How Iceland stalks its banksters
In London, Barclays rigged the interest rates on interbanks loans, while in Madrid, Bankia cooked the books in order go public. How can banks be held accountable? Iceland has appointed a team of investigators that seeks out fraud and sends the perpetrators to court. Excerpts.
Prior to the economic crisis, Olafur Hauksson was police commissioner in Akranes, a small port town of 6,500 inhabitants stranded at the end of a frozen peninsula some fifty kilometres from Reykjavik. Since 2009, he tracks down and brings to justice those who played a role in the country’s economic collapse of 2008.
At the end of 2008, the Icelandic bubble burst as a consequence of the subprime crisis in the United States. Two weeks after the dramatic fall of Lehman Brothers, the country’s three major banks – valued at 923% of gross domestic product (GDP) – collapsed. The crisis swept through the island, the Icelandic krona dropped in value and no intervention could halt its downward spiral. On October 6, 2008, live on national television, the then-prime minister ended his speech by asking God to “save the island”.
Since that fateful day, Iceland has known troubled times. In 2009, the Icelanders, although not used to demonstrating over social issues, shouted their anger against the politicians and the “neo-Vikings” of finance that betrayed them. The “revolution of pots and pans” forced the resignations of the Parliament and of the conservative government.
One of the demands of that movement was that those that profited from the economic situation and who pushed Iceland into the economic abyss be brought to justice. Early legislative elections [in 2009] brought the left to power. The new prime minister, Johanna Sigurdardottir, wanted to quickly appoint a special prosecutor to investigate the causes of the crisis but candidates applying for the post were hard to find.
Olafur Hauksson, isolated in his little provincial police station, had the merit of having no relations with the elite accused of having hastened the island towards bankruptcy. Despite his total inexperience concerning matters of economic law, he was the only one to apply for the job. More than three years after his appointment, he recognises himself “only recently feeling at ease in his function”. Starting out with a team of five, he now manages over one hundred assistants.
Theirs is a double burden: “On one hand, we have to investigate all suspicion of fraud and offences committed before 2009, on the other hand, we bring the lawsuits against the suspects to court ourselves,” Hauksson explains. This is a “totally new” method which allows the investigators to “follow the case” and the judicial system to “know the cases like the back of their hand”. This is indispensable in order “to compete with the well-prepared defence attorneys”.
To ease the prosecutor’s job, the government modified the laws on banking secrecy. “Today, we have access to all information with no objections possible,” claims Olafur Hauksson. Suspected bank fraud, swindles, professional identity theft, misuse of funds, the types of investigations are wide-ranging and the three – soon to be four – interview rooms are never empty. The prosecutor says he is currently working on “a hundred priority cases”.