This Wednesday morning, Sigurjón Þ. Árnason, former bank manager of Landsbanki, was sentenced to twelve months in prison, by the Reykjavík District Court. Thereof, he will serve nine months on probation.
Sigurjón was arrested in 2011. His time in custody will be subtracted from his sentence.
Two other among the bank’s former staff members, Ívar Guðjónsson and Júlíus Steinar Heiðarsson, received a nine months sentence each, thereof six months on probation. One of those charged, Sindri Sveinsson, was found not guilty.
The case against the former Landsbanki manager and his associates is based on one of the most extensive investigations started by the office of Special Prosecutor in the aftermath of the 2008 bank crash. All the defendants were charged for deceiving the public by manipulating the bank’s stock value.
This is the last in a series of three court cases based on related charges, and the first one in which Sigurjón is found guilty.
Backstory
Landsbanki, in public, i.e. state-, ownership until its privatisation in 2002-2003, was renationalized at its collapse in October 2008. It was the third of Iceland three major banks to fall. The Financial Supervisory Authority of Iceland took control of the bank on October 7, 2008, and appointed a committee to manage its reorganization. The committe transferred the bank’s assets to a new government-owned firm, New Landsbanki, whereas the old institute retained many liabilities.
The other two banks went through a similar treatment. In total, the scope of their activities had grown to 10 times Iceland’s GDP. The effects of the monumental crash are still evident in Iceland’s economy, which operates in relative isolation, under currency restrictions, ever since. The looming threat of unresolved claims due to the overgrown banks’ liabilities is colloquially known as the snow henge.
The office of Special Prosecutor was established, following the bank crash, to investigate and prosecute major financial offenses. The Independence and Progressive Parties’ government have announced a major reduction to the office’s budget.
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