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Iceland - Corruption

Iceland is consistently ranked in independent surveys as one of the world's least corrupt societies. Isolated cases of corruption do occur, but are not an obstacle to foreign investment in Iceland or a recognized issue of concern in the government. In 2015 Iceland tied for 13th place out of 168 countries in Transparency International’s Corruption Perceptions Index. In the wake of the financial collapse in Iceland in 2008, a code of conduct was established and ratified for public employees in 2013.

Most public officials were not subject to financial disclosure laws. The law requires members of parliament and government ministers who are not members of parliament to report their financial interests publicly on parliament’s website and to update this information within one month of receiving new information. As of the beginning of November, not every member had done so. There are no criminal or administrative sanctions for noncompliance.

The law provides for public access to government information, and the government provided effective access for citizens and noncitizens, including foreign media.

In the 2007 campaign, the Progressive Party was hamstrung by the public's perception that the party was rife with cronyism that was just shy of outright corruption. In what became an emblematic case, about a month before the election the Althingi granted Icelandic citizenship to the soon-to-be daughter-in-law of Minister of Health Jonina Bjartmarz under circumstances in which political connections seemed to many to be the deciding factor. Given its command of the Ministry of Industry and Commerce, the party also took the brunt of controversy over expansion in the aluminum sector and resulting environmental concerns.

On September 5, 2011, the trial of Geir Haarde, former Prime Minister of Iceland who served as his country’s prime minister from 2006 to 2009, opened in the Landsdomur, a 15-member special court established to try criminal cases involving Cabinet ministers. Haarde faced charges of intentional or gross negligence in failing to prevent the country's 2008 financial crisis, in which the banking system collapsed. There appear to be five counts of indictment brought against Haarde:

1. serious nonfeasance of his prime ministerial duties in the face of major danger looming over Icelandic financial institutions and the State Treasury, a danger that he knew of or should have known of and would have been able to respond to by initiating measures … [to avoid] foreseeable danger to the fortunes of the State;
2. failure to take initiative on either his own measures or proposals regarding them, so that there would have been a comprehensive analysis of the financial risk by the administrative system;
3. neglecting to take active measures for the State to reduce the size of the Icelandic banking system;
4. failure to have followed up on and made sure that Landsbanki's Icesave accounts in Great Britain were being actively transferred to a subsidiary; and
5. neglecting to ensure that the work of a government consultative group on financial stability and preparedness, set up in 2006, was more purposeful and results-oriented.

Haarde was reportedly the first world leader to face charges in relation to the global financial crisis. He declared himself “innocent of all charges,” however, and stated “[t]his whole affair is a farce … instigated by three members of the current parliament who have now succeeded in holding the first political trial in the country's history." In April 2012, Haarde was found not guilty of all but one charge—failing to keep his cabinet informed of developments—for which no penalty was levied. Haarde appealed that conviction. Geir H. Haarde took over as Iceland’s ambassador to the United States on January 1, 2015. It’s the first ambassadorial post for Haarde.

In a decision issued by the Reykjavik district court on December 12, 2013, two bank directors were among the parties imprisoned for fraud in connection with the banking crisis of 2008. The men were part of a scheme in which Sheikh Mohammed Bin Khalifa Bin Hamad Al Thani of Qatar made a five percent share purchase in the Kaupthing Bank with money borrowed from the bank itself. The Icelandic banking crisis led to the establishment of a Special Investigation Commission whose mission was to investigate the dealings of the Icelandic banks and Members of the Iceland Parliament.

The so-called Panama Papers are documents that were leaked from the Panamanian law firm Mossack Fonseca detailing how the rich and powerful park their assets to avoid scrutiny. Among those named in the year-long probe of millions of documents by the International Consortium of Investigative Journalists: 12 current or former heads of state, including Iceland’s Prime Minister Sigmundur David Gunnlaugsson, who resigned 05 April 2016 amid questions of a conflict of interest regarding his holdings.

Prime Minister Sigmundur David Gunnlaugsson quit after the leaked files from a Panamanian law firm showed that his wife, Anna Sigurlaug Palsdottir, owns a company in the British Virgin Islands that has more than $4 million in claims against the country's collapsed banks. He quit ahead of a planned no-confidence vote in parliament, with the ruling Progressive Party naming its deputy leader, Sigurdur Ingi Johannsson, to take over as the country's new leader.

Gunnlaugsson said his wife's overseas assets were taxed in Iceland, but his opponents said he should have disclosed his wife's ownership of the company since the government is involved in settling claims against the bankrupt financial institutions.Thousands of Icelanders protested in Reykjavik outside parliament Monday, hurling eggs and bananas and demanding Gunnlaugsson's ouster. Gunnlaugsson and his wife set up the company with the help of the Mossack Fonseca, the law firm at the center of the massive leak of 11.5 million documents from its files.