Thomas Borgen
COPENHAGEN: The chief executive of Denmark’s largest lender, Danske Bank, resigned on Wednesday as the institution said it was unable to determine how much money was laundered through its Estonian branch.
The bank said it had probed transactions amounting to 200 billion euros that had transited Danske Bank’s Estonian branch through the accounts of 15,000 non-resident clients between 2007 and 2015.
Of the 15,000 accounts – which Danske Bank closed in 2015 – 6,200 are considered suspicious and most of them have been
brought to the attention of authorities.
“We can’t exclude that a lot of the suspicious transactions are criminal, but that’s up to the authorities to decide,” Spiermann told reporters.
The bank was unable to provide an accurate estimate of how much of that was laundered money, nor exactly where the money came from.
It said 23 per cent of the incoming funds were from Russia.
“A large part of the flow (transactions) is suspicious,” explained Ole Spiermann, a partner in the external law firm that carried out a probe for Danske Bank.
The 200-billion-euro figure can be compared to Estonia’s gross domestic product of 23 billion euros in 2017.
In early August, the Danish state prosecutor’s office for serious economic and international crime said the bank was being investigated and prosecutors would decide whether to press charges.
The bank tasked an independent legal firm to conduct an investigation of its own.
It exonerated chief executive Thomas Borgen of any direct responsibility in the case, which has thrown the Danish bank into a whirlwind of legal and media attention in recent weeks.
Borgen nonetheless said it was best for him to go.
“It is clear that Danske Bank has failed to live up to its responsibility in the case of possible money laundering in Estonia,” he said in a statement.
The bank said it “knew that the Estonian branch had high risk customers.”
“Even though the investigation conducted by the external law firm concludes that I have lived up to my legal obligations, I believe that it is best for all parties that I resign,” he added.
The investigation underlined that the bank’s management did not break any laws.
“We can reach another conclusion,” state prosecutor for serious economic and international crimes, Morten Niels Jakobsen, told AFP, adding “a financial institution should know their customers.”
Meanwhile, a majority of the Danish parliament has agreed to eight-fold fines on the largest banks for money laundering, Danish industry and business minister Rasmus Jarlov told a news conference on Wednesday.
The parliament has yet to vote on the legislation at a later date.
As a way to clean up its tarnished image, Danske Bank said it would “donate the gross income from the customers in the period from 2007 to 2015, which is estimated at 1.5 billion kroner (201 million euros, US$235 million), to an independent foundation which will be set up to support initiatives aimed at combating international financial crime, including money laundering, also in Denmark and Estonia.”
With that sum set to be booked in the third quarter, the bank had to revise downwards its earnings outlook for the whole of 2018, forecasting a net profit of 16-17 billion kroner instead of the previously anticipated 18 to 20 billion.
The financial pain from the case was already being felt on the trading floor: Shares in Danske Bank fell by more than 3.9 per cent in the Copenhagen Stock Exchange in afternoon trading.
The money laundering allegations are linked to a fraud case exposed by the Russian lawyer Sergei Magnitsky, who was jailed in Russia after he revealed the involvement of several high-ranking Russian officials in stealing massive tax payments from several companies, including the investment fund Hermitage Capital.
Magnitsky died in 2009 aged 37 after being held in a Russian jail for a year, where he was denied medical care.
Bill Browder, CEO of Hermitage Capital and Magnitsky’s former client who was kicked out of Russia for exposing corruption at the largest state owned companies, has spent nine years tracking money laundering in the nation.
“We’ve looked at some of the accounts that belong to well known money laundering entities, they went through companies that have no real business, the companies are located in high risk offshore jurisdictions and the companies were managed from Russia,” he told AFP. — AFP