Glitnir Bank chiefs held in Iceland embezzlement investigation

Ólafur Þór Hauksson

Lárus Welding, the former CEO of now-defunct Icelandic bank Glitnir, is one of three people arrested and remand in custody yesterday as part of the Special Prosecutor’s investigation into Glitnir’s working methods before the 2008 banking crash.

RÚV quotes what it calls ‘reliable sources’ as saying that a court has already approved the Prosecutor’s request for custody while the investigation continues and that Lárus has therefore been put behind bars for a period not shorter than seven days.

At least three were arrested yesterday in connection to the investigation into the trade in Glitnir and FL Group shares before the collapse. Embezzlement is among the suspected crimes committed. Between ten and twenty people were also interrogated yesterday as part of the Special Prosecutor’s surprise actions. Special Prosecutor Ólafur Þór Hauksson told media the investigation is very extensive.

“We have opened several new cases this morning and started interviewing people today. The actions began at around 07.00 this morning (Wednesday) and are ongoing,” Ólafur said.

The actions in the Glitnir investigation yesterday are connected to a total of ten separate cases — nine of which began yesterday. The investigation is broadly about Glitnir’s systematic purchase of its own shares and its dealings with FL Group shares. Loans provided to several different parties in 2007 and 2008 are under investigation — loans amounting to ISK 37 billion (EUR 229.2 million at today’s rate — but more at the time).

Investigators suspect many large cases of embezzlement and violations of laws governing share trading, financial companies, accounting and bookkeeping.

The Special Prosecutor took on the investigation on the recommendation of both the FME national financial regulator and the Glitnir Bank resolution committee. It is thought that the interrogations which began yesterday will continue for several days.

60 investigators took part directly in yesterday’s operation.