REYKJAVIK, June 7 Iceland's prime minister at the time of its 2008 banking crash pleaded not guilty to charges of negligence at the start of a historic trial on Tuesday.
Former Prime Minister Geir Haarde was appearing at the first sitting of a special court set up in 1905 to try government ministers. Parliament voted last year to bring the negligence charges against Haarde.
"I declare myself innocent of all charges and will do my utmost to prove my innocence," he told the court, which consists of 15 judges. If found guilty, he faces up to two years in prison plus a fine, but could also get probation.
"This whole affair is a farce, solely instigated by three members of the current parliament who have now succeeded in holding the first political trial in the country's history," he told reporters after the first court session.
The charges include gross negligence for failing to take proper measures to prepare for an impending financial crash, failing to rein in banks and failing to keep his own ministers informed of the size of the bank system relative to the economy.
The defence spent much of the 30-minute session arguing about the right of eight of the judges to hear the trial.
Iceland's three main banks collapsed under their debts in 2008 during the global financial crisis. Haarde was prime minister from 2006 to 2009 when they were still expanding fast.
Iceland had to take a bailout from the IMF and Nordic lenders after the crisis, and popular discontent and protests led to the fall of Haarde's government.
Though economic stability has returned, the country is still struggling with the legacy of the crisis in terms of controls on the movement of foreign exchange. Unemployment rose from 2 percent in 2007 to 7.8 percent this year. (Reporting by Omar Valdimarsson; Writing by Patrick Lannin in Stockholm; Editing by Louise Ireland)