Former Kaupthing director Hreiðar Már Sigurðsson took the stand today at the trial of former Prime Minister Geir H. Haarde, and objected to assertions made by former Central Bank chairman Davíð Oddsson the day previous.
As reported, Davíð took the stand yesterday at the trial. In the course of his testimony, he said that he had foreseen in early 2008 that the finance bubble would burst. He also said that there was little Geir could have done to prevent the banks from collapsing.
Hreiðar Már took issue with this testimony, RÚV reports, asking rhetorically that if Davíð really knew in early 2008 that soon things would take a turn for the worse, then why did the Central Bank spend 800 million euros of tax money on shares in Glitnir that same year. Hreiðar Már was cautioned by the court to reserve his testimony to answering the questions asked of him; that he was not in court to respond to the testimony of others.
Hreiðar Már, when asked about his relationship with the government, testified that no meeting was ever initiated by the government with the banks to discuss their growing size. He also said that no such inquiries were ever made from the Central Bank or the Financial Supervisory Authority. At the time of the crash, the banks were several times the size of the GDP.
Ultimately, Hreiðar Már said he believes it was the emergency law which ruined Kaupthing. According to him, in late 2008 Kaupthing had managed to attract 5.7 billion euros from foreign investors, and many of the top brass believed this would help lead the country out of the financial crisis. However, when the emergency law was enacted by the government and placed on Kaupthing, investors got skittish and no one would approach Kaupthing about investing anymore.