Iceland's Former PM On Trial For Financial Crisis
MELISSA BLOCK, HOST:
Now, an unprecedented prosecution stemming from the global financial crisis of 2008. Today, the former prime minister of Iceland became the first world leader to go on trial over the financial meltdown. Geir Haarde is charged with gross negligence for failing to put financial safeguards in place. Iceland's three main banks collapsed in the fall of 2008, throwing the country into a severe recession.
Ingo Sigfussen, with the Icelandic National Broadcasting Service, has been following the case against former Prime Minister Haarde.
Well, the charges are basically that his negligence caused or made the financial crisis in Iceland worse; that he didn't so much do something to cause the crisis but rather that he did not do anything too avert it; that he should have been aware of the brewing storm much sooner than he seemed to have been.
Should have been aware of it and taken steps to prevent it.
Indeed, he should have taken steps to prevent it. He should've seen that the Icelandic banks had grown way out of proportion. He should have taken note of indications that showed you, in retrospect at least, that things were heading toward the abyss.
When you say that the banks have grown out of proportion, why don't you give us a scale of just the scope of the collapse and how big they'd grown.
INGO SIGFUSSEN: Well, a figure that has been floating around is that they had grown to approximately nine times the size of Iceland's GDP, which is just an amount that probably doesn't say anything to anyone except that it's extremely large. I don't know how many condos that would buy you, but quite a few.
(SOUNDBITE OF LAUGHTER)
BLOCK: Quite a few. Well, the former prime minister took the stand today, said my conscience is clear. What's the defense going to be?
SIGFUSSEN: Well, basically, the essence of what he has said today is that he was not aware that up until even the day after the collapse of Lehman Brothers, the heads of the large Icelandic banks and, indeed, himself and others believed that the banks had enough cash and were strong enough to withstand whatever was about to hit them. Less than a month later, we had emergency law nationalizing those three banks and, well, the rest is history really.
BLOCK: Let's talk a bit about the venue for this case. It's a court, I gather, that's never been used before.
SIGFUSSEN: Indeed. It is the Landsdomur or the high court impeachment. It was established in 1905 and its mandate is to handle cases where ministers of government have or are suspected of criminal behavior. It's never been used before. There's never been a reason to, and there is doubt as to whether it's ever going to be used again.
BLOCK: And what could happen with this case - the prosecution of former Prime Minister Haarde? What kind of sentence could he face if he is, in fact, found guilty?
SIGFUSSEN: Indeed, the worst-case scenario for Haarde is two years in prison. It could of course be much less. Of course, he could also be found innocent. I think the general public is not least interested in hearing what he has to say. People are still looking for closure. They want information. They want to know what exactly happened. How could this happen? Who messed up? They were looking for closure more perhaps than they're looking for somebody such as Haarde to land in jail. Although, I'm sure, there are quite a few who would be very happy to see him and several other people spend some time behind bars.
BLOCK: Well, three-plus years after the economic collapse there in Iceland, how is the economy doing now?
SIGFUSSEN: Well, certainly better than it was almost four years ago or three and a half years ago. We have - we see GDP growth. A lot of people are still struggling. Quite a few people have left the country, have gone abroad, to work, to try to pay off their debt. But things are moving forward, slowly but surely.
BLOCK: Better than fast and crazy, right?
(SOUNDBITE OF LAUGHTER)
SIGFUSSEN: Well, you know, given the experience - sometimes, you know, you do sit down and have a glass of wine and wonder whether, you know, maybe it would be nice if we could have 2007 back, when everything was hunky dory and we could go abroad twice a year and not worry too much about things. But 2007 will never be back.
BLOCK: Those unsustainable boom times.
BLOCK: Well, Ingo Sigfussen, thanks so much for talking to us about it.
SIGFUSSEN: My pleasure.
BLOCK: Ingo Sigfussen is deputy head of news with RUV, that's the Icelandic National Broadcasting Service. We were talking about the start of the trial today of former Prime Minister Geir Haarde on charges of gross negligence related to the 2008 financial crash.
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