From Iceland — The SIC Report: What's All This Then?

The SIC Report: What’s All This Then?

Published May 14, 2010

The SIC Report: What’s All This Then?

When the banks collapsed in October 2008, Iceland’s bankers, politicians, and financial supervisors sprang into action—and promptly blamed everyone but themselves. As a result, it became apparent that a neutral third-party was going to be needed to investigate what caused this mess. And so, parliament formed the Special Investigative Commission (SIC).

The members, appointed on December 30, 2008, are Supreme Court justice Páll Hreinsson, who acted as chair, along with two others: Parliamentary Ombudsman of Iceland, Mr. Tryggvi Gunnarsson, and Sigríður Benediktsdóttir Ph.D., lecturer and associate Chair at Yale University.

The commission defines its own purpose as “to collect information, find facts and provide an overview of the main events leading to the fall of the Icelandic banks and identify its causes.”

And so with bated breath, the Icelandic people waited. In the fall of 2009, it was announced that the findings would be released, but then that was delayed. It became delayed twice more. On April 12, the commission presented its nine volumes of findings to Parliament and the general public.

So what were those findings? Well, it turns out there was plenty of blame to go around. The banks were in part to blame for essentially committing fraud, with directors loaning to themselves and buying stock in their own companies, artificially inflating the value of the banks. Politicians—in particular, the Independence Party, and especially former Prime Minister Geir H. Haarde—were also to blame for misinforming the public and their own colleagues, for accepting enormous loans and gifts from corporations and banks, and for not stepping in to increase supervision and regulation when it was most needed. Even the President of Iceland was criticized, for allegedly giving foreign governments and businessmen a cosmetically enhanced image of Iceland’s financial situation, and for using his office to assist venture capitalists start businesses abroad.

But the most-mentioned individual in the report is former Central Bank chair and current editor of Morgunblaðið Davíð Oddsson, whose libertarian policies not only shaped the Independence Party during his time as party chairman and Prime Minister, but apparently carried over after he appointed himself in charge of the Central Bank.

Many people predicted that there would be blood in the streets when the findings were released. Instead, the reaction of the average Icelanders was decidedly “Well, no kidding.” No one was surprised nor outraged by the findings, and a recent poll showed that while most Icelanders are happy with the report’s findings, the vast majority don’t believe anyone is going to do any jail time.

As for the people named in the report—surprise!—they also lay the blame at everyone but themselves. Well, most everybody. Social Democrat MP and former Minister of Business Björgvin Sigurðsson took a temporary leave of absence. Independence Party MP Illugi Gunnarsson followed suit, as did Independence Party vice-chair and former Minister of Education Þorgerður Katrín Gunnarsdóttir. Social Democrat MP Steinunn Valdís Óskarsdóttir—herself in the spotlight for accepting very substantial campaign contributions—kicked things up a notch by suggesting that every MP who was in power in the time leading up to the banking collapse should resign (it should be noted that she suggested this while retorting those who had suggested she resign).

But in the end, these gestures are simply that. No one has yet been charged with a crime. That’s the special prosecutor’s job.

Whether anyone is charged, tried and punished remains to be seen, but even that doesn’t touch on what the Grapevine sees as the root of the problem: an unwillingness to supervise our country’s financial institutions. New laws are needed to prevent this from happening again. New supervisory bodies are needed who are actually willing to enforce these laws. And new judges are needed who are willing to convict those guilty of wrongdoing. Until that happens, it’s business as usual in Iceland.

If you’re curious, you can read English translations of the SIC’s findings online, at

What Went Wrong? Interview with William Black on Iceland’s financial collapse
SIC Report: What The Locals Think
Are Icelanders An Immoral Nation?

“Despite the parties and talks with rich and famous people in London, Ármann hasn’t gotten any useful contacts within the British government nor achieved any deeper understanding of it.” – Hreiðar Már Sigurðsson, on former Singer and Friedlander (Kaupthing’s daughter company in the UK) bank director Ármanns Þorvaldsson’s cocktail parties.
“There sits the Prime Minister before you, shaking like a leaf in the wind, and cannot make a decision. He listens to you and you’re undermining everything. If you don’t make this work I will personally see to it that you’ll never work in Iceland again.” – Davíð Oddsson to Tryggvi Þór Herbertsson, with regards to the nationalizing of Glitnir.
“And then he began to shake and stutter. He said, ‘You can’t do this to me. I can’t go up there and say that to Davíð.'” – Össur Skarphéðinsson describes former PM Geir H. Haarde’s reaction to being told the Social Dems wouldn’t accept Davíð Oddsson leading an emergency government.
“You have to stand with us. You should not be criticizing or commenting on the banks, you are to stand with us.” – Glitnir president Birna Einarsdóttir to Morgunblaðið editor Styrmir Gunnarson.
“But should I tell the Minister of Business? [I asked.] And she said, “Not right away, so don’t talk to anyone. Keep it under wraps.”  Össur Skarphéðinsson quoting former Minister of Foreign Affairs Ingibjörg Sólrún Gísladóttir when the banks were falling apart.

1. The politicians. Former Prime Minister Geir H. Haarde is portrayed as an incompetent bungler who was terrified of former Central Bank chairman Davíð Oddsson. Former Minister of Business Björgvin Sigurðsson is excluded from important meetings about the state of the banks, often with the collusion of members of his own party. Former vice-chair Þorgerður Katrín Gunnarsdóttir had loans exceed a billion ISK. And all the conservatives ignored warnings from abroad that the shit was going to hit the fan.
2. The banks. Oh boy, where do you start? You had directors loaning themselves their own banks’ money, giving enormous campaign contributions to politicians, and lying about anything untowards going on behind closed doors. At the time of the collapse, they were ten times the GDP. How did that happen? See point number three.
3. The supervisory apparatus. What supervision? The FME essentially sat back and cheered on the banks, touting them to everyone as sound and worthwhile institutions. Sound familiar? It should, because here comes point four.
4. The President of Iceland. While the President is typically an office comprised mostly of welcoming foreign dignitaries and giving awards to citizens of merit, our current President spent a lot of time overseas painting a very pretty picture of Iceland’s venture capitalists. He also used his office to influence foreign states to give the green light for his businessman buddies.
5. The media. The Icelandic media under-reported or in some cases completely ignored warnings being given by foreign analysts, and neglected to take a closer look at the country’s financial institutions. Instead, they too trumpted Iceland’s economic awesome, thinking they were doing us a favour.

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