More startling cases reveal the involvement of big Danish banks, according to American and Italian authorities.
Billions of Roubles stolen from the Russian people. A Russian attorney who died in a prison under sinister conditions. And corrupt European politicians bribed by a dictator.
Apparently, client problems in Danske Bank and Nordea reach far deeper and farther out in the world than what was previously known to the public.
Last week, Berlingske reported that laundered billions poured through Danske Bank and Nordea in a global money laundering-ring. Stories, which were made in collaboration with the Russian newspaper Novaya Gazeta and the journalist organization Organized Crime and Corruption Reporting Project.
In connection to this, Danske Bank admitted were not in control of suspicious clients and transactions in their branch in Estonia. Nordea has said that they too have underestimated the extent of money laundering.
Now, according to the authorities in several countries, it turns out that the two banks played a role in two startling international cases of corruption and organized theft of more than 230 million dollars.
According to authorities in USA and Italy, the alleged criminals in the two cases created accounts in the banks, which were used to channel illegally obtained money.
Thus, it seems that Danske Bank and Nordea once again have broken the Act on Money Laundering, which states that banks must be in control of who their clients are and monitor suspicious money transfers to clients with shell companies in tax havens, for instance, or politicians targeted for bribery.
This is the opinion of Jakob Dedenroth Bernhoft, Master of Law and specialist in the Act on Money Laundering with the consultancy company Revisorjura.
»It seems strange that they did not put a stop to these transactions, and it indicates a lack of critical approach to money laundering,« he says.
Lars Koch, who is the International director and expert on tax haven with the charitable organization Oxfam IBIS, is also astounded.
»It seems to be a troubling pattern that people with illegally obtained money or money from tax havens are targeting Danish banks to launder the money. It’s extremely unfortunate that Danske Bank Estonia and Nordea Denmark supposedly have a reputation for being a good place for this. This goes for the banks, but it also very unfortunate for the country of Denmark, because we like to brand ourselves on leading the battle on this kind of embezzlement,« he says.
Berlingske has presented the cases to Danske Bank and its CEO, Thomas Borgen, who was in charge of the banks international banking activities – among others the branch in Estonia – until 2012, when he was promoted.
Several of the cases’ suspicious transfers took place, while he was the acting manager.
Danske Bank did not wish to comment on the two cases directly, as they pertain to specific customer relations and transactions.
General Counsel Flemming Pristed writes in an email: “We have acknowledged that in Estonia we did not have sufficiently effective systems and routines to ensure the branch in Estonia would not be used for criminal activities.
We have corrected this and terminated the clients, who were unable to document a legitimate reason for having an account in Estonia. Furthermore, we have implemented new systems and control procedures and inserted a new management in Estonia.”
Nordea is also involved in one of the two scandalous cases, according to documents. Stine Wind, PR manager of Nordea, does not wish to comment on the specific case. However, she emphasizes that Nordea has tightened up today.
»We have changed completely in this area,« she writes in an email.
In both of the startling cases that the banks are entangled in, the alleged criminals have had accounts in both banks that belonged to shell companies in tax havens.
One of the cases concerns Sergei Magnitsky. The deceased Russian attorney has become a symbol of the lawless conditions in Vladimir Putin’s Russia.
Magnitsky and his employer, the investment company Hermitage Capital, accused high ranking Russian officials of being behind extensive tax fraud of 230 million dollars in Russia. Shortly thereafter, Magnitsky was himself arrested and charged with embezzlement.
After a year in prison, he died in 2009 in his cell. An official investigation has shown that Magnitsky for a long time asked for medical attention without ever receiving it.
The case caused an international diplomatic crisis, when USA with »The Magnitsky Act« later froze funds and banned numerous powerful Russian citizens, thought to be involved in the case, from entering the country.
Magnitsky’s findings and subsequent death has led to investigations around the world.
Among other things, in October 2013 the New York Southern District Prosecutor submitted a claim to confiscate properties and funds on a number of accounts, which according to state prosecutor Preet Bharara came from the tax fraud case. The case awaits trial.
In Bharara’s case against the company Prevezon, in which the owners allegedly took part in the money laundering, there is mention of several specific money transfers of millions of Kroner through the Estonian branch of Danske Bank in 2008.
Documents from the prosecution show that in February 2008, 951.400 dollar are transferred to the company Megacom Transit, which has an account in Danske Bank Estonia. However, according to the prosecutor, the company was a shell company in New Zealand and the manager was the head of more than 200 companies in the country.
Another example shows that a transfer of 390.000 dollar went through Danske Bank Estonia to a company in the famed tax haven the British Virgin Islands.
The Council of Europe’s Committee for legal affairs and human rights points out in a document from 2014 that one million dollar has been traced from the case to Danske Bank Estonia and Nordea Denmark. Among this, two tax haven companies had accounts in Nordea Denmark.
The other case, which Danske Bank is involved in, concerns corruption in the Council of Europe, which was established to promote human rights. One of the council’s now former vice-presidents, the Italian parliamentarian Luca Volontè, stands accused in Milan for money laundering.
The case unfolds in a report from the think tank European Stability Initiative (ESI), which came out in December last year. According to the report, Volontè received a bribe from middle men with contact to the regime in Azerbaijan. In exchange for the bribe, the politician was to work to ensure that the Council of Europe gave the seal of approval to the efforts for human rights in the country otherwise notorious for assaulting political opponents.
According to the prosecution, the bribe of about 3,2 million dollar was transferred to Volontè’s own organization in Italy on several occasions between 2012 and 2014.
The money came from companies called Metastar Invest and Hilux Services, which according to the research by Berlingske, have hidden ownerships in tax havens such as Belize and the British Virgin Islands.
And according to a note from the prosecution in Milan, which is in the possession of Berlingske, the companies had accounts in Danske Bank Estonia. The case is expected to appear in court sometime this year.
The chairman of the Danish delegation in the Council of Europe, Michael Aastrup Jensen of the political party Venstre, calls this case »the most serious case the Council of Europe has ever had in its more than 70 years of existence.«
»Therefore it makes me sad to see that Danske Bank appears to have played a role in this case. There should have been alarm bells ringing in the bank, especially when we are dealing with such large figures,« says Michael Aastrup Jensen of Venstre.
»This case clearly shows the need for the banks to have the necessary internal tools to expose the illegal activities, and not simply turn a blind eye to it,« he says.
Translation: Phillip Ørnø.
More from Berlingske's Investigative Team here.