The leader of Iceland's government when the nation's banking system collapsed was convicted on Monday of one criminal charge, cleared on four others and faces no punishment, a special court announced.

The court also said the state would pay Geir Haarde's expenses for defending the case.

The 15 members of the Landsdomur, a special court founded in 1905 to deal with criminal charges against Icelandic government Ministers, returned a 500-page verdict, but only a brief summary was announced in public.

Iceland's banking sector ballooned to nine times the tiny nation's annual gross domestic product in a decade of boom, before collapsing under the weight of debt in October 2008.

The country's three main banks collapsed in a single week.

Testifying on March 5, Mr. Haarde said neither he nor financial regulators knew the real state of Icelandic banks' precarious finances until they collapsed.

“The bankers did not realise that the situation was as dire as it was,” Mr. Haarde said. “It was not until after the crash that everyone saw it coming.”

“I reject all accusations and believe there is no basis for them,” Mr. Haarde testified.

More In: International | News