The Icelandic Supreme Court has sentenced (in Icelandic) three ex-managers of Landsbanki to jail sentences. Two of them – the bank’s CEO Sigurjón Árnason and director of corporate lending Elín Sigfússdóttir – had earlier been acquitted by Reykjavík District Court. The Supreme Court sentenced the two to respectively 3 1/2 years prison and 18 months prison. The third manager, Steinþór Gunnarsson director of proprietary trading had been been given a nine months suspended jail sentence, which the Supreme Court turned into nine months in prison.
The case was yet another example of bankers being convicted for breach of fiduciary duty, i.e. causing losses by fraudulent lending where laws and the banks own rules were broken, in addition to market manipulation. In this particular case over ISK5bn were lent to Ímon, a company with no assets except the Landsbanki shares bought for the fraudulent loans from Landsbanki on September 30 and October 3 2008, only days before the bank collapsed.
This case, called the Ímon case, was one of the first cases of suspicious lending to surface after the banks collapsed in early October 2008. The case became symptomatic for the three banks’ lending patterns where the banks lent money to asset-less companies to buy the banks’ own shares, with only the shares as collateral in the days, weeks and months before the banks failed, as share prices were collapsing. As so many of these loans the Ímon lending was later described in detail in the Special Investigation Committee report, published in April 2010.
With this sentence, top managers from both Landsbanki and Glitnir have been sentenced to prison. There are still on-going cases against Glitnir managers.
Updated 9 Oct., clarifying the loan and lending date.
Follow me on Twitter for running updates.