March 4, 2021

Memo From Iceland: Ex-Premier Faces Charges for Iceland’s Fiscal Woes

The bankers, surely: a government-appointed special prosecutor has named more than 200 people as official suspects in a case that appears bound to result in criminal charges. The politicians, certainly: voters expressed their disgust with the long-governing Independence Party by ousting it in the 2009 elections.

But the desire for justice and retribution is deep and complicated, and Iceland has taken an unusual step in the strange annals of the world financial crisis: it is pursuing criminal charges against a politician, former Prime Minister Geir Haarde, for his government’s failure to avert the catastrophe.

The formal indictment against Mr. Haarde, delivered by a sharply divided Parliament, charges him with “violations committed from February 2008 through the beginning of October of the same year, by intent or gross neglect, mostly violations against the laws of ministerial responsibility.” He showed, it continues, “serious nonfeasance of his duties as prime minister in the face of major danger looming over Icelandic financial institutions and the state treasury.”

His great sin was one of omission, said Atli Gislason, a member of the Left-Green Party in Parliament and the leader of the commission that prepared the case against Mr. Haarde.

“The wrong thing he did was to do nothing,” Mr. Gislason said. “He just did nothing.”

If found guilty by a special court, Mr. Haarde, a stalwart of the conservative Independence Party who served as prime minister from June 2006 until February 2009, faces a maximum sentence of two years in prison.

In some ways, the case was meant to serve as a way for Iceland to hold its leaders to account and then move on. But if anything, even as Iceland’s economy is starting to show signs of recovery, Mr. Haarde’s indictment has made a cynical population even more suspicious. Recent polls show that trust in Parliament is at an all-time low.

“There’s been a change in atmosphere,” said Kristrun Heimisdottir, an adviser to the minister of economic affairs. “There was so much anger and so much thirst to see someone hang, but now people are saying, ‘Is this really fair? Is this really all Geir’s fault?’ ”

The problem, said Robert R. Spano, a professor and dean of the law faculty at the University of Iceland, is that questions of law and politics have gotten mixed up.

“When you have a situation with lots of anger, decisions that should be taken objectively and carefully tend to be contaminated by politics and emotion,” he said in an interview.

At a hearing on Monday, Mr. Haarde’s lawyers will argue that the case should be dismissed on numerous procedural grounds, including that the charges have never been properly investigated and that the indictment is too vague to meet legal standards. If their motion fails and Mr. Haarde exhausts his pretrial appeals, the case would be heard early next year by a never-before-convened court for cases involving government malfeasance.

Mr. Haarde, 60, said he had committed no crime, that the events that led to the crash were far too complicated to be distilled to a crude political prosecution of a single person, and that he was certain that he would be vindicated.

“With hindsight, it’s hard to disagree that we could have done some things differently,” he said in an interview. “But this is a political trial cloaked as a criminal prosecution. My political enemies are trying to go after and punish me and my party.”

Even some legislators who voted to indict Mr. Haarde say they are troubled by the way the case has unfolded. Last fall, a special parliamentary commission investigating the crash dusted off an old law and identified four people, Mr. Haarde and three of his ministers, who could be held criminally responsible.

But after a series of political maneuvers that left normally collegial lawmakers shouting furiously at one another on the floor of Parliament, the lawmakers voted 33-30 to indict only Mr. Haarde.

“This is Parliament deciding that we’re going to punish one person who happens to be former head of the conservatives — we’re not going to prosecute our people,” said Jon Danielsson, an expert on Iceland at the London School of Economics. “So it becomes a political prosecution. I think it’s a major mistake. Either do all of them, or none.”

Many Icelanders agree.

“He was one of the architects of the collapse in Iceland; there’s no doubt about that,” said Arnar Thorisson, a 42-year-old cinematographer who was strolling through downtown Reykjavik the other day. “The party he came from ruined Iceland. But I would want to see more people prosecuted, not just him.”

If any politician is more culpable than others, many people believe it is David Oddsson, Mr. Haarde’s old friend and mentor, who was prime minister from 1991 to 2004. During his tenure, Iceland privatized its banks and liberalized the banking laws, paving the way for a brief period of prosperity and the banks’ risky and ultimately self-destructive behavior.

After Mr. Oddsson left politics, he became chairman of the Icelandic Central Bank, in charge of overseeing the system he had helped create. He was forced out of that job in 2009 and is now editor in chief of Morgunbladid, one of Iceland’s largest newspapers and a champion of the Independence Party.

“He is the king, and we are sort of hanging the prince,” said Eirikur Bergmann, director of the Center for European Studies at Bifrost University in Iceland. “This is also why people have ill feelings about this, because in many ways this is the wrong guy before this court.”

But regardless of the outcome, a trial may do little to assuage Iceland’s anger.

“We’re still far away from coming to terms with the events in a balanced manner,” said Gunnar Helgi Kristinsson, a political science professor at the University of Iceland. “However it ends, I’m sure it will be a bad thing. If he’s not guilty, people will consider it typical of a system where nobody is held accountable. On the other hand, if he is guilty, he’ll be standing there almost as if he’s the only one who’s responsible. And everyone knows that’s unfair.”

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