REYKJAVIK Jan 31 Two former chief executives of
collapsed Icelandic bank Landsbanki have been indicted by the
country's special prosecutor for putting the bank at risk by
letting it guarantee loans without sufficient insurance.
Iceland's financial system crashed during the credit crunch
that followed the collapse of Lehman Brothers in 2008, and the
country appointed a special prosecutor to investigate whether
bank employees were complicit in the crisis. A handful of former
bank executives have so far been prosecuted and found guilty.
In the indictment, Sigurjon Arnason and Elin Sigfusdottir
are charged with jeopardizing Landsbanki by letting it guarantee
loans by peer Kaupthing Bank to two companies registered in
Panama before the crisis for a total of 13.6 billion Icelandic
crowns, or about $200 million at the time.
The indictment states that without sufficient insurance this
was a "major violation" of their positions.
Arnason denied any wrongdoing but declined further comment.
Sigfusdottir could not be reached for comment.
Arnason was CEO from 2003 to October 2008. Sigfusdottir was
head of the bank from October 2008 to January 2009 and managing
director of corporate finance before that.
The case will be filed in the Reykjavik District Court on
Feb. 3, with the court then deciding whether to proceed.
Last year, Iceland's special prosecutor issued indictments
against Arnason and his joint Landsbanki CEO Halldor
Kristjansson, as well as four other former Landsbanki employees,
for alleged manipulation of Landsbanki's share price in the run
up to the collapse of the banking system in 2008.
Arnason and the other defendants in this case have pleaded
Iceland has taken a tough line against financiers who
oversaw a credit-fuelled spending spree across Europe that saw
the country's banks buy up assets such as UK fund manager Singer
& Friedlander and broker Teather & Greenwood.
Last month, the Reykjavik District Court handed down jail
sentences of 5 years and 5-1/2 years respectively to the former
CEO and former chairman of Kaupthing Bank - the heaviest
sentences ever given in Iceland for economic fraud.
CEO Hreidar Mar Sigurdsson, Chairman Sigurdur Einarsson and
two others were found guilty of market manipulation in relation
to Sheik Mohammed Bin Khalifa Al-Thani of Qatar's acquisition of
more than five percent of shares in Kaupthing Bank shortly
before it collapsed in the autumn of 2008.
(Reporting by Robert Robertsson; Editing by Mark Potter)