Iceland court sentences 4 bank execs to jail for fraud causing collapse of Iceland economy, lied about Qatar sheik investment-RTE

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12/12/13, "Four Icelandic bank executives jailed," RTE.ie/news (Ireland)

"An Icelandic court has sentenced four former Kaupthing bankers to jail for market abuses related to a large stake taken in the bank by a Qatari sheikh just before it went under in late 2008.

Weeks before Iceland's top three banks collapsed, Kaupthing announced that Sheikh Mohammed Bin Khalifa Bin Hamad al Thani had bought 5% of its shares in a confidence-boosting move.

A parliamentary commission later said the shares had been bought with a loan from Kaupthing itself.

A Reykjavik district court today sentenced Hreidar Mar Sigurdsson, Kaupthing's former CEO, to five-and-a-half years in prison.

Former chairman Sigurdur Einarsson received a five-year sentence. Magnus Gudmundsson, former CEO of Kaupthing Luxembourg, was given a three-year sentence.

Olafur Olafsson, the bank's second largest shareholder at the time, got three-and-a-half years.

This is by far the largest case brought by Iceland's special prosecutor against former employees of Iceland's failed banks.

It was argued that the market had been deceived by information indicating that financing was coming directly from Mr al-Thani's own funds.

Special Prosecutor Olafur Thor Hauksson, who called around 50 witnesses in the case, said the loans granted by the bank had the sole purpose of boosting Kaupthing shares.

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None of the bankers, now based in London and Luxembourg, were present today.

The estate of Kaupthing said earlier this year it had settled a dispute with Mr al-Thani but provided no details, saying only that it had discontinued legal proceedings.  

After taking control of the banks, the government was forced to seek an International Monetary Fund-led loan to stay afloat, a programme the country exited in August 2011."

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IMF adds $2.5 billion to Iceland bailout funds:

11/20/2008, "$2.5 Billion Is Added to Bailout for Iceland," NY Times, David Jolly

"Poul Thomsen, the head of the I.M.F. mission to Iceland, said in a conference call that the total compensation for Icesave customers would be $5 billion to $6 billion.

All told, Iceland is borrowing at least $10 billion, or about $33,000 for each of its 300,000 residents. The increasing severity of the global credit and economic crises has put great stress on many smaller and developing nations as capital flees to Japan, Europe and the United States.

The Turkish prime minister, Recep Tayyip Erdogan, said Thursday on television that he hoped a deal with the monetary fund would be reached by next week. An official in his party said earlier that a deal of $20 billion to $40 billion was likely.

Dominique Strauss-Kahn, the monetary fund’s managing director, said Saturday that there was “some disagreement” on the size and terms of a bailout package, which would be Turkey’s fourth in 10 years. But he said he was confident that a deal would be reached quickly.

In addition to Iceland, the monetary fund has recently announced bailout programs for

Hungary,
Pakistan,
Serbia and
Ukraine,

and created a credit line of as much as $100 billion for healthy countries

with liquidity shortages. The Latvian finance minister, Atis Slakteris, said Thursday that Latvia would seek help from the fund to ensure the stability of its financial sector.
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Belarus is also talking with the fund about aid.

Having gotten its bailout, Iceland now faces a long road to restoring its economy and its currency, the krona. The country’s financial markets have been effectively frozen for the last month. Mr. Thomsen, the monetary fund official, said that the immediate needs were to get foreign exchange market operating and to stabilize the krona."

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11/20/13, "Iceland Gets $4.6 Billion Bailout From IMF, Nordics (Update3)," Bloomberg, By Tasneem Brogger and Helga Kristin Einarsdottir  

"Iceland got a $4.6 billion bailout from the International Monetary Fund and four Nordic countries to help resurrect the island's economy after the failure of its biggest banks and the collapse of its currency. 

The Washington-based IMF approved a $2.1 billion loan late yesterday. Finland, Sweden, Norway and Denmark will provide a further $2.5 billion, the Finnish Finance Ministry said in a statement today.

``The shock of the economic collapse has already hit Iceland, these loans will just reduce the extent to which the decline will draw out,'' said Lars Christensen, chief analyst at Danske Bank A/S. ``But it is a substantial amount, and it's enough money to recapitalize the country's banks.'' 

The loan won't be enough to prevent the economy from contracting at least 10 percent next year, Christensen added. Iceland will use the money to stabilize the krona, shore up its banks and restore confidence, the IMF said. The country, which had the fifth-highest per capita income in the world last year, needs the financing to pay for imports and to create enough foreign reserves to support a free-floating currency."...
 




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