FORMER PRIME Minister of Iceland Geir Haarde is being put on trial over the country’s 2008 banking crisis.

Haarde denies acting negligently during the banking collapse and has called the case a “political farce”.  Today his lawyers called on the court to drop the charges. The court has refused twice before to dismiss them.

If found guilty, Haarde faces a maximum of two years in prison.

Although a report into the contributing factors surrounding the country’s banking collapse named four former government ministers as playing a part in it, parliament voted last year that Haarde would be the only one to face charges, the AFP reports. He is the first person being brought before a special court which hears cases involving current or former ministers.

According to the Special Investigation Commission’s report, growth in the banks’ lending “averaged nearly 50 per cent from the beginning of 2004 until their collapse… The banks’ rapid lending growth had the effect that their asset portfolios became fraught with high risk”.

It continues: “When the banking system had become far too big, relative to the size of the Icelandic economy, the governmental authorities needed to respond.” The report says that those authorities should have acted no later than 2006 to prevent the banks from collapsing, but failed to act “in a decisive way” on the issue either that year or the following year.

Icelandic MP Atli Gislason told the New York Times that “the wrong thing [Haarde] did was to do nothing. He just did nothing.”

- Additional reporting by the AP