Bankers who are found guilty of market rigging, fraud and irresponsible lending should be imprisoned, a member of the Scottish Parliament has said.
Scottish Government Cabinet Secretary Keith Brown said the UK should follow Iceland’s example of jailing corrupt financiers, rather than merely imposing fines, which is the current punishment for rogue bankers in Britain.
Speaking to the BBC on Thursday, Brown praised the actions of Iceland, which jailed its top banking chiefs for criminal behavior.
Iceland, which suffered a deep recession after the 2008 crash, set up a prosecuting team to investigate 21 alleged reports of illegal banking practice.
This resulted in the chiefs of Iceland’s three biggest banks – Glitnir, Kaupthing and Landsbanki – being convicted.
When Barclays and Royal Bank of Scotland (RBS) were found guilty of rigging the Libor rate, the five international banks involved – including Barclays and RBS – were fined a total of $5.7 billion, but no British bankers were sent to prison.
Brown also condemned the decision to bail out the banks during the 2008 global financial crisis.
“Why did we bail out the banks? We bailed out the banks because we were told they are a corner stone of the system and you have to have the banking system, but the perception I think for most people was you were going in to help the banks so they could continue to lend to people and to businesses.
“Instead they didn’t. They used all the money that they got from us to build up their capital sheets. Even now they are not lending to small businesses. And there’s a stark contrast today with David Cameron being in Iceland.
“Iceland jailed the bankers. I can’t believe there’s been so little said about this: corrupting the Libor mechanism, almost the very cornerstone of the capitalist system, corrupting that and they are now looking to ease back on the regulations if they find someone else does it in future.
“These were huge crimes. Nobody has gone to jail for that … Iceland jailed the bankers when they found they were corrupt. We should have done the same thing.”
David Cameron visited the Icelandic capital of Reykjavik on Thursday to discuss the potential use of Iceland’s volcanoes to power British homes via a 750-mile pipe.
His meeting was en route to the Northern Futures Forum, which will see the leaders of Scandinavia, Iceland, the Baltic States and the UK gather to discuss trade, technology and creative innovation.