Supreme Court rules in al Thani case: imprisonment confirmed
“The results today shows that it is possible to bring complicated financial cases to court and get conviction,” Ólafur Hauksson head of Office of the Special Prosecutor said to Icelog, now that the Supreme Court has ruled in one of the OSP’s major cases, the al Thani case. “Building up the expertise has been a long process but the ruling today demonstrates that setting up an office, which didn’t exist earlier, was fully justified. No society can tolerate that certain parts of it are beyond law and justice.”
Those four charged were Sigurður Einarsson chairman of Kaupthing board, Magnús Guðmundsson manager of Kaupthing Luxembourg, Kaupthing CEO Hreiðar Már Sigurðsson and Ólafur Ólafsson the bank’s second largest shareholder. Reykjavík District Court had earlier ruled in the case where Einarsson was sentenced to 5 years in prison, Guðmundsson 3 years, Sigurðsson 5 1/2 years and Ólafsson 3 1/2 years. The Supreme Court has confirmed the ruling over Sigurðsson whereas Ólafsson has now been sentenced to 4 1/2 years, Einarsson to 4 years instead of 5 years and Guðmundsson to 4 years.
As detailed in an earlier Icelog the core of the al Thani case were loans to Ólafsson and Sheikh Mohammed bin Khalifa al Thani, a Qatari investor from the country’s ruling family. It is important to notice that the issuing of these loans was the criminal deed in the case – the three Kaupthing managers broke law by doing it and Ólafsson was complicit in that criminal deed.
The story behind the case is that in in September 2008 Kaupthing made much fanfare of the fact that Sheikh al Thani bought 5.1% of Kaupthing’s shares. The 5.1% stake in the bank made al Thani Kaupthing’s third largest shareholder, after Olafsson who owned 9.88%. This number, 5.1%, was crucial, meaning that the investment had to be flagged – and would certainly be noticed. Einarsson, Sigurðsson and Ólafsson all appeared in the Icelandic media, underlining that the Qatari investment showed the bank’s strong position and promising outlook.
What these three didn’t tell was that Kaupthing lent al Thani the money to buy the stake in Kaupthing – a well known pattern, not only in Kaupthing but in the other Icelandic banks as well. A few months later, stories appeared in the Icelandic media indicating that al Thani was not risking his own money. More was told in SIC report and the SIC recount indicated a fraudulent behaviour. The ruling today has confirmed the doubts, which have surrounded this investment from early on.
Although the case draws its name from Sheikh al Thani he has not been accused of any wrongdoing. He was one of the witness in the case, gave a statement over the phone.
As I have pointed out earlier there is an echo of this investment story in the ongoing investigation into Qatari and Middle East investment in Barclays, which saved the bank from seeking state support in autumn 2008.
The ruling in Iceland is i.a. in stark contrast to how Irish courts have tackled financial crimes related to the Irish collapsed banks. In April last year a court ruled that two former Anglo Irish managers, who had been convicted of issuing loans to prop up the bank’s share price, should not be imprisoned in spite of being found guilty. The judge ruled it was unjust they should go to prison for a criminal deed because they believed they had acted lawfully. Sean FitzPatrick, the bank’s former chairman, was cleared in this case. I find this Irish ruling truly incredible. This loan saga – loans to the so-called “Golden Circle” – has striking parallels in other Icelandic cases, which are being processed.
Icelandic law on financial fraud is in most respect similar to law on these issues in Northern Europe. There is nothing special about the Icelandic situation – except the will to carry out investigations and bringing cases to court. As Hauksson pointed out financial crimes need not be too complicated to be successfully prosecuted – and no part of society should be beyond the reach of the law.
*Update: I have seen some comments that because the four sentenced to prison in the al Thani case are living abroad they are unlikely to go to prison. That is not correct: the fact that they live abroad – in London, Switzerland and Luxembourg – will apparently not change anything. Ólafsson has already said he will come when called to go to prison. That is an unavoidable consequence of the sentencing.
*Update 25.2. 2015: Ólafsson asked to start his sentencing as soon as possible. According to Icelandic media he is now already in prison at Kvíabryggja, Snæfellsnes, where this sentenced in earlier banking collapse cases have been sent to jail (see here for details of this prison).
Follow me on Twitter for running updates.
Brilliant!
Thanks Sigrun for the heads up. If only, in the UK ….
anrigaut
12 Feb 15 at 5:29 pm
If only anywhere else in the world. Iceland now seems to be the only country willing to adminster justice, and let it be seen to be done
Tricky Dicky
12 Feb 15 at 6:18 pm
Sasly the current government has gutted the budget of the special prosecutor. We won’t be seeing much more of this.
Hallam
12 Feb 15 at 8:11 pm
Excellent news. Well done Iceland.
This needs to get publicity in the UK to shame the UK authorities.
Tony Shearer
13 Feb 15 at 9:11 am
Quite right Tony. But there seems little chance of that. I can find no reports of this event in the UK mainstream press, other than – of all places (!) – in the Mail Online which has published, without comment, the piece by Reuters headlined “Iceland convicts bad bankers and says other nations can act”. As for the UK authorities, they appear to be totally unshameable.
Maybe its time for you to get writing again?
anrigaut
13 Feb 15 at 9:58 am
Sigrun,
This is of course welcome news that will give at least some measure of satisfaction to the many victims of Kaupthinking.
But what chances that these guys will actually get to serve their sentences? I read elsewhere that they all now live abroad and that – unsurprisingly – none of them were present for the court ruling. Do you know whether the Icelandic authorities plan to take steps to get them returned to Iceland?
anrigaut
13 Feb 15 at 10:05 am
I don’t think there is any chance of them evading going to prison. Yes, they all live abroad but I believe that is no shelter from going to prison. There are extradition agreements between countries. And living like a fugitive is not a good life. I can’t see but one end to that story: doing the time in prison. These men, or their defense lawyers, have all tried their best to evade the ruling, delay the case etc.. Still I can’t see but the one end to this story.
Sigrún Davíðsdóttir
13 Feb 15 at 10:30 am
Thanks Sigrun. Good – I hope you are right!
I noted yesterday that the next – and bigger – Kaupthing market manipulation case, involving Sigurdsson and Einarsson along with 7 others, is due to start on 21 April and expected to take 4 weeks.
http://www.visir.is/iceland-jails-former-kaupth…rticle/2015150219597
More interesting times ahead!
anrigaut
13 Feb 15 at 10:57 am
Anrigaut,
I have been in touch with all the journalists who take an interest in this. Also the relevant regulators and politicians.
They should all be so proud of Mr Griffith-Jones, Old Etonian, Chairman of the FCA who was chairman of KPMG, when they were auditors of Kaupthing,,,,,,,, HBoS, Bradford & Bingley, the Co-Op,,,,,,,,, and HSBC.
None of them has any shame.
Sigrun, well done to you; this is a real tribute to all you have done to keep this in the public eye. What is the reaction in Iceland?
Tony Shearer
13 Feb 15 at 12:30 pm
This is very good news and Iceland should be as proud as other countries should be ashamed.
I feel disgusted that Britain cannot even have the courage or the decency to mention this in the news. They know it puts them to shame, as it does Luxembourg and other countries who have deliberately and selfishly protected the bankers who have destroyed so many small businesses and people’s lives.
The E.U. under Jean-Claude Juncker will obviously continue to do what Juncker put in place in Luxembourg and that is a system to protect the financial crimes and re-classify them all as ‘legal’!
Iceland has set the example and it should be in all the world’s press and applauded.
How short-sighted to have cut the budget of the greatest possible PR for Iceland. The brilliant Icelandic Prosecutor, Mr Hauksson.
Rachael Williams
14 Feb 15 at 8:00 am
[…] ausgestellt wird, wenn sie dieser Aufforderung nicht nachkommen. Hintergründe zum Fall finden sie hier (auf […]
Strafen gegen Kaupthingmanager
14 Feb 15 at 8:38 am
Those who, like me, don’t read Icelandic might enjoy this extract from the ruling, as reported in Iceland Review:
“The Supreme Court’s unusually harshly-worded ruling stated that the defendants were guilty of “thoroughly organized violations, committed out of determined intention and unprecedented impudence and disregard.”
“The defendants’ conduct … involves a serious breach of trust against a large public limited company, leading to massive loss in funds,” the verdict concluded.”
http://icelandreview.com/news/2015/02/13/iceland-supreme-court-al-thani-deal-deception
Strong words indeed. Well done the judge.
anrigaut
14 Feb 15 at 10:35 am
On the subject of capital control.
Found this:
Iceland says sells crowns worth 59 mln euros at auction
COPENHAGEN Tue Feb 10, 2015 5:29pm GMT
Feb 10 (Reuters) – Iceland’s central bank sold 11.8 billion Icelandic crowns on Tuesday at the latest in a series of auctions that aim to cut an overhang of local currency held by overseas investors trapped when the island’s financial system collapsed.
The auctions are part of a longer-term strategy to ease capital controls put in place during the 2008 financial crisis. It held five such auctions last year.
At Tuesday’s exchange rate such a sale would amount to 79 million euros but the central bank said it had instead set the price at 200 crowns per euro, valuing the total sale at 59 million euros.
Iceland wants to remove the capital controls, which are hampering investment, but needs to avoid triggering a sudden outflow of capital that would undermine the currency.
The Nordic country also has to first settle outstanding issues between failed banks and foreign creditors have been settled. (Reporting by Sabina Zawadzki; Editing by Gareth Jones)
Goupil
15 Feb 15 at 10:47 am
Yes, there are more big cases coming up soon at the Supreme Court; the al Thani case was the first of those. – The al Thani ruling has been much debated in Iceland and has certainly silenced all those doubting OSP, at least for the time being.
Sigrún Davíðsdóttir
17 Feb 15 at 3:42 pm
[…] In total, Kaupthing sold almost 18% of the bank’s share in seven large transactions shortly before it collapsed, in all cases funding the share purchase with Kaupthing loans. The largest transaction was when a Qatari sheikh bought 5,1% for which the three above mentioned managers and Ólafur Ólafsson, the bank’s second largest shareholder, are now serving 3 to 5 1/2 years in prison in the so-called al Thani case. […]
Further insight into “Kaupthinking” at Sigrún Davíðsdóttir's Icelog
11 May 15 at 10:53 pm
Hi there to every one, for the reason that I am truly eager of reading this weblog’s post to be updated daily.
It contains good stuff.
pinterest.com
21 Jul 15 at 1:02 pm
[…] and three of the bank’s senior managers are now in prison after a ruling in the so-called al Thani case. – Gallup Iceland regularly measures trust in institutions. Since the OSP was included, in […]
Iceland’s recovery: sound basics, decent policies, luck and no miracle at Sigrún Davíðsdóttir's Icelog
23 Sep 15 at 3:18 pm
[…] I talked to Hauksson following the conviction in the so-called al Thani case, in February 2015, he pointed out that the Supreme Court’s decisions showed “that it is […]
Does Iceland have a better legal code to deal with dodgy banking? at Sigrún Davíðsdóttir's Icelog
17 Feb 16 at 8:29 pm
[…] year, earlier Kaupthing’s second largest shareholder Ólafur Ólafsson was sentenced in February 2015 to 4 1/2 years in prison in the so-called al Thani case. After a change in the law […]
Where but in Iceland… at Sigrún Davíðsdóttir's Icelog
23 May 16 at 9:45 pm
[…] Sigurðsson was sentenced to six months in prison, in addition to the 5 1/5 years in the so-called al Thani case where the bank’s executive chairman had received a four year sentence. The market […]
Kaupthing – prison sentences for market manipulation at Sigrún Davíðsdóttir's Icelog
7 Nov 16 at 6:23 pm
[…] Kaupthing’s largest owners were, intriguingly, businessmen who got wealthy through deals largely funded by Kaupthing. The largest shareholder, Exista, was owned by two brothers, Ágúst og Lýður Guðmundsson and the second largest was Ólafur Ólafsson. The brothers own one of Britain’s largest producers of chilled ready-made food, Bakkavör. Ágúst got a suspended sentence in a collapsed-related criminal case. Ólafsson, together with Kaupthing managers, was sentenced to 4 ½ years in prison in the so-called al Thani case. […]
Has Iceland learnt anything from the 2008 banking crash? at Sigrún Davíðsdóttir's Icelog
9 Dec 16 at 4:23 pm
[…] were only a front for Ólafsson and Kaupthing’s interests. The case that felled Ólafsson was the al Thani case: Mohammed Bin Khalifa al Thani announced in September 2008 a purchase of 5.1% in Kaupthing. The […]
The ‘puffin plot’ – a saga of international bankers and Icelandic greed at Sigrún Davíðsdóttir's Icelog
30 Mar 17 at 10:58 pm
[…] al Thani played a role in another Kaupthing case, the so-called al Thani case; the Sheikh was not charged but the three Kaupthing managers, charged in the CLN case, and […]
What is Deutsche Bank hiding in Iceland? at Sigrún Davíðsdóttir's Icelog
3 Nov 17 at 10:01 pm
[…] is a well-known name in Iceland from his role in another Kaupthing criminal case, the so-called al Thani case; although the case is commonly named after the Sheikh he was not charged (the $50m loan to […]
Deutsche Bank, Kaupthing and alleged market manipulation at Sigrún Davíðsdóttir's Icelog
5 Feb 19 at 12:23 pm
[…] and three of the bank’s senior managers are now in prison after a ruling in the so-called al Thani case. – Gallup Iceland regularly measures trust in institutions. Since the OSP was included, in […]
Iceland’s recovery: myths and reality (or sound basics, decent policies, luck and no miracle) | A Fistful Of Euros
14 Dec 20 at 4:47 am
Having read this I thought it was really informative. I appreciate you finding the time and effort to put this information together.
I once again find myself personally spending a lot of time both
reading and commenting. But so what, it was still worthwhile!
bandarq online
14 Aug 21 at 12:03 pm
Thanks a lot for giving everyone such a remarkable opportunity to check tips from this site.
It’s always very kind and packed with fun for me and my office acquaintances to search the blog no less than three times every week to see the fresh items
you have. And of course, we’re always pleased with the remarkable tips served by you.
Certain 2 facts in this post are in fact the most efficient we have all ever had.
sabi entertaiment bangsat
24 Dec 21 at 9:18 am
Of course, what a splendid blog and informative posts, I definitely will bookmark your blog.Best
Regards!
ranggo kontol
25 Dec 21 at 5:25 pm
Good post. I study one thing tougher on different blogs everyday. It can all the time be stimulating to learn content material from different writers and observe a bit of one thing from their store. I抎 choose to use some with the content material on my blog whether or not you don抰 mind. Natually I抣l offer you a hyperlink on your internet blog. Thanks for sharing.
off white
19 Oct 23 at 1:44 am
I precisely had to say thanks yet again. I am not sure the things that I would’ve carried out in the absence of the actual concepts provided by you on such topic. It was actually a very hard crisis for me, nevertheless finding out your professional style you resolved that forced me to leap with delight. I will be grateful for your information and thus sincerely hope you realize what an amazing job you are getting into teaching many others using your web site. Probably you’ve never encountered all of us.
curry shoes
17 Nov 23 at 12:00 pm
I am also writing to let you know what a awesome encounter my child undergone reading yuor web blog. She came to find a good number of issues, not to mention what it is like to have an awesome giving character to let the others easily know selected advanced subject matter. You actually did more than people’s desires. Many thanks for distributing the practical, dependable, revealing as well as unique thoughts on your topic to Emily.
kd 12
19 Jan 24 at 9:39 am
I wish to show thanks to you just for bailing me out of this type of incident. Just after checking through the search engines and getting basics which are not powerful, I was thinking my entire life was well over. Living without the strategies to the problems you have sorted out by means of the review is a serious case, as well as ones which could have in a negative way affected my career if I hadn’t noticed your website. Your main training and kindness in touching all things was very helpful. I don’t know what I would have done if I hadn’t encountered such a subject like this. It’s possible to now look forward to my future. Thanks very much for the expert and amazing help. I won’t think twice to propose your web site to any person who should receive tips about this situation.
jordan shoes
23 Jan 24 at 6:55 pm