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French authorities have brought preliminary charges against Danske Bank for a direct link to the major Danish bank’s involvement in the so-called Magnitsky case, one of the most spectacular cases of international crime, money laundering and human rights violations in recent times.
The revelation by Berlingske comes after a brief statement from Danske Bank late Wednesday confirming that the bank is being investigated in France for breaking anti money laundering regulation.
In France known as a so called »mise en examen.«
The dramatic case of Sergei Magnitsky, who died in a Russian prison after whistle-blowing on tax fraud, led a number of countries around the world to adopt new legislation and provoked a diplomatic crisis following US sanctions against named Russian citizens.
The Magnitsky case involves tax fraud and corruption amounting to some 230 million US dollars in Russia.
Some of this money was subsequently laundered through tax shelters and banks across the globe – and the latter included Danske Bank, French authorities say.
Late on Wednesday Danske Bank disclosed that the bank had been put under investigation in France, but the statement did not mention any link to the Magnitsky case.
Yet Magnitsky’s former employer, the financier William Browder, has confirmed to Berlingske that the French probe is directly linked to money flows relating to the Magnitsky case.
»Yes. This criminal case was in response to our complaint about money laundering in France which originated from the $230m fraud that Sergei Magnitsky exposed and was killed over,« William Browder writes in an email to Berlingske.
According to Browder Danske Bank is the first bank to be formally investigated for money laundering in the Magnitsky case.
Earlier in 2017, Berlingske revealed how Danske Bank’s Estonian branch was deeply involved in a number of serious cases of money laundering.
The response from Danske Bank has been to repeatedly state that it »does not wish to be abused« by criminals.
But French prosecutors do not believe that Danske Bank was merely abused.
Their wording suggests that Danske Bank played a far more active role in this case.
One of the probe’s charges is that Danske Bank »assisted in… investing, hiding, or converting… the proceeds of crimes,« stating also that these breaches were committed »in an organised manner«.
This is »a very serious charge«, says a legal expert.
»It sounds quite strong. The prosecutors appear to believe that Danske Bank in Estonia not only knew about these illegalities but actively participated in them,« says Jakob Dedenroth Bernhoft, an expert on anti money laundering regulation and owner of legal consultancy firm Revisorjura.dk.
Flemming Pristed, Danske Bank’s Group General Counsel, does not wish to comment on the specific case while it is being investigated.
»As we have previously stated, the extent of suspicious transactions in our Estonian branch during this period has taken us by surprise as well. This is why we have launched a thorough investigation of clients and transactions in the so-called “non-resident« portfolio in Estonia up to 2015,« Flemming Pristed writes in an email to Berlingske.
According to the Tribunal de Grande Instance de Paris, the French investigation involves some 15 million euro allegedly being laundered through Danske Bank between January 2008 and July 2011.
During roughly the same time – from 2009 to 2012 – Thomas Borgen, the current CEO of Danske Bank, was directly responsible for overseeing the Baltic units of Danske Bank, including the Estonian branch.
Thomas Borgen has made the following statement in writing:
»Although we do not yet know if anything illegal was committed in this specific case, it is clearly unsatisfactory that in Estonia we have historically not been good enough at avoiding potentially being abused for money laundering.«
For Danske Bank to be involved in the Magnitsky case is »extremely astonishing«, says money-laundering expert Jakob Dedenroth Bernhoft.
»This confirms that money from serious crime flowed through the bank,« he says, pointing to French charges that the funds came from activities such as fraud and tax evasion.
Berlingske has knowledge of some of the specific details in this case.
According to the French authorities, laundered funds were transferred to a French company by the name of S.a.r.l. Decobat, which on paper appeared to trade in paints under the management of a French-Russian woman who is now according to Berlingske’s information also under investigation.
Links to Belize tax haven
The money came from an account in Danske Bank Estonia held by a company called Argenta Systems Ltd.
Argenta Systems was registered in the tax haven of Belize with a listed address in Moscow.
According to a document from the Estonian police made available to Berlingske, this company was run by Russian citizens.
The documents show that, in the period from 2008 to 2011, transactions amounting to several million kroner were made between the two parties.
Estonian authorities have previously investigated Argenta Systems but stopped short of pressing formal charges, as most of the accounts had already been closed and the money was long gone.
According to William Browder, Estonia has played a central role in money laundering.
»Estonian accounts were one of the key conduits in the transnational money laundering in this case which extended across EU, US and Canada. The authorities in Estonia clearly need to take a more pro-active stance in light of this recent development,« he states.
Despite a request for comment, Berlingske has not received a response from the Estonian financial fraud authorities on the latest information in this case.
Berlingske has previously described a similar call from William Browder for Danish authorities to launch their own investigation into this case.
At the time, the Danish financial crime unit, Bagmandspolitiet, decided not to pursue an investigation as the case was by then considered too old under the statutes of limitation applicable under Danish criminal law.
Bagmandspolitiet has not wished to comment on whether the French investigation might lead the Danish authorities to change their position.
Arrested, charged and found dead in his cell
The case involving the Russian lawyer Sergei Magnitsky began when Magnitsky and his employer, Hermitage Capital, a fund manager run by the previously mentioned William Browder, came forward to accuse high-ranking Russian officials of orchestrating tax fraud in Russia to the tune of 230 million dollars.
Shortly after this revelation, Magnitsky was arrested and charged with fraud. In 2009, after a year in prison, he died in his cell under mysterious circumstances.
An inquiry found that Magnitsky had made repeated requests for medical assistance but never received any.
The case then led to a diplomatic crisis after the United States invoked the so-called »Magnitsky Act« to freeze funds and ban US entry for several powerful Russian citizens believed to be involved in the case.
Russia retaliated by blocking the adoption of Russian children by American citizens.
Since Magnitsky’s death, William Browder has systematically sought to bring authorities to prosecute the people he believes to be behind both the tax fraud, the money laundering and the treatment of Magnitsky himself.
According to William Browder, it was these efforts that led to the French charges against Danske Bank.
He is pleased that the French authorities are now investigating charges against Danske Bank.
»This is an important step in our campaign for justice for Sergei Magnitsky. He was killed for uncovering the theft of $230m from a Russian government sponsored corruption scheme. We are trying to ensure that anybody in the West who benefitted from this crime or helped facilitate it are prosecuted to the full extent of the law,« he states.
The Magnitsky case made headlines again in the spring when US authorities agreed to settle charges against one of the Russian companies involved, Prevezon Holdings, which is believed to be linked to some of the masterminds in the case.
Over the past year, Berlingske has described other cases involving money laundering violations in Danske Bank – among them transactions linked to Azerbaijan and Moldova. Berlingske worked on these cases with investigative reporters at international media such as the Organized Crime and Reporting Project.
In both of these cases, the bank regretted not having sufficiently checked its clients and their transactions for possible violations of anti money laundering regulation.
In September, Danske Bank CEO Thomas Borgen launched an extensive investigation into possible money-laundering breaches.
As part of this investigation, the bank wants to probe transactions to and from some 3,000 clients in the Estonian branch’s section for foreign account holders, going back as far as 2007.
Translation Bibi Christensen.