European Parliament Member and Investigative Judge Eva Joly received the Global Financial Integrity 2010 Exemplary Leadership Award in Washington DC earlier this month, in honor of her tireless work against corruption and fraud. "Ms. Joly's career is distinguished and defined by her work against corruption," said GFI Director, Raymond Baker. "In pursuing the Elf Aquitaine case Ms. Joly bravely ignored threats to her life in order to see justice served. As a member of the European Parliament and as Chair of the Parliament's Development Committee, Ms. Joly is fighting to curtail illicit outflows from developing countries and do away with banking secrecy and corruption."
Photo: economicdisasterarea.com The French-Norwegian Joly is a prominent figure in European politics; she was named Reader's Digest's European of the Year in 2002 and has been the subject of numerous articles, books, and a 2006 French film L'Ivresse du pouvoir. She has for the last two years advised the Office of the Icelandic Special Prosecutor in the investigation into Iceland's bank and economic collapse.
You have spent the past year and a half guiding Ólafur Þór Hauksson and his office in their investigation of possible criminal wrongdoing in Iceland's financial sector. Under your tutelage, Ólafur Þór's office has grown to several dozen investigators from all over the world, and more than 60 cases are reportedly under investigation. Although some search warrants have been executed, and there have been several depositions of high-level bank officers, many Icelanders are growing impatient. You warned us from the start that an investigation of this magnitude could well take years, but we have already seen some convictions in the United States (e.g., Bernie Madoff), and others appear imminent. What can you tell the Icelandic people to reassure them that justice is being done?
The reality is that the legal systems are very different. I have been jealous of the American legal system, its efficiency, for years! The Elf case in France - we spent seven years bringing it to court, the Maddoff case was settled in some months. They [the Americans] have other methods, and one must say that they have terribly skilled and organized investigators and prosecutors. They also have a lot more money, and they have over 40 years of experience. In Iceland you have to build up everything, and you neither had the experience nor the skills. So it takes more time. But this doesn't mean that they will not achieve.
Sources close to the investigation have said it is unlikely that the bank owners will be prosecuted in Iceland, because "there is too much opposition in the system"? What is your opinion of this?
We cannot have an a priori position here. I am quite confident that this team will take the investigation to an end. I know them, and I do not believe for one second that they will stop before they have to if they have the necessary information.
The Investigative report into the collapse reveals a fundamental failure in the structure of Icelandic government and politics, a system that is seriously undermined and rendered ineffective by corruption, cronyism and nepotism. What is your opinion of this and do you think that the Icelandic government has done anything or has done enough to address these structural problems within its system?
Icelanders lack the awareness of the the importance of the issue of conflict of interest. What was very striking for me in Iceland was that everybody knew that this person sitting in a very key position was the nephew of the minister or of other people, but they didn't do anything! They didn't deal with the issue of conflict of interest, and this is very serious because it creates suspicion that decisions are not being taken in the common interest, but in the interest of a party or in interest of a family. So I think that the new Icelandic society will pay a lot of attention to conflict of interest. And I think also that the situation of Iceland today is very much due to this - that people were indebted to each other so they didn't dare to ask questions, to exercise the real control.
Do you believe this has changed now?
What has changed is the political awareness. That is very strong when you go to Iceland, people are so engaged, and I think that is the hope. When I go to Iceland, I don't see that people are fearful. I see that they are enthusiastic and finding new ways of being together, rather than going abroad shopping in London over the weekend. They stay together, or they are doing new things. I'm not sure that they feel unhappy when you look at them... They feel a kind of a satisfaction also of things starting up again. But it is important to keep this feeling of that the future is in our hands and that we can do something about it. And we should not accept to delegate it for thirty years to some ten persons.
Despite its central role in the kreppa, the conservative Independence Party continues to gain in popularity in Iceland. Are you concerned that, if the IP once again takes control of the government, any prosecution of the major players will become politically impossible?
Yes, well it is for you - the press - to make people aware of the fact that you don't invite the former captain of Titanic to conduct the new ship, because then he will be very much afraid when he sees an iceberg. The penal instrument is a very blunt instrument. You point at who is responsible for what happened. You try to find a just sentence for that responsibility, but that doesn't do anything about the future. I do think that it [sentencing] is an important step in order to make national reconciliation, but it is not sufficient and that the work has to be done by the citizens to construct a new way of living together.
Paul Krugman wrote recently that Iceland has emerged more quickly from the collapse of its financial sector because it had its own currency, rather than the euro. ("Iceland has also benefited from the fact that, unlike Ireland, it still has its own currency; devaluation of the krona, which has made Iceland's exports more competitive, has been an important factor in limiting the depth of Iceland's slump.") Do you agree with his assessment?
Yes, it is a competitive advantage to be able to devaluate, but it also is a tremendous cut for the people, so that depends on from where you are looking at things. The Euro has protected the European citizens.
You have stated on many occasions that you believe it would be advantageous to Iceland to join the European Union. The EU is currently under great stress as a result of financial problems in Greece and Ireland, and possibly Portugal, Spain, Belgium, and even Italy. Do you believe that the EU will hold? Is it realistic to expect further expansion at this time?
I have great faith in the EU. The EU is a peace project, and I believe Iceland's place is among other European countries. That is what I want to say about this.
Would Iceland's history of financial mismanagement and corruption pose an obstacle to its acceptance into the EU?
No...(laughing), you are small players, compared to former Eastern Europe, for instance... Bulgaria, Romania... And you have well functioning institutions. It's the conflict of interest issue - but that can be dealt with.
Although it wasn't directly within your mandate, you've expressed strong opinions about the Magma Energy affair, in which Iceland's third largest energy company was privatized and sold to a Canadian company. Iceland's other natural resources--such as its fisheries and hydroelectric power--have been also given by the government to private companies in sweetheart deals. What, if anything, can Iceland do to reverse these deals and to prevent exploitation of its remaining natural resources in this manner?
I said Magma was a bad deal. I think this privatization was made on the wrong basis. It was stated that it was mandatory to privatize energy companies due to EU regluations, but that is not true. When you read the regulations, there are exceptions for networks that have less than one hundred thousand households/clients, so you very clearly did not have to privatize. So this is one issue.
And you asked, what can Iceland do now. Well, when you are the state, you can do what you want. This deal was based on wrong premises. The company that bought was not a Swedish company but a shell company... but that is just one issue; there are many strong legal arguments against this deal. The state can do what it wants, this is a principle in most countries. If the state doesn't need energy from coal anymore because it now can get energy from electricity power plants, well, then the contract with the coal companies will be reconsidered. You [Iceland] might have to pay damages, but this is the way things are done, this is a very well known issue.
This is a question of political will. The question that should be set forward is: was this deal made taking the Icelandic people's interests into account or was it made taking into account the Magma shareholders' interests?
How can an institution like GFI help Iceland in its rebuilding?
The general work that they are doing, generating awareness of transparency, accountability, and their fight against tax havens and against illicit money flow. I think this work can benefit Iceland directly. There was lack of transparency and a lack of accountability. You [Iceland] are kind of an illustration that there is much more that needs to be done.
President Obama has been criticized by many of his supporters on the left, who believe he has been sided with bankers and the financial industry, the main architects of the financial crash. Do you agree with that?
There are new very interesting citizens' movements [in the U.S.] now working on the Freedom of Information Act and how it should be better implemented and I think there is a growing interest among the public to be more involved in the public decisions, to understand them better. I think the Wikileaks leaks also maybe will change things a little bit. It shows that a lot of things are being done in secret, and that there are no real accountabilities. I think that when there will be an awareness about the fact that information can get out and that you will have to answer for your actions, even before 50 years or 30 or 10 years pass, but that you will be accountable within your tenure. That you will have to answer for why you started the war, why you made the decisions you made.
I think this is very important for the democratic life, actually. This is the only check and balance against an executive power that all over the world has become too strong and is weakening the democratic process everywhere.