Iceland seeks charges over collapse

2010-09-12 11:37

Reykjavik - Iceland should bring negligence charges against former ministers over its banking collapse in 2008, a committee of the Althingi parliament said on Saturday, but was split on who should stand trial.

Five of the nine members of the committee want charges brought against former prime minister Geir Haarde, ex-foreign and finance ministers Ingibjorg Solrun Gisladottir and Arni Mathiesen, and former business minister Bjorgvin Sigurdsson.

Two members did not want charges brought against Sigurdsson and two members did not make any recommendation.

Iceland's parliament will now decide whether to bring charges. If it decides to go ahead, it would be the first time the Landsdomur - a special court set up in 1905 to try government ministers accused of crimes - has sat.

"I cannot comment on the probability of the ministers being put in front of the Landsdomur. I need time to read this report," Prime Minister Johanna Sigurdardottir told reporters.

In late 2008, Iceland's three main banks collapsed under a mountain of debt built up during a decade of overseas expansion, sending the economy into a tailspin.

In April this year, an official investigation into the banking collapse accused Haarde, central bank head David Oddsson and a number of other former officials of gross negligence.

In their report, the investigators said that as a result of rapid overseas expansion, Iceland's main banks - Kaupthing, Glitnir and Landsbanki - became too big for the island's economy and the authorities should have reacted.

The report also pointed to close ties between the banks and their main owners, which gave these people - Iceland's business elite - easy access to cash.

The parliamentary panel has since been mulling whether to recommend legal action.

The crash left Iceland dependent on overseas aid, led by the International Monetary Fund. It is also saddled with more than $5bn in debt to Britain and the Netherlands that has complicated its economic recovery plans and could hold up its negotiations to join the European Union.