Iceland Mag

3 Reykjavik

Iceland Mag


Kaupþing bosses found guilty of massive embezzlement of bank funds

By Staff

  • Guilty of embezzlement and cover-up From the left: Hreiðar Már Sigurðsson CEO of Kaupþing, Magnús Guðmundsson CEO of Kaupþing Luxembourg and Skúli Þorvaldsson, investor. Photo/

Hreiðar Már Sigurðsson, the former CEO of failed Icelandic bank Kaupþing, Magnús Guðmundsson the former CEO of Kaupþing Luxembourg and investor Skúli Þorvaldsson were found guilty earlier today by the Reykjavík District Court for embezzlement and cover-up.

Guilty of embezzlement and cover-up
The local news site reports that Hreiðar Már and Magnús were found guilty of having fraudulently transferred 6 billion ISK (48.2 million USD/42.4 million EUR) to Marple Holdings, a company owned by Skúli, and for having purchased Kaupþing bonds from the same company at above market value. The District Court ruled that through these transactions Hreiðar Már and  Magnús embezzled nearly 8 billion ISK (63 million USD/56 million EUR) from Kaupþing by transferring them to Marple holdings. Skúli was sentenced for having covered up the crime as the listed owner of Marple holdings. At previous stages of the case he had denied any knowledge of the company.

Hreiðar was sentenced to six months in prison, Magnús to 18 months and Skúli to six months. The three were also sentenced to pay the estate of Kaupþing damages. The fourth defendant, Guðný Arna Sveinsdóttir, the former CFO of Kaupþing, who had been charged with participation in the embezzlement was acquitted by the District Court.

A track record of fighting corruption didn‘t disqualify a judge
The lawyers of Hreiðar Már had called for one of the judges in the case to recuse himself on account of having liked Facebook posts and articles critical of the former bosses of the failed banks, and for being a member of the board of a anti-corruption NGO.

Read more: Former CEO of Kaupþing bank wants judge to recuse himself on account of Facebook likes and work for anti-corruption organization

Hreiðar Már argued that his work for the anti-corruption NGO Gagnsæi, which has applied to be the Icelandic chapter of Transparency International, made it clear the judge could not be considered impartial. The Reykjavík District Court denied this request.

The list of jailed bankers keeps getting longer
Hreiðar and Magnús are already serving 5.5 and 4.5 year sentences for market manipulation. Earlier this summer the two were sentenced by the Reykjavík District Court to prison in a separate market manipulation case, along with five other top Kaupþing bosses. Yesterday three top managers of failed bank Landsbankinn were found guilty by the Supreme Court of market manipulation and breach of fiduciary duty.

Read more: Bankers Behind Bars: A guided walking tour through the collapse of Iceland's banking system in 2008

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