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Ex-Glitnir Executives Get 9-Month Jail Sentences for Fraud

Larus Welding, the former chief executive officer of failed Icelandic lender Glitnir Bank hf, and Gudmundur Hjaltason, an ex-director at the bank, were sentenced to nine months in jail for fraud, a court ruled.

The executives were sentenced today by the Reykjavik District Court. They were indicted 12 months ago for having “misused their position and grossly endangered the bank’s funds” by lending 102 million euros ($134 million) to Milestone ehf without guarantees or collateral, the prosecutor said then.

The executives are the first bankers from Iceland’s three-largest lenders to be sentenced to jail for activities related to the island’s financial and economic collapse in 2008. Glitnir was the first of Iceland’s biggest banks to fail, triggering the biggest recession in six decades and sending the krona down as much as 80 percent against the euro on the offshore market.

Welding was this month also indicted on separate charges for his role in approving a 6 billion-krona ($47 million) loan to holding company FS38 ehf.

Welding and Hjaltason couldn’t be immediately reached through their lawyers, Ottar Palsson and Thordur Bogason, respectively.

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