Iceland Mag

2 Reykjavik

Iceland Mag

Business

Former heads of failed bank Kaupthing receive the heaviest jail sentences for financial fraud in Iceland’s history

By Staff

  • Convicted Click on frame to see all. From left, chairman Sigurður Einarsson, CEO Hreiðar Már Sigurðsson, CEO of Luxembourg branch Magnús Guðmundsson and investor Ólafur Ólafsson. Photo/Vísir.is

The Supreme Court of Iceland sentenced today four former heads of failed bank Kaupthing to jail for their role in market manipulation of share prices in Kaupthing bank in 2008.

Former CEO, Hreiðar Már Sigurðsson, received a five-and-a-half year long sentence, which is the heaviest sentence for financial fraud in Iceland’s history.  

Former chairman, Sigurður Einarsson, received a four-year sentence, Magnús Guðmundsson, former CEO of the bank’s Luxembourg branch, got four-and-a-half years and so did investor Ólafur Ólafsson, who was a leading shareholder in the bank.

The four men were convicted for conspiring to try to manipulate Kaupthing’s share price by claiming that sheikh Mohammed Bin Khalifa al-Thani, a Qatar royal, had risked his own money by buying a 5% stake in the bank for 155 million UK pounds in September, only weeks before the bank collapsed in October 2008.

At the time of the investment the bank’s chairman, Sigurður Einarsson, told English newspaper the Guardian that the bank's strategy of increasing the diversity of its shareholder base had proved "fruitful".

However it later surfaced that it was the bank itself that was indirectly buying the shares and now the four men who conceived that strategy are going to jail for a long time.

Kaupthing was one of Iceland’s big three banks that crashed in the autumn of the 2008. The other two were Glitnir and Landsbankinn. All three are still in winding-up proceedings.

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