ICELANDIC authorities today arrested Hreidar Mar Sigurdsson, the former chief executive of the collapsed Kaupthing bank, making him the first high profile banker to be detained in the wake of the Nordic country's financial crisis.
The special prosecutor investigating the Icelandic banking crash of October 2008 said Mr Sigurdsson was suspected of falsifying documents and breaking laws on stock trading for personal gain.
Mr Sigurdsson is being held in police custody until a bail hearing tomorrow at the Reykjavik District Court.
Prosecutor Olafur Thor Hauksson said he planned to ask that the former banker be kept in custody for two weeks to prevent the possibility of him tampering with evidence or interfering with the investigation.
Mr Hauksson was appointed by Iceland’s post-crisis government to investigate whether there was any criminal activity in the lead up to the banking crash that crippled Iceland’s economy, sent its currency into a tailspin, frightened off foreign investors and forced out the country’s leaders of the time.
Britain’s Serious Fraud Office is still conducting its own investigation into suspected fraud at Kaupthing, with a focus on efforts by the bank to attract British investors to its “high yield” deposit account, Kaupthing Edge.
About 30,000 British individuals, companies and organisations made an investment.
When it opened the investigation in December, the British agency said that it would work with the Icelandic special prosecutor because it also looked closely at a series of decisions that appear to have allowed substantial value to be extracted from the bank in the weeks and days before its collapse.
The demise of Kaupthing, one of several Icelandic banks to collapse, sparked a political row between Reykjavik and London because Kaupthing had failed after the British Government invoked anti-terrorist legislation to freeze the UK assets of another collapsed Icelandic bank, Landsbanki.
Britain’s Treasury said that the move was necessary to ensure the money that British savers had placed in the bank would not be whisked back to Iceland.
But Iceland’s prime minister at the time, Geir Haarde, criticised the move as an “unfriendly act” and blamed the decision for inspiring panic that led to the subsequent collapse of Kaupthing.
A cross-party committee of British lawmakers was later critical of London’s handling of the situation, saying that the government’s statements on the ability and willingness of Reykjavik to compensate non-Icelandic account-holders was “ultimately unhelpful”.
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