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Iceland commission recommends charges against ex-PM over financial crisis

By Erin Bock

[JURIST] An Icelandic parliamentary commission on Saturday recommended that the country's former prime minister and three other former governmental ministers be tried for negligence for their roles in the country's 2008 financial crisis. The nine-member Special Investigation Committee (SIC) published a 274-page report [text, in Icelandic; press release, in Icelandic] confirming a preliminary report [materials, in Icelandic; JURIST report] published in April that found the extremely negligent actions of Iceland's former prime minister Geir Haarde, former foreign minister Solrun Gisladottir [official profiles, in Icelandic], former commerce minister Bjoergvin Sigurdsson, and former finance minister Arni Mathiesen [official profiles] were to blame for the country's financial crisis and the collapse of three Icelandic banks. The report alleges the officials were aware of the country's ailing financial sector, but failed to take the necessary steps to mitigate the impending damages to the economy. The SIC recommended the ministers be "tried and punished" for their actions. The committee will present their findings for debate before the entire Icelandic Parliament [official website] on Monday.

The parliamentary recommendation was handed down just as global bankers met in Switzerland and agreed to new international banking rules [BBC report] that would prevent a repeat of the global financial crisis. The rules would call for some banks to raise more capital from shareholders and could have the effect of limiting lending. The new rules could go into effect if they are ratified by heads of government at the G-20 [official website; JURIST news archive] summit in November. The Icelandic financial crisis began in 2008 as a result of the financial crisis [JURIST news archive] emanating from securities related to the US mortgage market. The Icelanic government took over three ailing banks, which collectively held debt equaling more than 900 percent of the country's gross domestic product. This caused the economy to collapse and necessitated governmental reliance on loans from the International Monetary Fund (IMF) [official website]. The country considered seeking accession [JURIST report] to the EU after current Prime Minister Johanna Sigurdardottir [official profile] argued that adopting the Euro would help stabilize the economy. In 2008, the UK used anti-terrorism laws to freeze $4 billion [JURIST report] in assets held by Landsbanki [corporate website], one of the ailing banks, after its takeover by the Icelandic government.

Full post as published by JURIST - The Paper Chase on September 12, 2010 (boomark / email).