Danske boss quits over €200b money laundering scam
Investigation revealed payments through its Estonian branch
Danske Bank’s chief executive Thomas Borgen resigned yesterday after an investigation revealed payments totalling €200 billion (Dh858 billion) through its Estonian branch, many of which the bank said were suspicious.
The Danish bank detailed compliance and control failings amid growing calls for a new European Union watchdog to crack down on financial crime after a series of money laundering scandals which have attracted the attention of US authorities.
“Even though I was personally cleared from a legal point of view, I hold the ultimate responsibility. There is no doubt that we as an organisation have failed in this situation and did not live up to expectations,” Borgen, who will stay on until a new CEO is appointed, told a press conference.
Borgen, 54, was in charge of Danske Bank’s international operations, including Estonia, between 2009 and 2012.
Danske Bank said in a summary of a report covering around 15,000 customers and 9.5 million payments between 2007 and 2015 that Borgen, Chairman Ole Andersen and the board “did not breach their legal obligations”.
Andersen said the bank had made an assessment of whether it violated US laws, a key concern for shareholders, but declined ■ to share its conclusion when asked at a press conference.
The Estonian non-resident portfolio included customers from Russia, Azerbaijan, Ukraine and other ex-Soviet states, the investigation, which began a year ago after the Berlingske newspaper revealed alleged misconduct at the branch, found.
Danske Bank, whose already battered shares fell by nearly 8 per cent during morning trading, said some 6,200 customers had been examined so far and it expected “a significant part of the payments to be suspicious”.
Share prices
Shares in Danske Bank had doubled in value from when Borgen took over as CEO in 2013 until July 2017, but have since lost more than a third as allegations of suspicious transactions increased and Denmark and Estonia began criminal investigations.
The bank said it had taken action including “warnings, dismissals, loss of bonus payments and reporting to the authorities” against current and former staff, as well as overhauling the systems which had contributed to the lapses.
In an indication of the potential costs such failings can have on a bank, Dutch bank ING agreed to pay €775 million this month after admitting criminals had been able to launder money through its accounts.
And earlier this year US authorities accused Latvia’s ABLV of covering up money laundering, leading to the bank being denied US dollar funding and its swift collapse. While Danske does not have a banking licence in the United States, banning US correspondent banks from dealing with it would amount to shutting it out of the global financial network.