We have launched a recovery initiative following the latest events concerning Danske Bank A/S (ISIN code: DK0010274414), the largest bank in Denmark, with shares listed on the Copenhagen Stock Exchange. It recently emerged that the Danish bank was actively involved in one of the largest ever money laundering schemes, with more than EUR 200 billion of suspicious payments flowing through its Estonian branch over close to 10 years.
The money seems to have originated mainly from Russia, with some transactions taking place through a complex scheme involving little-known banks in Moldovia and Latvia, fictitious lawsuits and sham corporations. Part of these sums are thought to be connected to high-ranking Russian politicians, the Russian Federal Security Service (FSB) and the president of Azerbaijan, amongst others.
This case is regarded as one of the most pervasive corporate scandals in Europe, yet not a single top executive of the bank has been held accountable.
Danske Bank’s stock price has dropped by more than 30% since March 2018.
Investigation by Bruun
On 19 September 2018, Danske Bank released the results of the investigation commissioned by its board of directors. The scope of the internal investigation, undertaken by the Danish law firm Bruun, was twofold: on the one hand, investigations were conducted to shed light on how the bank has handled the non-resident portfolio of customers managed by its branch in Tallinn since 2007. On the other hand, their mandate included an assessment of whether the members of the executive board and the board of directors violated their duties towards the company.
Bruun ultimately concluded that neither the board of directors, nor its chairman or CEO violated their obligations towards the company.
This liability clearance came as a surprise, considering the abundance of facts described in the investigation report suggesting that the illegal scheme had taken place for a number of years, and that the board of directors was aware of it.
Deminor's analysis and proposition
Deminor shared its analysis and action plan with its clients during a webcast that took place on 24 October 2018. We came to the conclusion that the top management of Danske Bank knew with a very high degree of accuracy the scope and details of the situation in Estonia as from 5 February 2014, yet they refrained from (i) acting swiftly to solve the issue conclusively and (ii) disclosing this information to the market. It can therefore be argued that investors were misled at a minimum from 5 February 2014 until 13 March 2018, when the bank disclosed to the market that an investigation was taking place. Deminor has reached out to its clients with a concrete recovery proposition in this regard. We also stressed the need for an independent investigation, whereby personal liability of the top management towards third parties would be assessed by an independent investigator without interference from the company’s management, as independent investigations are permissible under Danish law.
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Written on November 9, 2018 by
Executive Director & Partner of Deminor Recovery Services.
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