Iceland's Jailed Bankers Are Back, Demanding They Were Crisis Scapegoats

Tyler Durden's picture

In the aftermath of the 2008 financial crisis, one country stood out: Iceland was the one nation in the world which not only let its banks fail, but convicted the bankers responsible for the collapse of the country's financial system (incidentally, since then Iceland has been one of the world's economic success stories, with the economy growing over 7% last year). Now, nearly a decade later, Iceland’s ex-bankers, once reviled as symbols of crony and rogue capitalism, say they were scapegoats: and having been "improperly" jailed for their roles in the 2008 financial crisis, they’re now taking their cases to the European Court of Human Rights.

Some background.

In 2008, after Iceland’s inflated financial system imploded, the three main banks Kaupthing, Glitnir, and Landsbanki collapsed. The government urgently nationalized them, then asked the International Monetary Fund (IMF) for an emergency bailout, a first for a western European country in 25 years. The crisis brought to light the bankers’ questionable practices, often involving artificially inflating the value of the banks’ assets by providing cheap loans to shareholders to buy even more shares in the bank. Thousands of Icelanders had thus placed their life savings in a house of cards.

What Iceland's bankers did was not unique: virtually every other bank around the globe at the time had countless employees who were doing the exact same thing, ending with a similar result - bank failures, bailouts and partial or entire nationalizations. However, only in Iceland were bankers prosecuted wholesale, and only in Iceland did they end up going to prison.

Since then, dozens of so-called “banksters” have been convicted, about 20 of them to prison, for manipulating the market.

Now, some of them now claim they didn’t get fair trials, and have turned to the European Court of Human Rights.

People protest in Reykjavik over the government's handling of the financial crisis

Acording to AFP, Sigurdur Einarsson, the former chairman of the board of Kaupthing, spent one year behind bars after being sentenced by an Icelandic appeals court to four years in prison before being released. He is critical of what he dubs Iceland’s “scapegoat” justice system, which he claims turned a blind eye to unlawful proceedings during his trial.

Some of the judges were partial … because they had lost a lot of money during the economic crisis,” Einarsson told AFP in an exclusive interview in Reykjavik. This was not a just and fair trial. (This is) very important because Iceland praises itself for being a Western democratic country, and one of the key issues for that is having fair trials for everyone."

While it would have been informative to get his take, Einarsson had no comment on why judges in other countries refused to prosecute any of his peers: surely it wasn't just Iceland's judicial branch that "lost a lot of money" during the economic crisis? In any case, Einarsson was especially critical of a Supreme Court judge who was allowed to rule on his case: the judge’s wife was on the board of the financial regulator during the collapse, his daughter worked at the Ministry of Economy and Finance, and his son was the chief legal advisor to the winding-up committee of Kaupthing.

Einarsson and his lawyers also claimed his rights were violated in the case, including illegal phone taps and excessive custody detentions. After he contacted the European Court, it then addressed a series of questions to the Icelandic government in June 2016. Reykjavik answered a first time in December, then a second time in March, with a 64-page document of which AFP has obtained a copy.


Without denying the Supreme Court judge’s family ties, the Icelandic government rejected the ex-banker’s arguments outright.


All in all, it wrote, “no violation of the applicant’s rights under Article 6 and 8 of the European Convention of Human Rights has taken place”.


The Court told AFP it had received nine appeals linked to the Icelandic bankers’ trials. Einarsson’s is the only one it has begun to study.

Ironically, Einarsson readily admits that some of the banking “practices” would never have been approved today, but he distinguishes between doing “something illegal and something commercially wrong”. Perhaps it was this apriori distinction that prevented other judges from seeking legal recourse against other "crisis" bankers.

Speaking of "commercial wrong", Kaupthing’s collapse is one of the biggest in history in terms of assets, at $83 billion. While a far cry from Lehman Brothers at $691 billion, in the context of Iceland's far smaller economy, the failure was even greater, and led to huge losses for a majority of the island nation's small population.

For better or worse, however, the banker revisionism may not have much traction.

Eva Joly, the French-Norwegian judge who advised Iceland’s special prosecutor on the cases linked to the financial crisis, says the ex-bankers’ attempt to seek vindication from the European Court was “classic” behaviour from the “ruling elite” after being found guilty of their ways. “Men of power always resort to legal means,” Joly told AFP. Iceland’s bankers benefitted from advice from “the best lawyers”, while judges were drowning in cases and working with little means, she said. “Iceland rented out its coast guard to African countries in order to finance” the investigations, she said.

Don't call it a comeback just yet...

The island is now abuzz with rumours about the return of some of the bankers to centre stage, this time in Iceland’s flourishing tourism sector. Finance Minister Benedikt Johannesson sees no problem with that.

“I think people can improve. They should be allowed to be in business as long as they stay within the law,” he told AFP. No recent surveys have been conducted on Icelanders’ opinion of the ex-bankers. But those questioned on the streets of Reykjavik are rarely forgiving.

“I doubt people feel much sympathy for them,” says Kristjan Kristjansson, a 52-year-old who says he lost “a little” money in the crisis.

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Pumpkin's picture

Lock em back up!

Ignatius's picture

Apparently they didn't really get the message.

JRobby's picture

Hang them

Leave the corpses along the road to be abused

Manthong's picture

Iceland would not have this irritant if they had just hung the thieves.

Sanity Bear's picture

Exactly, certain types of threats it's suicidal to give mercy to.

manofthenorth's picture

BANKSTERS are like child molesters, they are NEVER reformed into normal, caring and decent human beings.

The only rehabilitation that works on these types of sociopaths is termination.

BennyBoy's picture


Sigurdur Einarsson. If only it was Dimon and Blankfein. 

Jail the fraudulent, illegal asses now.


Hey Trump, you gonna drain the swamp or pretend to?!

Dabooda's picture

Didn't Trump offer both Dimon and Blankfein positions in his Administration?  That might be a clue.

shamus001's picture

You ever watch Game of Thrones? Season 1 - Ned Stark? If not, watch it and educate yourself. If so, you didnt learn a thing. In order to clear out SOME corruption, your going to need powerful allies, and yes, theyre corrupt too. If you make enemies on all sides, youll end up dead.

MEFOBILLS's picture

The politicians too.

Icleanders came out in force and banged pots.  Political leaders got the message, that they would be out on their ass if they didn't do the people's bidding.

In a large, non-homogenous country, that sort of event won't take place.  The people are more easily distracted by their differences.

 There are multiple reasons our ((friends)) and their agents, want large scale immigration.  

thisandthat's picture

"We iz victeems!"

#BLM #BanksterLivesMatter

Nolde Huruska's picture

Hanging's too good for them. Bring back the blood eagle.

BarkingCat's picture

Next time give then the Viking trial followed by Viking punishment. They all deserve blood Eagles. Every one of them.

mkkby's picture

Revoke their citizenship while their in Europe "complaining".  Let them live with the other muzzie/nigger *refugees*.

QuantumEasing's picture

"...taking their cases to the European Court of Human Rights"

No standing. Must be Human to have Human Rights.

Take them shark fishing, get chummy with them.

Lyman54's picture

Iceland isn't a member of the EU so I don't know what they hope to gain with that.

HowdyDoody's picture

Chop off the bits of their person that they use to debase currency.


meditate_vigorously's picture

Iceland should deport them for sedition. What an egregious assault on their native nations sovereignty. Are they Jews? Sounds like Jew behaviour.

Bigly's picture

Put them in a longboat and make them row due west.  In November 

Dame Ednas Possum's picture

Long tar and feathers...

New_Meat's picture

Au contraire, madame, that would be a waste.

However, there are natural volcanic springs that have water at 100 Degrees, that would achieve your purpose with no adverse effects on the environment.

- Ned

booboo's picture

Some of the judges were partial … because they had lost a lot of money during the economic crisis,”

Ha, just the opposite here, some judges made a shit ton of money and they turned a blind eye, sucks to be you don't bub

hxc's picture

Very accurate but after all these years, I still have no idea what your avatar is.

booboo's picture

I don't either, it was assigned to me by Putin

IndyPat's picture

These were probably toadies.

Let's be honest.

The smart (((ones))) used the other passport.

Justin Case's picture

"Now, some of them now claim they didn’t get fair trials"

I agree, They should have set the example to other embedded crooks in that sector. A public hanging would have slowed down the fraud in some aspect. You wanna steal? These are the concequences. Public hanging to satisfy the victims.

Al Tinfoil's picture

As far as I can find, Iceland is not a member of the European Union, so the jurisdiction of the European Court of Human Rights (ECHR) seems to be under the International Convention of Human Rights, assuming Iceland joined that Convention.  If the ECHR comes down with a judgment that strongly favors the disgraced banksters, Iceland might leave the Convention, and sue the banksters for the losses they caused.

The banksters might be better advised to slink away into dark corners and change their names.


joseywales's picture

They could call a Viking "thing" and then blood eagle the bankers found guilty.

Chris88's picture

I'm sure they are scapegoats.  Not one central banker or poltician jailed, even though government caused the crisis.  In Iceland just like the US, government has succeeded in getting people to think GS/MS/JPM caused the crisis rather than the Fed and the rest of the federal government.  The lemmings bought it hook, line, and sinker.

hxc's picture

Nauseating. "Don't hate the player, hate the game" is especially apt here. If these moneyprinter fucks never pushed rates lower, then the money the banksters used to "swindle" everyone would never have existed.

Chris88's picture

Of course, the money pritning, the guarantee of deposits which prevents the old fashioned check on credit expansion via the bank run, pushing banks to make garbage loans to buy votes, having GSEs being half the damn MBS market after the money printing artificially inflated GOS margins, and the list goes on and on.  If the US had no Fed/FDIC the financial crisis never happens, yet I don't hear many people calling for them to be incarcerated.

Nobodys Home's picture

The not the government.

Chris88's picture

Holy shit, it's an accomodating fiscal instrument that's the entire purpose of it.  Confirmed by Senate, appointed by President, hands down regulations - give me a break.

cat2005's picture

No dumbass, they really caused the crisis. The government allowed the private banks to do so by creating an environment conducive to shit storms, but the private banks were the ones selling, buying and hiding the shit that later erupted into a shit storm.

Chris88's picture

Right so let's ignore the extraneous institutions that fostered the perfect environment of generating wide-scale capital allocation problems.  What do I know we were only up over 25% in 2008.

JustPrintMoreDuh's picture

Banksters vrs Humanity

AncientAviator's picture

Oh the pain and agony! Because Icelandic prisons are so horrific and so inhumane Sarcasm

opaopaopa's picture

no jews - no problems

TeethVillage88s's picture


Wow. I don't think that is a defense. What if Chelsea Manning said she didn't understand how to protect classified material? Or Susan Rice, Hillary Clinton, Wiener, Podesta, Sid Blumethal... all said well we didn't receive training on classified material?

Hm... They had Fiduciary Responsibility. They were trusted not to Embezzle funds. But... now they say they were not informed of their responsibility to protect depositors, the community, the state, the taxpayers!

hmmm... You started a fire, but didn't know you would burn down the forest or the town.

- Got it, they were hired for being charismatic, good looking, for being authority figures, for being men with families to provided for and since they had a good-enough reputation!

Chris88's picture

Did these guys commit embezzlement?

TeethVillage88s's picture

Use your senses, man.

If they did they would have been prosecuted. Perhaps you need to orientate toward responsibility, fiduciary promises.

Chris88's picture

"They were trusted not to Embezzle funds."

I was asking if they actually did do that.

1.21 jigawatts's picture

Cough up some Kosher names then! 


bobbbny's picture

In the aftermath of the 2008 financial crisis, one country stood out: Iceland was the one nation in the world which not only let its banks fail, but convicted the bankers responsible for the collapse of the country's financial system (incidentally, since then Iceland has been one of the world's economic success stories, with the economy growing over 7% last year). 

What part of that does the rest of the world not get?

Tsipras the Great's picture

If your economy falls by 50% in year 1 and then rises by 50% on year 2 are you back to the same values you had in year 0?

Asking for a friend

Also take a look at this:

silverer's picture

I hope they tack more time onto their original jail terms.

Sudden Debt's picture