Fellow defendants included Kaupthing CEO Hreidar Maar Sigurdsson, who also lives in Luxembourg, the bank’s chairman Sigurdur Einarsson and board member Olafur Olafsson.
The four bankers claim that the Supreme Court in Iceland had not been impartial on account of the positions held by family members of one of its judges and that they had not been granted access to all of the prosecutor’s documentation. They all were sent to prison for sentences of between 6 months and 5 years for their role in the collapse of the bank.
The original case dates back to the dawn of the financial crisis when Kaupthing issued a statement saying that a company owned by Sheik Mohammed bin Khalifa Al Thani, a member of Qatar’s royal family, had purchased 5.01% of the bank’s share capital. But, Kaupthing, had, via convoluted loans involving companies in the British Virgin Islands and Cyprus, provided a loan for the entire purchase price of the shares, which the bank itself had owned prior to their sale. Another loan of $50 million to another of Khalifa Al Thani’s companies had been disbursed into an account with Kaupthing’s Luxembourg subsidiary.
But it turns out there was reason to doubt the impartiality of one of the judges who ruled on the case in Iceland’s Supreme Court. His wife had been on the board of Iceland’s Financial Supervisory Authority while it was investigating Kaupthing and his son had been employed as the bank’s head of legal after its collapse and had brought civil cases against two of the defendants.
The European Court of Human Rights ruled that although they no longer held any position in the bank when the case was before the Supreme Court, the applicants could legitimately harbour doubts as to the judge’s objectivity, and that this violated Article 6 of the Convention on Human Rights.