Iceland’s ex-bankers now want vindication

Once reviled symbols of rogue capitalism, Iceland’s ex-bankers now say they were scapegoats: jailed for their roles in the 2008 financial crisis, they’re taking their cases to the European Court of Human Rights. In 2008, after Iceland’s inflated financial system imploded, the three main banks Kaupthing, Glitnir, and Landsbanki collapsed. The government urgently nationalised them, then asked the International Monetary Fund (IMF) for an emergency bailout, a first for a western European country in 25 years.

The crisis brought to light the bankers’ questionable practices, often involving artificially inflating the value of the banks’ assets by providing cheap loans to shareholders to buy even more shares in the bank.

Without realising it, thousands of Icelanders had thus placed their life savings in a house of cards. Since then, dozens of so-called “banksters” have been convicted, about 20 of them to prison, for manipulating the market.

Some of them now claim they didn’t get fair trials, and have turned to the European Court of Human Rights. Sentenced by an Icelandic appeals court to four years in prison, Sigurdur Einarsson, the former chairman of the board of Kaupthing, spent one year behind bars before being released.

He is critical of what he dubs Iceland’s “scapegoat” justice system, which he claims turned a blind eye to unlawful proceedings during his trial.

“Some of the judges were partial... because they had lost a lot of money during the economic crisis,” Einarsson said. “This was not a just and fair trial.(This is) very important because Iceland praises itself for being a Western democratic country, and one of the key issues for that is having fair trials for everyone.”

Einarsson is especially critical of a Supreme Court judge who was allowed to rule on his case: the judge’s wife was on the board of the financial regulator during the collapse, his daughter worked at the Ministry of Economy and Finance, and his son was the chief legal adviser to the winding-up committee of Kaupthing.

Einarsson and his lawyers also claim his rights were violated in the case, including illegal phone taps and excessive custody detentions.

After he contacted the European Court, it then addressed a series of questions to the Icelandic government in June 2016. Without denying the Supreme Court judge’s family ties, the Icelandic government rejected the exbanker’s arguments outright.

All in all, it wrote, “no violation of the applicant’s rights under Article 6 and 8 of the European Convention of Human Rights has taken place”. The Court said it had received nine appeals linked to the Icelandic bankers’ trials. Einarsson’s is the only one it has begun to study.

Einarsson readily admits that some of the banking “practices” would never have been approved today, but he distinguishes between doing “something illegal and something commercially wrong”. According to Iceland’s financial regulators, Kaupthing’s collapse is one of the biggest in history in terms of assets, at $83 billion, though still far behind Lehman Brothers at $691 billion.

Eva Joly, the French-Norwegian judge who advised Iceland’s special prosecutor on the cases linked to the financial crisis, says the ex-bankers’ attempt to seek vindication from the European Court was “classic” behaviour from the “ruling elite” after being found guilty of their ways.

The island is now abuzz with rumours about the return of some of the bankers to centre stage, this time in Iceland’s flourishing tourism sector.

Finance Minister Benedikt Johannesson sees no problem with that. “I think people can improve. They should be allowed to be in business as long as they stay within the law,” he said.

No recent surveys have been conducted on Icelanders’ opinion of the ex-bankers. But those questioned on the streets of Reykjavik are rarely forgiving. “I doubt people feel much sympathy for them,” says Kristjan Kristjansson, a 52-year-old who says he lost “a little” money in the crisis.