Government watchdog continues to monitor money-laundering scandal

Procurement office ‘closely monitoring’ scandal involving Danske Bank

Denmark’s state prosecutor last week filed preliminary criminal charges against Danske Bank for alleged violations of the country’s anti-money laundering act in relation to its Estonian branch.

Denmark’s state prosecutor last week filed preliminary criminal charges against Danske Bank for alleged violations of the country’s anti-money laundering act in relation to its Estonian branch.

 

The State’s procurement office, which earlier this year selected Danske Bank to provide day-to-day banking services to the Government, has said it continues to closely monitor the unfolding scandal involving Denmark’s largest lender.

A spokeswoman for the Department of Public Expenditure and Reform said, however, that it would be premature for the Office of Government Procurement (OGP) to initiate any action until investigations into the bank have concluded.

The news comes as Denmark’s state prosecutor last week filed preliminary criminal charges against Danske Bank for alleged violations of the country’s anti-money laundering act in relation to its Estonian branch.

The bank is caught up in a major money-laundering scandal involving €200 billion in suspicious transactions that flowed through its Estonian unit between 2007 and 2016. Danske has so far said there is no evidence that money-laundering sanctions were breached but it has also acknowledged that the risk cannot be ruled out.

The scandal has seen Danske’s chief executive Thomas Borgen step down, while its shares have lost nearly half their value. Denmark’s government has said the scandal could ultimately lead to a fine of up to four billion kroner (€536 million), while the country’s financial regulator has ordered Danske to hold an extra €1.3 billion in capital to serve as a buffer against possible penalties.

The multi-year contract to provide State payments of social welfare, wages and pensions was announced by the OGP in June. This marked the first time the contract had been subject to a competitive tendering process.

Bank of Ireland previously held the contract.

Dankse entered the Irish market in 2005 when it acquired National Irish Bank. It pulled out of retail banking in the Republic eight years later after racking up massive bad loan losses but has remained in the wholesale services market.

Preliminary charges

“The OGP is aware of ongoing investigations into this matter in a number of jurisdictions and that, as result of an investigation by the Danish state prosecutor, preliminary charges have been filed,” a spokeswoman for the department told The Irish Times.

“Remaining cognisant of the responsibility to conduct business in line with applicable laws, rules and regulations, officials from the OGP have engaged and corresponded with Danske Bank and continue to engage on this matter and to monitor closely developments in this regard,” she added.

Criminal investigations are ongoing in Denmark and Estonia, while aspects of the case are being examined by authorities in a number of other jurisdictions, including the UK, US and Switzerland.

“In the absence of any of these investigations having concluded, it would be premature for the OGP to initiate further action at this time,” the department spokeswoman said.

Last month, Danke’s largest shareholder, the Maersk family, led a boardroom coup that saw the lender’s chairman Ole Andersen step down over the scandal.