The leader of Iceland's government when the nation's banking system collapsed was convicted Monday of one criminal charge, cleared on three 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.

Haarde, who led the government from 2006 to 2009, was the first government leader anywhere to face criminal prosecution because of the global banking crisis. He smiled and shook hands with supporters after the judgment was announced.

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.

Haarde, who pleaded innocent to all charges, could have faced a sentence up to two years in prison.

"In my opinion and let me say this clearly, I believe the majority of the judges have succumbed to political pressure in the case and decided to offer the prosecution a small consolation price to justify this low and costly process," Haarde said.

"The count of which I am found guilty has nothing to do with the origins of the financial crisis or the way I dealt with it."

Haarde considering appeal

He said he was considering appealing to the European Court of Human Rights on the conviction.

"I am found partially guilty for not discussing the financial situation in the markets frequently enough at cabinet meetings in the period leading up to the crisis in the period leading up to the crisis in 2008," he said.

"This is obviously a purely formalistic charge. It has nothing to do with the banking crisis as such.

"I can tell you that I have always found this charge to be even more ridiculous than the others."

Haarde originally faced six charges, but two were dismissed in October.

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.

Haarde was convicted of failing to take the initiative to insure "a comprehensive and professional analysis of the financial risk faced by the state because of the risk of financial crisis."

Ex-PM cleared of four charges

He was cleared of malfeasance, of neglecting to act to reduce the size of the banking system, of not making sure that national bank Landsbanki's Icesave interest accounts in Britain were transferred to a subsidiary, and of failing to produce better results from the government's 2006 report on financial stability and preparedness.

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

"The bankers did not realize that the situation was as dire as it was," Haarde said. "It was not until after the crash that everyone saw it coming."

The special court included five supreme court justices, a district court president, a constitutional law professor and eight people chosen by parliament.

Haarde, the former leader of the Independence Party, became a hated symbol of the bubble economy for Icelanders who lost their jobs and homes in the crash.

He testified that the size of the bank would not have been a problem if not for their recklessness and a worldwide squeeze on credit, which also brought down major banks in the United States and Europe.