REYKJAVIK (Reuters) - Two former executives at an Icelandic bank
which collapsed in the 2008 financial meltdown were sentenced to jail on
Friday for fraud which led to a 53 million euro loss, in the first
major trial of Icelandic bankers linked to the crisis.
All three
of the small North Atlantic island's top banks collapsed in quick
succession in October 2008 due to big debts incurred during a rapid
overseas expansion.
Glitnir was the first to fall after the collapse of Lehman Brothers caused international credit markets to freeze up.
A
Reykjavik court sentenced Glitnir's former chief executive, Larus
Welding, and former head of corporate finance, Gudmundur Hjaltason, each
to nine months in jail, of which six months were suspended for two
years. They had denied the charges.
Prosecutors said the two
approved a loan to a company which owned shares in Glitnir so that the
company could in turn repay a debt to Morgan Stanley.
The
decision, taken outside the regular decision-making process, meant
Glitnir was too exposed to the company and cost the bank at least 53.7
million euros (43 million pounds), the prosecution said.
The
sentence was less than the jail terms of at least five years demanded by
Iceland's special prosecutor, who is looking into alleged wrongdoing
connected to the crisis.
"We have a conviction, which is of course
the main thing," prosecutor Holmsteinn Sigurdsson told reporters
outside the courtroom when asked whether he was disappointed with the
length of the sentence.
The special prosecutor is also looking
into alleged wrongdoing linked to the collapse of the other two former
top banks, Landsbanki and Kaupthing.
(Reporting by Omar Valdimarsson; Writing by Patrick Lannin in Stockholm; Editing by Pravin Char)
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