• Wed
  • Jul 23, 2014
  • Updated: 2:17pm
NewsWorld
ICELAND

Former head of Iceland's failed Kaupthing bank faces conspiracy trial

PUBLISHED : Thursday, 21 March, 2013, 12:00am
UPDATED : Thursday, 21 March, 2013, 3:00am
 

Icelandic banker Sigurdur "Siggi" Einarsson, who ran Kaupthing bank until its collapse five years ago, is among nine former senior staff who have been charged in Reykjavik with orchestrating five large-scale market manipulation conspiracies.

Further details, to be released by the courts later this week, are expected to allege a conspiracy by Kaupthing executive chairman Einarsson and other bosses at Iceland's largest bank, claiming they secretly used the bank's funds to indirectly buy Kaupthing shares in the hope of propping up its share price.

According to an Icelandic parliamentary report, almost 42 per cent of Kaupthing shares were held by the bank as loan collateral at the end of September 2008, much of that without the knowledge of other stakeholders.

The criminal case is the largest in a series of fraud prosecutions brought to court in Iceland in recent years, and may be one of the largest alleged market manipulation conspiracies seen in Europe.

Einarsson is already on trial in Reykjavik over unconnected market manipulation allegations concerning a controversial purchase of a 5-per-cent stake in the bank by Sheikh Mohammed Bin Khalifa al-Thani of Qatar weeks before the bank collapsed in 2008. Prosecutors claim the bank effectively financed this purchase while encouraging investors to believe the risk was taken by Sheikh Mohammed.

Since the bank failed in October 2008 Einarsson has found himself linked to several criminal inquiries. In 2009 The Observer reported that the London-based banker was the first head of a European bank to be formally classed as a criminal suspect, when Iceland's special prosecutor Olafur Hauksson focused on his activities. The following year Einarsson declined to leave London and return to Iceland to be interviewed by prosecutors. It was not until he appeared on Interpol's wanted list that he agreed to travel.

As well as charges laid against former Kaupthing bosses, Hauksson has also this week issued an unconnected indictment against former Landsbanki chief executive Sigurjon Arnason and five ex-colleagues, also alleging market manipulation.

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