Landsdómur Court – Day Six Skip to content

Landsdómur Court – Day Six

Last Monday was the sixth day of testimonials before Landsdómur court in the case of the state vs. former Prime Minister Geir H. Haarde. The purpose is to try and determine whether there was something Geir Haarde should or could have done in order to prevent the collapse of the banks in the fall of 2008.


geir_haardeGeir H. Haarde.

Ingibjörg Sólrún Gísladóttir, former Minister for Foreign Affairs and former Chairman of the Social Democratic Alliance, took to the stand on Monday. Ingibjörg criticised the Central Bank of Iceland for withholding documents that should have been revealed to the Government, such as a letter from Mervin King, Governor of the British Central Bank, in which King refused to make a currency trade agreement with the Icelandic Central Bank, but offered to assist in reducing the size of the Icelandic banking system instead. Ingibjörg also said that difficulties in communications with Davíð Oddsson, former Governor of the Central Bank, was the reason why she did not take him seriously in a meeting on February 7th, 2008, when he talked about possible threats to the banks, Fréttablaðið reports. According to Ingibjörg, the commercial banks were generally not considered to be in danger even though it was revealed, at meetings with the board of the Central Bank, that various parties overseas did not want anything to do with Icelandic banks, visir.is reports. <?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />

Björgólfur Guðmundsson, former Chairman of Landsbanki’s Board of Directors, also testified on Monday. Björgólfur revealed that the merging of Landsbanki, Straumur and Glitnir banks was looked into in 2008. However, it was always known that this option was not feasible without a strong sponsor. He also said that he did not sense any sort of pressure from the authorities to reduce the bank’s operations. When asked whether he felt pressure from the authorities to transfer Landsbanki’s headquarters overseas, Björgólfur said; “No, not from the authorities. They were just concerned,” mbl.is reports. Björgólfur also testified that executives at Landsbanki considered selling the bank’s assets in Britain and Ireland in 2008. They were however concerned that selling the assets for too low a price would have a negative effect on the bank’s balance sheet, and the plan was therefore called off, mbl.is reports.

Sigurjón J. Árnason, former CEO of Landsbanki, had several meetings with Geir H. Haarde in 2008 about the condition of the Icelandic economy. Sigurjón believes that Geir reacted correctly to the impending danger to the financial system, mbl.is reports. He testified that people were obviously concerned about the situation and were trying to strengthen the bank’s status with various methods, such as trying to acquire liquid assets with so-called repurchase agreements, after it had become apparent that selling property could prove problematic. “It was obvious that an international financial crisis had struck throughout the entire world. But what Geir could do about it is another issue,” said Sigurjón, and added that he felt it was right of Geir not to promote state involvement in the financial system.

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