Sigrún Davíðsdóttir's Icelog

In two recent cases brought by the Office of the Special Prosecutor the focus has been on the defence team more than those indicted. The resignation of two defence lawyers from the al Thani case postpones the case until earliest February next year. In a case of alleged market manipulation at Kaupthing, the prosecutor asked that one of these two lawyers should be dismissed in order to prevent a repetition of the al Thani case. In a similar case against Landsbanki managers, the prosecutor asked for dismissal on grounds of conflicts of interest.

Yesterday, as one of the biggest cases, on alleged market manipulation and breach of fiduciary duty, brought so far by the Office of the Special Prosecutor came up in Reykjavík District Court for the first time, prosecutor Björn Þorvaldsson made a startling request: he demanded that Gestur Jónsson, defence lawyer for Sigurður Einarsson ex-chairman of Kaupthing, should be dismissed and Einarsson find a new lawyer.

Also Justice Arngrímur Ísberg seemed to be taken by surprise. Ísberg is famous in Iceland for what many see as a lenient grip on the infamous Baugur case where, incidentally, Gestur Jónsson acted as defence lawyer for Jón Ásgeir Jóhannesson. Ísberg was unsure if prosecutor Þorvaldsson could make this request but Þorvaldsson pointed him to a recent amendment to older law. After a deliberation for fifteen minutes Ísberg returned and refused the dismissal. The prosecutor has appealed Ísberg’s decision to the Supreme Court.

Þorvaldsson’s move was unexpected but there is a story behind it. As reported earlier on Icelog, Gestur Jónsson, also acting for Einarsson in the al Thani case, together with Ragnar Hall, acting for defendant Ólafur Ólafsson, Kaupthing’s second largest shareholder, resigned from the al Thani case just days before the oral hearings were due to start April 11. When Justice Pétur Guðgeirsson refused to accept their resignation, the two lawyers simply refused to follow the Justice’s order. Following a meeting this week with the two new defence lawyers – Ólafur Eiríksson and Þórólfur Jónsson from Logos – the Justice announced that oral hearings will not start until February next year. – In accordance with Icelandic law, the judge will rule on the lawyers’ resignation, which some see as contempt of the court, only at the end of the case.

In their letter (in Icelandic), Hall and Jónsson write that though they are convinced of their clients’ innocence they fear that the treatment of their clients so far is i.a. in breach of the European Human Rights Act. But instead of using these arguments on behalf of their clients in Court the two lawyers chose to resign. Before resigning, Jónsson and Hall had exhausted all possibilities for having the case thrown out or postponed. Ultimately, their resignation obtained just what they had failed to do through the courts: a major postponement.

As Þorvaldsson pointed out yesterday when he argued his case for the dismissal, the grounds Jónsson and Hall cited for their highly unusual move could also be invoked in the market manipulation case, which is why the prosecutor made this request. In Court, Jónsson protested that Þorvaldsson cited their letter, since it had not been presented earlier. Þorvaldsson said the letter was an open-source document, already published in the internet and did not need to be presented.

In the market manipulation case against the Kaupthing managers and employees nine are charged: chairman of the board Sigurður Einarsson, CEO Hreiðar Már Sigurðsson, director of Kaupthing Iceland Ingólfur Helgason, director of Kaupthing Luxembourg Magnús Guðmundsson, director of corporate banking Bjarki Diego, credit committee member and Kaupthing corporate employee Björk Þórarinsdóttir, director of prop trading Einar Pálmi Sigmundsson and two private business brokers Birnir Sær Björnsson and Pétur Kristinn Guðmarsson. – All nine were present in Court yesterday. All deny any wrongdoing.

In a similar case, against managers and employees of Landsbanki, which was also brought up in Reykjavík District Court yesterday, prosecutor Arnþrúður Þórarinsdóttir also asked that one of the defence team should be dismissed. Until one and a half year ago Lárentsínus Kristjánsson, acting for ex-director of brokerage Steinþór Gunnarsson, was the chairman of Landsbanki resolution committee. Þórarinsdóttir argued that this could imply conflict of interest and asked for Kristjánsson’s dismissal. Neither Gunnarsson nor Kristjánsson accepted. The Justice will rule on this at a later time. Other defendants are CEO Sigurjón Árnason, Director of Corporate Accounts Elín Sigfússdóttir, director of proprietary trading Ívar Guðjónsson and brokers Júlíus Steinar Hreiðarsson and Sindri Sveinsson. All of those charged deny any wrongdoing.

These latest events show that as elsewhere in big white-collar fraud cases, Icelandic defence lawyers know a trick or two to delay and thwart the path for the prosecutor when it comes to defending former high-flyers. The latest move by the prosecutor indicates that the OSP is prepared to play it tough. Or, as we say in Icelandic, “to converse with two rams’ horn” – not a sweet conversation.

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