Paradise Papers: Finn used millions to rescue Maltese bank

New Paradise Paper revelations about dubious tax haven dealings reveal that majority Kone shareholder Antti Herlin transferred millions of euros to a discredited bank in Malta that is linked to a criminal investigation. An owner of the bank then sold Herl

Dow Jones -129.84 23,279.63 Finnish lift and escalator firm Kone’s chairman Antti Herlin had unusual financial dealings with a bank located in Malta, according S&P 500 -14.28 2,564.45 Nasdaq -39.34 6,698.54 Shanghai -27.02 3,402.52 to new Paradise Papers revelations. Documents indicate that Herlin – also a major Kone shareholder – spent three million euros to help rescue a failing Finnish-owned bank named Nemea, which is registered in Malta.

This was reported by the Nikkei 225 -351.69 22,028.32 Hang Seng -300.43 28,851.69 Finnish public broadcaster Yle.

Antti Herlin, is the son of Pekka Herlin, former chairman of Kone, and his inheritance and business ownership position has given him a net worth of nearly €3 billion, according to a 2014 Forbes ranking, making him one of the richest men in Finland. FTSE 100 -47.02 7,367.40

Nemea bank was owned by two Finns, Mika Lehto and Heikki Niemelä, and had run into trouble with the authorities. Information obtained by Yle showed that a Nemea Bank employee had reported suspicious activities at the bank to the European Central Bank. The authority took interest in a ten-million-euro deposit from an Azerbaijan-owned company.

Lehto and Niemelä used the bank to finance their business operations in Finland. Nemea was also required to quickly acquire three million euros more in capital to prove its stability. This money was traced to Antti Herlin via a holding company he owns, Security Trading Ltd.

But his deposit was not enough, as the European Central Bank – in order to safeguard the patron’s deposits – withdrew Nemea Bank’s operating license in March 2017 for a series of “serious regulatory shortcomings”. Malta’s Financial Services Authority said the bank had limited links with the domestic economy.

Speaking to Yle, Lehto denied that Nemea Bank had any questionable dealings, saying the bank was the target of the local authority’s witch hunt.

Plot thickens

The now-defunct Nemea Bank had a subsidiary named Revestor that specialised in real estate administration and other forms of ownership. Revestor owned 50 percent of a company named Långvik South, a network of nine properties and 78 hectares located in Kirkkonummi’s Långvik district, west of Helsinki.

Four private individuals owned the company, but on May 2016, it was sold to Kone’s Antti Herlin for €8.5 million, with Herlin committing to pay €1.5 million in cash. It was arranged that Herlin would assume the outstanding liabilities of the company to cover the remaining seven million euros.

As one of the Finnish owners of the bank, Lehto sold Herlin land in Kirkkonummi, which he allegedly did not have the right to sell. He signed the bill of sale with a proxy on behalf of the four previous owners of the Långvik South property. One of the shareholders, Mikko Pyykkö, has since come forward to say he had no knowledge of the deal, and only heard about it four months after the fact.

“Mika Lehto had no credentials to handle this deal. He just signed his own name over the place left for mine. I find it a little perplexing that the buyer, Antti Herlin’s investment firm Security Trading, did not bother to make a local call to ask a minority shareholder if the prerequisites for the deal were on the up and up,” Pyykkö told Yle.

Former shareholders were unaware

In the autumn of 2017, shareholders of Långvik South submitted a request for a police investigation of the deal – specifically, if Lehto and Herlin acted illegally in their handling of the agreement.

Lehto says the previous owners knew about the deal beforehand.

“The claim is entirely false and not true. The transaction was arranged with the largest of the minority shareholders’ full knowledge of the deal,” he wrote.

A second major owner of Långvik South, Henrik Lindfors, was not available for comment when contacted by Yle, but his signed police investigation request says that he did not know about the deal which was finalised on 10 May 2016.