REYKJAVIK (Reuters) - An Icelandic court sentenced four former Kaupthing bankers to jail on Thursday for market abuses related to a large stake taken in the bank by a Qatari sheikh just before it went under in late 2008.
Weeks before the country’s top three banks collapsed under huge debts as the global credit crunch struck, Kaupthing announced that Sheikh Mohammed Bin Khalifa Bin Hamad al Thani had bought 5 percent of its shares in a confidence-boosting move.
A parliamentary commission later said the shares had been bought with a loan from Kaupthing itself.
On Thursday, a Reykjavik district court sentenced Hreidar Mar Sigurdsson, Kaupthing’s former CEO, to five and a half years in prison while former chairman Sigurdur Einarsson received a five-year sentence.
Magnus Gudmundsson, former CEO of Kaupthing Luxembourg, was given a three-year sentence AND Olafur Olafsson - the bank’s second largest shareholder at the time - got three and a half years.
In what is by far the largest case brought by Iceland’s special prosecutor against former employees of Iceland’s failed banks, it was argued that the market had been deceived by information indicating that financing was coming directly from al Thani’s own funds.
Special Prosecutur Olafur Thor Hauksson, who called some 50 witnesses in the case, said the loans granted by the bank had the sole purpose of boosting Kaupthing shares.
None of the bankers, now based in London and Luxembourg, were present on Thursday.
The estate of Kaupthing said earlier this year it had settled a dispute with al Thani but provided no details, saying only that it had discontinued legal proceedings.
Reporting by Robert Robertsson; writing by Mia Shanley; editing by Andrew Roche