A special Icelandic court on Monday found former prime minister Geir Haarde guilty on one count over the collapse of Iceland's banks in 2008 but acquitted him of three other charges.
"Geir Haarde will not be punished," said Markus Sigurbjornsson, the head of the never-before-used special court Landsdomur for current and ex-ministers.
Haarde, 61, the first politician to be tried in connection with the global financial crisis and who had rejected the charges against him, was found guilty of not meeting with his cabinet when matters turned critical, the court said.
"I always found that charge to be even more ridiculous than the others," Haarde said in a statement, noting that the court found him "not guilty on all the substantive parts of the indictment."
Landsdomur ordered the Icelandic state to pay Haarde's court costs of 24 million kronur ($189,000, 143,000 euros).
He said he now planned to take his case to the European Court of Human Rights.
"The whole matter will then hopefully be reviewed by that court including several procedural flaws which I believe Landsdomur was responsible for in the early stages of the case," he said.
He claimed the judges had "succumbed to political pressure" and "decided to offer the prosecution a small consolation prize to partially justify the long and costly process."
The ruling was a "terrible reflection on the Iceland legal system", he said, adding that the count on which he was found guilty had "nothing to do with the origins of the financial crisis or the way I dealt with it."
Haarde headed the right-leaning Independence Party and was prime minister from mid-2006 to early 2009 when his coalition was ousted amid public uproar over the crisis.
He was one of four former Icelandic government ministers blamed in a 2010 report for contributing to the country's stunning financial sector collapse in late 2008, when all its major banks, which at the time held assets equal to 923 percent of gross domestic product, failed in a matter of weeks.
The heads of the failed banks and the former chief of the country's Financial Supervisory Authority were also handed a large portion of the blame.
According to the report, Haarde and the then head of the central bank, David Oddsson, withheld information in the spring of 2008 from relevant ministers and from the government indicating that the country was headed for a major financial crisis.
The banking failure plunged Iceland into a deep recession, prompting a 2.1-billion-dollar bailout from the International Monetary Fund, and sending the value of its krona spiralling.
The country's economy has since returned to growth.
Parliament, now majority-held by Haarde's left-leaning opponents, voted in September 2010 that Haarde was the only one who should be tried for the collapse, including the online Icesave bank implosion that spawned a fiery diplomatic row with Britain and the Netherlands.
Last October, the court threw out the most serious charge of "gross neglect".
He was on Monday acquitted of three charges: not properly overseeing the work of a financial stability committee; neglecting to take the initiative to reduce the size of the bloated banks; and failing to ensure that the Icesave accounts in Britain and the Netherlands were split off into subsidiary companies in those countries.
Haarde, whose trial opened on March 5, has previously dismissed the case as a farce.
By letting the banks go, and not guaranteeing their external debts, "we saved the country from going bankrupt," Haarde insisted in an interview with AFP in 2011.
He had risked up to two years in prison.