Iceland review - 2015, Side 61

ICELAND REVIEW 59
After almost six years of investiga-
tion by the Office of the Special
Prosecutor, on February 12, 2015,
the Supreme Court of Iceland sentenced
CEO of Kaupþing Bank Hreiðar Már
Sigurðsson to five-and-a-half years
in prison for serious fraud and market
manipulation leading up to the coun-
try’s banking collapse in October 2008.
Owner Ólafur Ólafsson and Magnús
Guðmundsson, CEO of the bank’s branch
in Luxembourg, got four-and-a-half years
each. Finally, chairman of the board,
Sigurður Einarsson, was sentenced to four
years in prison. These were by far the
heaviest sentences ever handed down for
financial fraud in Iceland. All defendants
maintained their innocence throughout
the case. When the sentence was passed,
Sigurður, for example, accused the judges
of giving into public opinion. To date the
Al-Thani case is the most significant of
those the Special Prosecutor has brought
to court.
THE AL-THANI CASE
By autumn 2008 the executives of Icelandic banks found them-
selves in a tight spot with increasing temptation to respond in
questionable ways. One example lies in how the banks met cred-
itors’ demands for increased collateral as share prices fell. One of
Kaupþing’s largest owners, for example, had financed his stakes
with funding from Citi Bank, which was demanding increased
collateral as Kaupþing’s stock was falling. To protect its owner,
Kaupþing simply lent him the money to pay Citi. One of its
largest owners was thus funding almost his entire stake from his
own bank. Landsbanki turned a similar favor to a company run
by one of its owners to pay a margin call from Deutsche Bank.
In September 2008, Kaupþing announced that Sheikh
Mohammed bin Khalifa Al-Thani of Qatar had bought a 5.1
percent stake in the bank for USD 285 million. The Sheikh is
a member of the Royal House of Qatar, brother of the Emir
and, despite his young age, was believed to be instrumental in
this fantastically rich family’s investments around the world.
The investment was claimed to prove strength and the bank’s
promising outlook. Kaupþing CEO Hreiðar said the investment
strengthened the bank, which would henceforth fund itself on the
international market. This was in stark contrast to the apparent
In February, Iceland’s Supreme Court sentenced four Kaupþing
Bank bosses to prison for serious fraud and market manipula-
tion leading up to the 2008 banking collapse. Professor of Politics
Eiríkur Bergmann Einarsson discusses the Al-Thani case.
BY EIRÍKUR BERGMANN EINARSSON. PHOTOS BY PÁLL STEFÁNSSON AND COURTESY OF REYKJAVÍK METROPOLITAN POLICE.
LOCKING UP
THE BANKSTERS
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