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Iceland's former prime minister demands dismissal of charges against him in bank collapse

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REYKJAVIK, Iceland - Geir Haarde, Iceland's former prime minister, has demanded that a special court dismiss charges that he was negligent before and during the collapse of the nation's banks.

The special court, convened for the first time in Iceland's history to conduct a trial on charges against a government minister, could rule as early as Wednesday but set no deadline.

Haarde appeared in court on Tuesday to be formally charged. He pleaded not guilty, and his lawyer argued that the case should be dismissed because the court was not impartial.

"I plead not guilty of all the charges," Haarde told the court. "During my time in government I strove to solve all of my projects with integrity and with the good of the people as my guiding light."

The 60-year-old former leader is the first person ever brought before the Landsdomur, a special criminal court created in 1905 to deal with charges against Icelandic government ministers.

He could face a two-year prison sentence, if convicted.

Iceland's parliament, the Althingi, voted in September to indict Haarde for allegedly failing to prevent the 2008 financial crisis that sparked protests, toppled the government and brought the economy to a standstill. However, it voted not to pursue charges against three other members of the government.

Haarde's lawyer, Andri Arnason, argued that parliament — which appointed the prosecutor — had compromised the integrity of the court by extending the terms of eight of the 15 judges.

The court consists of five supreme court justices, the president of the district court, a constitutional law professor and eight people chosen by parliament every six years.

Sigridur Fridjonsdottir, the prosecutor, disputed Arnason's argument, saying that parliament had extended the terms of the eight judges simply to maintain continuity in handling the case.

The first count of the indictment accuses Haarde of failing to initiate measures, legislation or instructions between February and October 2008 "for the purpose of avoiding foreseeable danger to the fortunes of the state."

The count also faults him for failing to act to reduce the size of Iceland's banking industry, whose assets had swollen to nine times the size of the tiny nation's gross domestic product. A Special Investigation Commission had reported that the country's three leading banks — Glitnir, Kaupthing and Landsbanki — overwhelmed the financial system when they ran into trouble with excessive risk-taking.

The second count accuses Haarde of failing to uphold his duty under the constitution to hold ministerial meetings on important issues.

"During this period there was little discussion at ministerial meetings of the imminent danger; there was no formal discussion of it at ministerial meetings, and nothing was recorded about these matters at the meetings," the indictment said.

Haarde's government collapsed in 2009 during a wave of public protests, and he decided not to seek re-election to the Althingi while he was being treated for esophageal cancer.

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