An Icelandic court has ruled that former Prime Minister Geir Haarde was guilty of one charge related to negligence in connection with the country's financial meltdown in 2008 but gave him no punishment.

Haarde was found guilty of failing to hold dedicated cabinet meetings ahead of the crisis. But he was cleared of the three major charges, including neglecting to deal with an overblown banking sector.

"It is obvious that the majority of the judges have found themselves pressed to come up with a guilty verdict on one point, however minor, to save the neck of the parliamentarians who instigated this," Haarde said in reaction to the verdict.

Haarde, the only politician in the world so far put on trial for their role in the crisis, had pleaded innocent to the charges alleging that his negligence in carrying out his duties contributed to the economic disaster on the North Atlantic island.

The verdict was announced by 15 members of the Landsdomur, a special court founded in 1905 to deal with criminal charges against Icelandic government ministers. It was the first case to be tried by the court.

Iceland's banking sector ballooned to nine times the nation's annual gross domestic product in a decade of boom, before collapsing under the weight of its debts in October 2008. The country's three main banks collapsed in one single week.

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

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

'Warning signs'

Part of the case relies on a charge that Haarde failed to implement recommendations that a government committee had drawn up in 2006 to strengthen Iceland's economy.

Haarde said the committee's work could not have prevented the crash.

Eirikur Bergmann, a political science professor at the Bifrost University in Iceland, described the verdict as a "slap on the wrist"

"He's found guilty only on one rather minor account," he said. "He's not convicted on any of the charges leading up to the crisis - sponsoring the system that proved unsustainable.

"It is an in-between ruling to calm both sides of society."

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

But some feel that Haarde should not have been the only politician put on the stand.

"He was the captain on the bridge, but there were more ministers," said Arni Einarsson, a pensioner living in Reykjavik. "The politicians thought that Iceland was like the Titanic, unsinkable. They were not on their guard." 

Many people wonder why none of the men in charge of the banks that collapsed have been tried - even though a handful of charges have been brought and dozens of investigations are under way.

Icelanders took to the streets during the crisis, clashing pots and pans outside parliament in downtown Reykjavik.