Hreiðar Már Sigurðsson, the former CEO of Kaupþing Bank, was convicted in Reykjavík District Court today for insider fraud, Kjarninn reports. Namely, he was found guilty of selling his shares in the bank to his own company. This is now Hreiðar Már’s third conviction related to financial crimes during his tenure at Kaupþing, for which he has, thus far, earned a cumulative sentence of seven years in prison.
Per the findings of the court, Hreiðar Már bought shares in Kaupþing for ISK 246 million [$2,019,870; €1,778,819] on August 6, 2008. That same day, a private limited company in his ownership purchased the shares for ISK 572 million [$4,696,223; €4,135,881], funded by a loan that the company had received from Kaupþing. The resulting ‘profit’—a difference of ISK 326 million—was then transferred to Hreiðar Már’s personal bank account later that month. The loan taken by the private limited company was supposed to be paid back in 2011, however, by then, Iceland’s banks—including Kaupþing—had long-since crashed and the company had gone bankrupt.
The indictment against Hreiðar Már made a particular point of emphasizing that when this sale took place, stock prices in Iceland were dropping rapidly. Iceland’s banking crisis is typically dated to October 6, 2008, the day that Former Prime Minister Geir H. Haarde notified the nation of the gravity of Iceland’s financial situation in a televised address. Over the next few days, Iceland’s banks crashed one by one.
Hreiður Már was tried in this fraud case alongside Guðný Arna Sveinsdóttir, Kaupþing’s former chief financial officer. Guðný Arna was charged with participating in the commission of the crime, such as instructing lower-level employees on the settlement of securities transactions and loan distribution to Hreiðar Már’s company. However, Guðný Arna was acquitted of all charges in this matter.
Prosecutor Finnur Þór Vilhjálmsson requested that the court levy an additional sentence of 12 to 15 months against Hreiðar Már for this fraud conviction, which he said represented another serious breach of trust and also afforded him significant personal gains. The District Court did not sentence Hreiðar Már to prison time for his crime, however, as he has already been sentenced to seven years in prison, which exceeds the maximum sentence allowances for economic crimes.