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2 Former Executives of Failed Icelandic Bank Charged With Fraud
By JULIA WERDIGIER
When Kaupthing Bank collapsed in 2008, it owed creditors, including local authorities, more than $50 billion.
LONDON — The former chief executive and chairman of the failed Icelandic lender Kaupthing Bank were indicted on Wednesday on charges of fraud and market manipulation.
Hreidar Mar Sigurdsson, the bank’s former chief executive, and Sigurdur Einarsson, the former chairman, are expected to stand trial at the beginning of March in Iceland, their lawyers said. The court hearings could last for several months. Both individuals have pleaded not guilty to the charges.
The indictments are the latest step by Iceland’s special prosecutor to investigate the executives behind the 2008 collapse of Kaupthing, which crippled the country’s banking system and paralyzed its economy.
During the boom years, Kaupthing and other Icelandic banks expanded far beyond their small domestic market, relying on financing from Icelandic authorities and others to finance their efforts. Then the credit crisis hit, and Kaupthing crumbled under the weight of its $50 billion debt load, leaving creditors in the lurch.
On Wednesday, Olafur Olafsson, an Icelandic businessman who was Kaupthing’s second-largest shareholder, was also indicted by the special prosecutor. The prosecutor, Olafur Hauksson, was not immediately reachable by telephone.
Ingolfur Juliusson/ReutersHreidar Mar Sigurdsson, the former chief of Kaupthing Bank.
Mr. Sigurdsson was arrested in 2010 and temporarily held in solitary confinement while an arrest warrant was issued for Mr. Einarsson. Mr. Einarsson was eventually arrested in 2011 as part of early morning raids on properties in London and Reykjavik, which also lead to the arrest of a handful of other individuals linked to the Kaupthing collapse.
Some lawmakers in Iceland have grown increasingly impatient with the lengthy legal proceedings. Prime Minister Johanna Sigurdardottir said previously that the separate legal case involving her predecessor, Geir Hilmar Haarde, had already taken “too long.” Mr. Haarde is currently defending himself against six charges that include failure to protect the country from financial danger.
Kaupthing was Iceland’s biggest lender and its failure coincided with those of two rivals, Landsbanki and Glitnir, which led Iceland to turn to the International Monetary Fund for help.
Larus Welding, former chief executive of Glitnir, was indicted last year, and investigations continue against Sigurjon Arnason, former head of Landsbanki.
http://dealbook.nytimes.com/2012/02/...ef=global-home
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