More bankers behind bars: Three Landsbankinn bosses sentenced to prison

By Staff |Oct 9 2015

Sigurjón Þ. Árnason, former CEO of failed Landsbankinn, Elín Sigfúsdóttir, former director of corporate lending and Steinþór Gunnarsson, former director of brokerage were sentenced to serve time in prison by the Supreme Court of Iceland yesterday, October 8.

Market manipulation and fraudulent loans
The three were sentenced for breach of fiduciary duty and market manipulation. Sigurjón and Elín had previously been acquitted by the Reykjavík District Court while Steinþór had been given a nine-month suspended sentence. The Supreme Court sentenced Sigurjón to three years in prison and Elín to 1.5 years. Steinþór was sentenced to nine months in prison.

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

The case revolved a 5.2 billion ISK loan (41 million USD/37 million EUR) to a company called Ímon on 30 September, just days before Landsbankinn and the entire Icelandic financial system collapsed. The loan paid for the purchase of shares in Landsbankinn. The Supreme Court found that the Sigurjón and Elín arranged for the loan to buy over-prized shares, despite the lack of adequate collateral. 

The three Landsbankinn bosses From the left: Steinþór Gunnarsson, Elín Sigfúsdóttir and Sigurjón Þ. Árnason. Photo/visir.is

Sigurjón was then sentenced along with Sigurjón for having misrepresented the purchases of Landsbankinn shares by Ímon and a related company Azaela Resources in an official notification to the Icelandic Stock Exchange. The purchases were made to look like Landsbankinn was receiving a new equity infusion when in reality the share purchase was fully financed with a loan from the bank itself.

The three will join three Kaupþing bosses already behind bars
Earlier this year the Supreme Court sentenced three top managers of Kaupþing to prison for market manipulation and breach of fiduciary duties. Several cases against the Landsbankinn and Kaupþing bosses are still finding their way through the court system, as are cases against the managers of Glitnir, the third largest Icelandic bank prior to the financial collapse of 2008.

Read more: Former heads of failed bank Kaupthing receive the heaviest jail sentences for financial fraud in Iceland’s history

Sigurjón Þ. Árnason blasted the ruling, describing it as "inexplicable" and "flying against the rule of law", but refused to comment further on the case, the local TV station Stöð 2 reported.