Nine judges out of 15 in the High Court of Iceland (Landsdómur) acquitted former Prime Minister Geir H. Haarde in three out of four charges when the court’s verdict was announced yesterday.
Geir H. Haarde (right) at Landsdómur during the trial. Photo by Geir Ólafsson.
He was convicted in one of the four charges, for not having fulfilled his obligations according to the 17th article of the Constitution of Iceland, Fréttablaðið reports.
1.3 – Acquitted:
The majority opinion of Landsdómur regarding item 1.3 is that it appears that the consultation group on financial stability mostly operated in accordance with its purpose. However, it lacked—on the basis of the ideas and information stated—a political policy to tackle the risk to which Icelandic financial institutions and the state were subject from February to October 2008. However, the jury considers that the actions Geir was accused of having neglected could by themselves not have expelled the danger looming over Icelandic society or reduced it.
1.4 – Acquitted
The majority opinion of Landsdómur regarding 1.4 says that Geir must have realized the risk to which financial institutions and the state was exposed. However, the obligation to react wasn’t clear until at latter stages and even though Geir had with policy making in the government and in the authority of his position made sure that the Central Bank and Financial Supervisory Authority used their authority to pressure the banks into decreasing their balance sheets, there is no basis for argumentations made by the prosecution in this case that such actions could have prevented such a risk.
The jury accepts the arguments that it would have proven difficult to sell assets at the time as would have been necessary, and furthermore, the sale of assets could have had the effect that the collapse of the banks had happened sooner. Landsdómur also concludes that the prosecution had no grounds for arguing that Geir had the option to enforce the relocation of the headquarters of one of the three banks to a foreign country until much later.
However, it is stated that the Central Bank could have used its authority to pressure the banks into decreasing their balance sheets. Yet Geir never took action to form a policy in the government so that such a demand or request could have been directed to the Central Bank, pressuring the bank to use this authority.
1.5 – Acquitted
The majority of Landsdómur states that the prosecutor did not explain adequately what the wording in charge 1.5 fully refers to. Also, the prosecution did not reason how actions, which the government could have undertaken to move the Icesave deposits to a foreign subsidiary, could have involved other than accepting the bank’s requests on loans or responsibility to bridge the gap between assets and the obligations of the subsidiary.
Landsdómur does not believe that it could be demanded of Geir that he take the initiative to have the state or the Central Bank of Iceland grant loans or take over responsibility so that the relocation of the deposits could have happened. “It is entirely unproven that other measures, to which the defendant could have taken the initiative, would have expelled the risk,” the verdict on this item concludes.
2.0 – Convicted
Nine judges out of 15, who issued the majority opinion, convicted Geir for not having held cabinet meetings on important matters in the lead-up to the economic collapse.
The verdict states that even though it has been practiced for years that chairpersons of political parties informally consult with each other on affairs concerning the coalition, such consultancy cannot relieve the prime minister from the obligation stated in the 17th article of the constitution. The prime minister also cannot avoid that obligation even though he is concerned that other ministers will not remain confident on matters that are of the nature that they must remain confidential.
The majority opinion states that when Geir became aware of the risk to which the Icelandic banks were exposed, which could jeopardize financial stability in the country and thus the position of the state treasury, he should have realized that it had to be immediately investigated whether this information was true. Information on impending danger which Geir knew about, or was bound to know about, should have been reason for him as prime minister to discuss it at a cabinet meeting, if not immediately then as soon as possible.
Landsdómur considers it fully proven that the work of a consultancy group on financial stability and preparedness was not discussed at cabinet meetings in the period mentioned in the charge.
Landsdómur supports conviction, concluding that the jury: “considers it to be of major recklessness not to have discussed the aforementioned matters at cabinet meetings because it was clear to him, or should have been clear, that they were of utmost importance and of the nature that, as part of the government’s economic policy, he was obligated to do so.”
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