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Icelandic State to Seek Compensation for Al-Thani Scam

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Icelandic State to Seek Compensation for Al-Thani Scam

Minister of Finance Bjarni Benediktsson speaking at the Independence Party general meeting in 2013.

Bjarni Benediktsson. Photo: Geir Ólafsson.

Icelandic Minister of Finance Bjarni Benediktsson stated in parliament yesterday that there is reason to look into whether an EUR 500 million (ISK 75 billion, USD 569 million at today’s exchange rate) emergency loan the Central Bank of Iceland granted to Kaupþing Bank following the Al-Thani scam is reason for the Icelandic state to file a damages case against Kaupþing’s bankruptcy estate.

The Supreme Court of Iceland sentenced four of the bank’s former top executives to prison last week because of their fabrication of Sheik Mohammed Bin Khalifa Al-Thani of Qatar’s acquisition of a 5.01 percent share in the bank two weeks before the banking collapse in 2008.

Bjarni made the comment following a request from Bright Future MP Guðmundur Steingrímsson, Vísir reports. Guðmundur stated it is time to publish a telephone conversation between the then governor of the Central Bank Davíð Oddsson and Geir H. Haarde, who was prime minister at the time, before the emergency loan was granted.

“The authorities did everything in their power to save the economy and the interests of Icelanders as far as the circumstances allowed,” Bjarni responded. Both Davíð and Geir used to chair the Independence Party, which Bjarni now leads. “But of course the parliament is entitled to explanations and I believe, in fact, that they have already been given these explanations.”

Bjarni pointed out that the loan would only have been granted had Kaupþing provided collateral considered to be secure at the time. He added that in Iceland, the authorities didn’t allow “strict regulations get in the way of right decisions,” as happened in the UK and the U.S.

The minister concluded that the publication of the telephone conversation is not as important as looking into whether Al-Thani’s ‘investment’ in Kaupþing had given the state further reason to grant the loan to the bank, following which the grounds for the Icelandic state’s damages case should be looked into.

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