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Europe

Former PM goes on trial over role in financial crisis

Text by News Wires

Latest update : 2012-03-06

Iceland’s former Prime Minister Geir Haarde, the first political leader to face criminal charges in connection with the 2008 financial crisis, goes on trial Monday over his role in the small island-nation's banking collapse.

AP - Iceland’s former prime minister faces trial Monday as the first world leader criminally charged over the 2008 financial crisis that left the world teetering on the edge of financial disarray.

Geir Haarde became a symbol of the get-rich bubble economy for Icelanders who lost their jobs and homes after the country’s main commercial bank collapsed, sending its currency into a nosedive and inflation soaring.

He is accused of negligence in failing to prevent the financial implosion from which the small island country is still struggling to emerge.

Haarde’s trial - the culmination of a long fight by the politician to avoid prosecution - marks a new chapter in the aftermath of the meltdown: accountability.

The former prime minister has rejected the charges, calling them “political persecution” and insisting he would be vindicated when he appears at the Landsdomur, a special court being convened for the first time in Iceland’s history to try him.

Legal experts say he has a strong chance of beating the charges, because of the strength of his legal team, growing sympathy for a politician alone in shouldering blame, and because the court’s structure - laid out in 1905 - is flawed because it allows lawmaker, not lawyers, to press charges.

In the crisis’s immediate aftermath, as unemployment and inflation skyrocketed, many sought to affix blame for the havoc across the 330,000-strong nation. A wave of public protests forced Haarde out of government in 2009.

Some have argued that Iceland’s financial meltdown was tied to the global crisis, and that the government could not have predicted or prevented it. But a parliament-commissioned report put much of the blame on Haarde and his government, saying that officials “lacked both the power and the courage to set reasonable limits to the financial system.”

It was up to lawmakers whether to indict those officials. After heated debate, Haarde was referred to the special court. Legal experts say such a vote makes the road ahead particularly rocky.

“This whole scenario has demonstrated that we need to change the system,” said Robert Spano, law professor at the University of Iceland.

Politicians are not trained in determining if there is an adequate basis for prosecution, said Spano. The financial crisis - which he likened to “a national natural disaster created by humans” had emotional connotations for Icelanders and politicians alike, which could have affected the vote, Spano added.

The vote exposed a deep divide among Icelandic lawmakers. Ultimately, Parliament voted 33-30 to pursue charges again Haarde, but not against three other members of his government.

Haarde pleaded not guilty and has sought to have all charges dismissed, calling the proceedings “preposterous.” He has insisted Icelanders’ interests were his “guiding light” and blamed the banks for the crisis, saying government officials and regulatory authorities tried their best to prevent the crisis and that his “conscience is clear.”

A last ditch attempt by Haarde’s independence party to have the charges dropped was rejected last week in Parliament and the case was given the green light to move forward Monday.

Robert Wade, a professor of political economy at the London School of Economics, argued for “accountability at the top of the system.”

“In the public mood, there’s a fair bit of sympathy that it is somehow unfair to put Haarde on trial on his own,” Wade said, noting that he expects Haarde to beat the charges. “But it’s better that somebody go on trial than nobody, because there was very clear ministerial irresponsibility.”

The special court will consist of 15 members - five supreme court justices, a district court president, a constitutional law professor and eight people chosen by parliament. The court was founded to deal with criminal charges against Icelandic government ministers.

Date created : 2012-03-05

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