STRASBOURG, France (CN) – Owning stock in a collapsing Icelandic bank may have affected the impartiality of judges in a trial of one of the bank’s top executives, the European Court of Human Rights found Tuesday.
“The impartiality of the Supreme Court could have been open to genuine doubt,” the seven-judge panel wrote in their decision concerning the trial of former Landsbankinn executive Sigríður Elín Sigfúsdóttir for fraud and market manipulation in one of the first cases in Iceland concerning the 2008 financial crisis.
In 2015, Sigfúsdóttir and two colleagues were charged with fraud in the so-called Ímon case. Just before its collapse in 2008, the bank loaned 5.2 billion Icelandic krona ($42 million) to Ímon, a holding company, which was then used to purchase shares in the bank, making it appear as though the bank had just gotten a new infusion of capital.
Only one of the three defendants, Steinþór Gunnarsson, the bank’s director of proprietary trading, was convicted by the Reykjavík District Court. But on appeal, the Iceland Supreme Court convicted both Sigfúsdóttir and her other co-defendant, CEO Sigurjón Árnason, for their involvement in the scheme. Sigfúsdóttir was sentenced to 18 months in prison and ordered to pay 15 million krona ($116,000) in restitution.
The Nordic island nation with a population of 360,000 became a major financial hub in the run-up to the 2008 financial crisis. Landsbankinn, created by an act of Icelandic parliament in 1886, was one of the largest commercial banks in the country. Three weeks after the collapse of U.S. investment bank Lehman Brothers in 2008, Landsbankinn was taken over by the Icelandic government.
In 2016, Icelandic media reported that three of the five judges who decided Sigfúsdóttir’s case – Markús Sigurbjörnsson, Eiríkur Tómasson and Viðar Már Matthíasson – owned stock in Landsbankinn and lost money when the bank was taken over. These assets were not declared to the Icelandic authorities.
Sigfúsdóttir requested that the Supreme Court reconsider her case and she also brought a complaint before the Strasbourg-based European Court of Human Rights, alleging her right to a fair trial had been violated. Founded in 1959, the Court of Human Rights is an international court established by the European Convention on Human Rights that handles cases on human, civil and political rights.
The court concluded on Tuesday that while there was no indication that Judge Matthíasson “displayed hostility or ill will towards the applicant for personal reasons,” his financial loss was considerable, nearly 1.5 times his annual salary, and thus could have had an impact on his verdict.
Judge Sigurbjörnsson was found to have inherited his stock and sold it in 2007, before the bank collapsed, while Judge Tómasson only owned 1.7 million krona ($13,523) worth of stock, which was below the reporting threshold and too small of a sum to be considered influential.
Sigfúsdóttir asked the court to award her 708.5 million krona ($5.5 million) in damages, but the judges decided that was excessive and instead awarded her 12,000 euros ($13,000) in damages and 5,000 euros ($5,400) for expenses.
Her request for a retrial before the Icelandic Supreme Court is still pending.