:43 AM on 03/06/2012

"Geir Haarde said neither he nor financial regulators knew the real state of Icelandic banks' precarious finances until they collapsed in October 2008"

Except of course when the head of Iceland's central bank called Geir to a meeting the 8th of February 2008 and told him all the banks were in fact bankrupt.

But whether Geir will be convicted or not is not important. What IS important is that during this trial, "everyone" who had anything to do with the financial crash will have to show up and testify under oath about what really happened. And that is going to be very interesting.

[Stilley Periodical]

07:56 AM on 03/06/2012

Nice to see, but the bank execs should have been the first ones arrested.

[kilakhan]

01:46 PM on 03/06/2012

my thoughts exactly....the proper defendants in this case should be the bank chiefs who i am sure received a soft landing and a generous severance package to boot...

[Mochilero]

10:37 PM on 03/05/2012

Even if he is guilty of negligence, and i don't know nearly enough to comment on that, it is clear that he is being scapegoated. Assigning responsibility for the world financial meltdown would decimate the ranks of political chambers and corporate boardrooms all over the world.

[Snoopwith Camel]

10:11 PM on 03/05/2012

"First World Leader To Face Criminal Charges Over Financial Crisis " needs a little editing:"Only World Leader To Face Criminal Charges Over Financial Crisis now or ever"

[Telemachus]

10:02 PM on 03/05/2012

"'Nobody predicted that there would be a financial collapse in Iceland' in 2008, he said, ... "

Mmmm, yeah. Just like nobody ever imagined terrorists would fly airplanes into buildings. Except all the terrorism experts who wrote magazine articles about it starting in about 1980.

[MarxEngelsLeninTrotsky]

09:51 PM on 03/05/2012

He's been made a scapegoat because Iceland let the banks fail.

Bankers at work AGAIN.

[Durt Bagg]

09:47 PM on 03/05/2012

Bush should be arrested:

Bush Admin Barred Officials From Briefing Congress On Impending Financial Crisis in Fall 2008 -- http://tinyurl.com/2frmajy

Bush administration ignored clear warnings
Under Pressure, Bush Eased Lending Rules
WASHINGTON (AP) --The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to a of regulatory documents.http://tinyurl.com/5casnp

[Epilef2000]

09:47 PM on 03/05/2012

The big kahuna GWB wil never face anything, but can we get Larry summers and Rubin, even if its just a little slap in the hand, or just to scare them...or at the least try to make belief there is some fairness..a ten dollar fine would suffice..but they arent even trying to lie to us anymore..at least try

[dungfacerepub]

09:29 PM on 03/05/2012

was it all the black people in iceland borrowing more than they could afford ha! ha! or maybe it was jimmy carter's community reinvestment act that caused iceland to fail yeah that's it you republican dudes

[Telemachus]

09:59 PM on 03/05/2012

Or maybe they went broke paying for prenatal care.

[paultec1]

09:15 PM on 03/05/2012

Why is the comercial allways much louder.

[breakingpoint]

09:01 PM on 03/05/2012

Max Keiser: Predicting the collapse of Iceland
http://youtu.be/wFzUR1k3ku4

smartest man on cable

[breakingpoint]

08:59 PM on 03/05/2012

Iceland let the banks fail and their rating just went back up

get um!

[RitaS]

08:56 PM on 03/05/2012

Too bad GWB wasn't the first.... Hmm.. maybe GWB can be the second....

[saganz999]

08:54 PM on 03/05/2012

If you remember right, when John McCain was running for president, he said that the economy was "basically sound". Were all of the Republicans blind?

[Telemachus]

10:00 PM on 03/05/2012

There is none so blind as he who will not see.

[saganz999]

10:56 PM on 03/05/2012

YOU said it.

[Game Changer 88]

08:54 PM on 03/05/2012

Now that's the right "Precedent" to use to bring george w. bush and barrack obama to Justice, they were even more criminally involved than this guy, they were even "Pre-meditated", and it directly involves their political, corporate, and personal networks conspiracy to steal "Termed" Government-owned Corporations and Businesses, namely High Paying Positions, Stocks, Bonds, Commodities, Consulting Fees, Speaking Engagement Fees, Commercial and Luxury Real Estate.