Iceland’s former prime minister Geir Haarde went on trial on Monday for failing to prevent the island nation’s 2008 financial crash, the only global political leader to face prosecution over the wider crisis that engulfed the world economy.
Iceland’s top three banks all collapsed in late 2008 after years of debt-fuelled expansion. The country of just 320,000 people was forced to borrow around $10 billion from the International Monetary Fund and other lenders.
Parliament voted in 2010 to prosecute Haarde over the crisis at a special court of impeachment set up in 1905, which has so far never been used. He denies the charges.
“None of us realized at the time that there was something fishy within the banking system itself, as now appears to have been the case,” Haarde told the court in opening questions from a special prosecutor investigating crimes linked to the crisis.
Many Icelanders blame a small and closely connected group of businessmen, bankers and politicians for the crisis.
Haarde, prime minister from 2006 to early 2009, is charged with gross negligence for failing to take proper measures to prepare for an impending financial crash. He faces up to two years in prison if found guilty.
He is also accused of failing to rein in banks whose balance sheets grew to around nine times the size of the island’s economy in the years leading up to the crisis.