The former directors of Landsbanki and Glitnir testified at the trial of former Prime Minister Geir H. Haarde yesterday, offering their version of their operations and their relationship with the government.
Geir stands accused of negligence and mismanagement contributing to the 2008 bank crash, but has maintained that he is innocent. He contends rather that the crash could not have been predicted, and that it was not the place of the office of the prime minister to involve itself in the internal affairs of the banks.
Former bank managers were among those who testified yesterday. Former Landsbanki manager Sigurjón Þ. Árnason told the court that 2008 would have been too late for the government to step in and do something about the banks; that 2006 or 2007 would have been better. By the time the banks collapsed in late 2008, they were already several times the size of Iceland’s GDP.
When asked if there had been an assumption that one bank falling would mean all of them falling, Sigurjón responded that as far as foreign investors were concerned, the Icelandic banking system functioned as one. He added that the banks grew as large and as fast as they did because bank managers had placed their focus on foreign markets.
Former Glitnir director Lárus Welding testified that at no time did the government even suggest that the banks could scale down their size. “I think we had an honest and open relationship with the government about our plans to sell our holdings,” he said, directly contradicting Geir’s contention that the banks were hiding information from the government.