The former President of Kaupthing Bank, Hreidar Mar Sigurdsson has been arrested in Reykjavik, accused of criminal malpractice.
Police arrested Sigurdsson on the orders of Iceland’s Special Prosecutor into the banking crisis, Olafur Thor Hauksson. Hauksson and his team continue to work closely with international white-collar crime investigator, Eva Joly.
The Special Prosecutor put in a request for two weeks’ police custody to the Reykjavik District Court today, but the judge decided to adjourn the case for a day. This means that Hreidar Mar Sigurdsson will stay in police cells until tomorrow at the earliest, and possibly longer if he does not receive bail, Visir.is reports. If convicted, he faces up to eight years in jail.
The Special Prosecutor and his team have been investigating alleged ‘institutionalised market abuse’ within Kaupthing; and the investigation even included raids in Luxembourg.
According to RUV, Sigurdsson was arrested on charges of filing/documentation infractions (IS: skjalabrot), embezzlement, breaking laws on bond trading, and for breaking the laws governing limited companies.
Hreidar Mar was the President of Kaupthing Bank for many years following its privatisation and also had the dubious honour of being Icelandic ‘Tax King’ (Tax records in Iceland are made public for a short period each year, and it is assumed that the highest tax payers – or Tax Kings – are also the highest earners).
“From what is available in public the Kaupthing investigation does mainly focus on use of the bank by UK based businessmen ( not Icelanders ) although Jón Ásgeir Jóhannesson has a lot to answer for.”
What makes you say that? The loan book was almost entirely to Scandinavian companies and individuals with only one ‘UK based’ businessman of note.
Fisy writes:
“From what is available in public the Kaupthing investigation does mainly focus on use of the bank by UK based businessmen ( not Icelanders )”
That’s not correct. The investigation is almost entirely centred on Icelanders. The main focus of the investigation is on the internal operations of the bank itself. These are concentrated on two areas: false reporting (in various forms e.g. announcing the successful placement of a private bond issue – we know this never actually happened) and share-support operations (e.g. lending money to third parties to invest in the bank’s shares with any losses guaranteed on those purchases by the bank itself). In both cases the Icelandic managers were deceiving current and potential investors/bond holders by lying about the true state of the bank’s affairs.
The matter of lending money to Icelandic and international related parties was well known at the time – and if you read the annual reports of the bank they were actually trumpeted as a strength. The line was: we invest as equity holders in companies we loan money to because we are so confident in their success that we want to share in it. As many analysts pointed out at the time this was focussing risk rather than laying it off and meant that Kaupthing was no longer acting as a bank but as a hedge fund. Whether those equity investments in companies was legal or not is an open question but I don’t believe it is being investigated at the moment.
As Bjarni does say correctly :
>The best thing everyone can do, is to let the legal process run its normal course,
>and not do anything that might jeopardize the end goal, which is to convict the
>people that broke the law, and are responsible for the crash in Iceland.
So far the investigation has been concentrated on Kaupthing. But Glitnir and Landsbanki will be next.
https://www.icenews.is/index.php/2010/05/17/eva-joly-defends-iceland-banking-arrests/
https://www.icenews.is/index.php/2010/06/04/joly-and-hauksson-get-their-way/
From what is available in public the Kaupthing investigation does mainly focus on use of the bank by UK based businessmen ( not Icelanders ) although Jón Ásgeir Jóhannesson has a lot to answer for.
Did anyone shoot him?
It would be very appropriate for the 1000’s of families that lost all their money and all pensioners that lost their money all over the world. People are suffering while bankers live in luxury!
Do these people have watches/clocks/calendars?
They are very very slow in paying out the creditors.
I’ll probably retire in Iceland in 10-15 years time, I’ll stay at the politicians, judges, bankers luxury homes for free(free accomodation).
Get ready Iceland, I coming to collect my dues.
Terry says:
May 9, 2010 at 5:37 pm
“To think that the average listener of a bulletin on a radio channel – in the midst of an election, would be unduly influenced by a lack of detail – as to who, or where an arrest was made, is a little self indulgent.
As I said – it was adequately covered by media with pages to fill – for those, who, perhaps, may have had an interest.”
———————————
What are you (indulgently) waffling on about now?
Indulgent ?? :)
Do you have anything to add to the discussion other than waffling on about average listers and their impressions?
The simple fact is, that it was a **** poor report by a BBC news radio station and was repeated two more times. I listened to the radio news, I expect the news to get the very relevant appropriate facts of a story and I remarked on how the faulty report impressed me. I do not give a ‘fiddlers’ about the average lazy/brainwashed/apathetic/concerned listener in England.
The fact that other news reports could give a proper account only highlights the amateur lazy effort of the BBC to report this story.
And yes, I do agree, the world did not lose a heartbeat over the BBC’s loose standards of journalism.
Bravo, Iceland leads the way! The rest of the world needs to follow suite and incarcerate all of the Pin Striped Bandits that they can find. Please note, there is enough public sector info to bring indictments. RICO and Asset Forfeiture need to be invoked to return the ill gotten gains to pensioners and stock holders.
And you are aware of the importance of first impressions made in a media report?
To think that the average listener of a bulletin on a radio channel – in the midst of an election, would be unduly influenced by a lack of detail – as to who, or where an arrest was made, is a little self indulgent.
As I said – it was adequately covered by media with pages to fill – for those, who, perhaps, may have had an interest.
Bjarni, maybe it’s complicated maybe it’s not.
The crooks like the public to think it’s complicated to hide the wrongdoing. We couldn’t possibly follow what was going on let alone determine it was illegal.
When you cut through all the BS it’s usually anything but complicated. See, despite their rep, most bankers aren’t too bright. In their wildest F-up, the average Joe couldn’t manage to lose the money most of these bankers lost.
Case in point. Not complicated:
http://tiny.cc/z5a5v
I agree you don’t want to blow a case. But it’s been enough time since the financial meltdown. Let’s get to it before we all get distracted by the next bubble.
The prosecution showed enough to the Judge to get periods of 7 and 12 days granted, to hold the 2 bank chiefs in custody.
The offenders are very lucky as it seems they are well protected by law. How about the bleeding nation ? Shoulder all the relevant expenses . Is 8 years or less penalty / deterrent enough, IF CONVICTED ? Is recovery of illegally earned or stolen assets possible ?
Questions and more . This is a very good heritage, if ever.
Terry says:
May 7, 2010 at 3:37 pm
“?? So Radio 5 didn’t mention the arrest was made in Iceland…. Other UK press did.”
Then that obviously adds to the inadequate quality of the BBC Radio 5 Live’s report on the arrest. Without mentioning key details of who made the arrest or where the arrest was made, one was left with the undoubted impression that the arrest was affected by British investigators of a Kaupthing bank chief on UK soil.
And you are aware of the importance of first impressions made in a media report?
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Just a show off, so ignorant people will get very exited and say: “ohh!! finally, you see they are doing something”
This is just like:”hey, you have to take one for the team, you can keep your millons, and millons but, we arrest you for a couple of weeks, we showcase you in the media and you know who this people are, they will get so exited and everybody happy” -“yes no problem, I take one for the team!!
To SOFIA MOUSOULEA:
These are extremely complex criminal cases, and it is actually a GOOD THING that the special prosecutor office is taking the time they need to investigate the matter fully, and make sure everything is done correctly. It would be much, much worse if they rushed things through, and then ended up loosing the actual cases in court.
In Iceland, as in most other civilized countries, accused persons have a lot of rights, that cannot be trampled on if you want to get conviction. The main laws governing criminal cases are 88/2008:
http://www.althingi.is/altext/stjt/2008.088.html
I have not been able to find English translation except few excerpts here:
http://eng.domsmalaraduneyti.is/laws-and-regulations/nr/1339
The actual articles that apply regarding the arrest and the subsequent granting of 2-week custody is governed by chapters XIII (Arrests) and XIV (Investigative custody).
In article 90. it states that a person can only be arrested if he:
The police is authorized to arrest a person if there is a confirmed suspicion that he has committed an offense that he can be indicted for, so long as the arrest is necessary to avoid further offenses, assure his presence or safety or others, as well make sure there is no interference with the investigation.
If there is an riot that results in either injuries or large amount off damage, and the police cannot uniquely identify the individuals responsible, they are authorized to arrest people that are close enough to be suspected of the offense.
Furthermore, in addition to other laws authorizing arrests, an arrest can be made if the person:
a. Refuses to give his name or otherwise identify himself as required by an investigation
b. Has be called in for interrogation, and doesn’t show up.
c. Has not given a valid reason for not showing up or interrogation
d. Without authorization left custody or not followed rules regarding leave.
Whether investigative custody (Gæsluvarðhald) is needed is determined separately by a judge. The main rule is that the custody must be for investigative purposes only and to protect the investigation. It can not to be used as “punishment”, which requires a conviction by the courts.
The conditions for investigative custody are specified in article 95. as follows:
a. There is an expectation that the suspect would damage the investigation, by destroying or removing evidence, or apply pressure on co-suspects or witnesses.
b. There is an expectation that the suspect might try to leave the country or otherwise hide from the investigation or avoid the punishment.
c. There is an expectation that the suspect would continue to break laws while the investigation is ongoing or there is a confirmed suspicion that he has broken conditions for suspended sentence.
d. The investigation custody is necessary to protect himself or others from attacks or pressure.
It is also possible to apply investigation custody if there is a strong suspicion that the person has committed offense that would result in more than 10 years in prison, as long as the custody would be necessary to protect the welfare of the public.
Then the laws goes on to specify further limitations and conditions for applying investigative custody.
As you can see from the above, the police has relatively strict conditions that narrowly in which cases a person suspected of crime can be arrested in Iceland. Furthermore, to subsequently keep a person in investigative custody for any period of time, there must be strong legal reasoning behind it.
There is a good likelihood that the lawyers for the two Kaupthing bankers, will be challenging their clients investigative custody, and they might actually succeed based on the laws in question. In any case the special prosecutor asked for only 2 weeks custody, so if the challenge does not succeed they will probably be released at the end of that period (unless the prosecutor can legally show he needs extension).
The best thing everyone can do, is to let the legal process run its normal course, and not do anything that might jeopardize the end goal, which is to convict the people that broke the law, and are responsible for the crash in Iceland.
“I heard the news of his arrest reported on BBC radio 5 news, but they neglected to mention that the arrest was made in Iceland.”
?? So Radio 5 didn’t mention the arrest was made in Iceland…. Other UK press did.
http://news.bbc.co.uk/1/hi/world/europe/8665880.stm
http://www.guardian.co.uk/world/2010/may/06/kaupthing-hreidar-mar-sigurdsson
http://www.thisismoney.co.uk/markets/article.html?in_article_id=504050&in_page_id=3&position=moretopstories
http://www.ft.com/cms/s/0/e6f64384-597f-11df-99ba-00144feab49a.html
Propaganda to calm the humors. Time will tell
[…] von einer weiteren Festnahme (Magnus Gudmundsson). Hier auch die offizielle AFP Meldung. Auch den Englischen Artikel (Ice News) wollen wir euch nicht […]
I heard the news of his arrest reported on BBC radio 5 news, but they neglected to mention that the arrest was made in Iceland.
If some ordinary decent criminal was facing a charge which carries a sentence of up to 8 years, I would be pretty confident that the judge would have little hesitation in granting a requested 2 weeks police custody to facilitate the investigation.
Congratulations!
And Jón Ásgeir Jóhannesson, Thor Björgólfsson, … … … we are waiting .. spring cleaning!
Is this the first among the syndicate responsible for the collapsed of the banks ? Will the others follow soon ? Mentioned is only the offenses committed and the possible maximun penalty of 8 years, if convicted. Is this enough ? How about the assets, by product of the offense, is it totally lost ? Or is recovery possible ? The investigation and prosecution cost money. Is these additional burden to the people ? Question and more questions .
It is strange to employ and managed a bank the Best in Nordic and Iceland and after barely 16 months, Zero Balance. Poor judgement and no accounting. No feasibility studies and too much networking.
It seems the law is not also a sufficient deterrent to the commission of the same offense or even greater offense in the future. Too lenient. Possibly eight (8) years if convicted, and maybe a maximun of two years for good behavior and luxuriate in the hard earned income after release.
It should be remembered that the effect of the bank collapsed is too great. Felt by all, even the oldest man and those unborn children of generations to come with a more or less EU 20,000 plus account at birth. All the rest have paid higher taxes, lost jobs, homes, benefits, self esteem and etc.
This is maybe a joke because the truth hurts.
Congratulations! Why it took you so long?
It seems we have to take matters like that into peoples hands here in Greece.
Beware! In the next days people will finally storm into the parliament and make all appropriate arrangements.