Sigrún Davíðsdóttir's Icelog

Yet another fraud investigation ending in prison sentences

with 3 comments

Today, the Reykjavík District Court ruled in the most extensive banking case so far, a case of market manipulation and loans to Kevin Stanford and other businessmen to buy shares in Kaupthing, alleged to have part of the market manipulation by Kaupthing senior managers.

This is a complicated case, where the Office of Special Prosecutor went through, in court, months of trades to show a pattern they claimed was consistent with charges of market manipulation. – The judgement will no doubt be appealed by those who were sentenced.

Sigurður Einarsson ex-chairman of the board of Kaupthing was sentenced to a year. Hreiðar Már Sigurðsson, the banks CEO at the time, was found guilty but not sentenced to prison because he has already been sentenced in another case, the al Thani case. According to Rúv, Einarsson sentence will be added to the four years he was sentenced to in the al Thani case. Ingólfur Helgason, Kaupthing manager of Icelandic operations was sentenced to 4 1/2 year. Magnús Guðmundsson manager of Kauphing’s Luxembourg operations was acquitted as was another employee, Björk Þórarinsdóttir member of Kaupthing’s credit committee. Bjarki Diego credit officer at the time was sentenced to 2 1/2 year. Three employees, who carried out the relevant trades, got suspended sentences of 18 months to two year.

One thing, which has proved valuable in this case as in other similar cases, is phone tabs. Interestingly, they have all been done after the collapse.

A complicated case – and contrary to what some seem to think Iceland has a similar legislation regarding market manipulation and other financial fraud as other Western countries. The difference is that there is a will to prosecute these cases: they are time-consuming to investigate but it is perfectly doable and the stories are simple. The fact that big banks are too big to investigate in other countries is only because there is a lack of appetite among authorities and politicians – there really is no other reason, no other explanation.

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Written by Sigrún Davídsdóttir

June 26th, 2015 at 5:02 pm

Posted in Uncategorised

3 Responses to 'Yet another fraud investigation ending in prison sentences'

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  1. Sigrun,
    Thank you very much for that information.
    You are right; the authorities in the UK certainly could prosecute. But the big banks and the auditing firms in London have so corrupted the system that the politicians have made sure that no prosecutions happen.
    When I was interviewed (as a witness!) by the SFO I said that I thought that the biggest issue in a prosecution would be which was the jurisdiction in which country the fraud took place. The Icelanders have shown that that is not an issue; and we know for sure that most of the fraudulent activities took place in the UK.
    The truth is that, as Sigurdur Einarsson said to me, London welcomes people (“crooks”) such as him with open arms; we are the money-laundering capital of the world. We have the banks, the accounting firms, the lawyers and the PR agents to aid those criminal activities. Indeed to become Chairman of the FCA you really need to have been party to all these activities.
    And without the taxes and money from those activities the country’s finances would be in an even worse state.
    So all credit to Iceland for prosecuting these individuals. All shame to the UK for not doing so.

    Tony Shearer

    27 Jun 15 at 2:32 pm

  2. Mr Shearer has summed up the problem in a nutshell, well done sir.
    The only problem would be that no one in authority will actually do anything about it – shame on them.

    Tricky Dicky

    27 Jun 15 at 7:08 pm

  3. I understand that the current conservative government has cut the budget for the special prosecutor. Is this true? If so, by how much was it uct and how was it justified? Do you think this will seriously affect future prosecutions?

    Hallam

    28 Jun 15 at 5:37 am

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