Europe

Q&A: Icelandic ex-PM's Geir Haarde trial

Image caption Mr Haarde described the court's verdict as "absurd"

Iceland's former Prime Minister Geir Haarde has been found not guilty of negligence over the 2008 financial crisis that saw the island's economy go into meltdown.

But Mr Haarde - the first world leader to face criminal prosecution arising from the global turmoil - was found guilty of one of the four charges: not holding cabinet meetings when things turned critical.

What happened in Iceland in 2008?

Iceland was plunged into a deep recession after the country's major banks, including online bank Icesave's parent company Landsbanki, collapsed in the autumn of 2008 within days of each other.

They owed around six times the island's total gross domestic product (GDP), and when the world's credit markets dried up, they were left unable to refinance loans.

The nation's three major banks, which stretched across Europe, collapsed under billions of dollars of debt.

Iceland's economy had traditionally been based on fishing, but in the 1990s, banks boomed and expanded abroad.

In the immediate aftermath of the crisis, unemployment and inflation in Iceland skyrocketed.

A wave of public protests forced then Mr Haarde out of government in 2009.

Icesave's collapse spawned a fiery diplomatic row with both the UK and the Netherlands.

What kind of court tried Mr Haarde?

The proceedings against Mr Haarde were held at the Landsdomur court, a special body set up in 1905 to try government ministers.

It was used for the first time in Iceland's history.

It consisted of 15 members - five supreme court justices, a district court president, a constitutional law professor and eight people chosen by parliament.

What were the charges and verdicts?

Mr Haarde, 61, was accused of four charges relating to the 2008 crisis.

He was cleared of three charges: of malfeasance, of neglecting to act to reduce the size of the banking system, of not making sure that Icesave interest accounts in Britain were transferred to a subsidiary.

But he was found guilty of not holding cabinet meetings when things turned critical. The lesser charge carried no prison sentence or fine.

During the trial, Mr Haarde always denied the charges.

He could have faced up to two years in prison if convicted by the Landsdomur.

Is Mr Haarde the only politician to face prosecution?

Mr Haarde was one of four politicians blamed in a 2010 parliament-commissioned report for contributing to the country's financial collapse.

But in September of that year, parliament voted that he was the only one who should be tried on charges related to the crisis , including those concerning the collapse of Icesave.

At the time, Mr Haarde noted two ministers - Prime Minister Johanna Sigurdardottir and Foreign Minister Ossur Skarphedinsson - were not referred to the court, and nor were his former foreign, finance and business ministers.

Some have argued that Iceland's financial meltdown was tied to the global crisis and that the government could not have predicted or prevented it.

What has happened to Iceland since the 2008 collapse?

Iceland compensated its savers, but those overseas faced losing all of their money, sparking the diplomatic row with the UK.

As well as fuelling political controversy at home, the issue of repayments also created uncertainty over Iceland's economic recovery.

In November 2008, the IMF approved a $2.1bn (£1.4bn) loan to help Iceland through its financial crisis.

Eventually, the Netherlands and UK agreed to reimburse account holders in their countries and the Icelandic parliament agreed to the terms of a repayment deal in December 2009.

In March 2010, Icelandic voters overwhelmingly rejected in a referendum a proposal to pay the UK and the Netherlands 4bn euros (£3.4bn) they lost when the Icesave bank collapsed.

The majority view was that Icelandic citizens should not be made to pay so much for their banks' bad decisions.

In December 2010, the UK, Netherlands and Iceland agreed a new repayment deal .

In February 2011, Iceland's parliament voted yes to a new plan to repay the UK and the Netherlands for reimbursing 400,000 citizens who lost their savings in the collapse of Landsbanki.

For a second time, Iceland's president, Olafur Grimsson, put the deal to a public vote.

In April 2011, Icelandic voters again rejected the repayment deal in a referendum .

The dispute remains unsettled.

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