Posted 8 years ago on Dec. 4, 2011, 4:19 p.m. EST by fjolsvit (957) from Washington, DC

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http://mobile.reuters.com/article/idUSTRE7AT2UX20111130?irpc=932

REYKJAVIK (Reuters) - Iceland's special prosecutor arrested the former chief executive of Glitnir Bank on Wednesday and questioned nearly two dozen people related to the collapse of the bank in 2008.

Glitnir Bank was the first of Iceland's top three commercial banks to collapse three years ago, imploding under the weight of huge debts racked up during years of aggressive expansion.

Special prosecutor Olafur Hauksson said his office had made several arrests on Wednesday -- the first for activities related to Glitnir. He told local media that former CEO Larus Welding would be held in custody for up to one week.

"Welding is being held in the interest of the investigation in order to prevent him for influencing other suspects or removing evidence that we're after," he was quoted as saying by Morgunbladid.

Hauksson said he had initiated nine new investigations, made several arrests and questioned nearly two dozen people related to the fall of Glitnir.

Inquiries are being made into the purchase of Glitnir's shares, as well as into loans provided to a number of firms to purchase Glitnir shares. It also investigated a 15 billion Icelandic crown ($126 million) guarantee provided by Glitnir in connection with a share offering in FL Group.

The prosecutor has also been conducting investigations at Kaupthing and Landsbanki. Kaupthing, Landsbanki and Glitnir all collapsed in the space of a week during the 2008 crisis.

(Reporting by Omar Valdimarsson)