The Kremlin critic investigating an alleged $230m Russian fraud is set to file a criminal complaint against Danske Bank in its home country of Denmark, accusing it of being a central player in a vast money laundering scheme.
Bill Browder, chief executive of Hermitage Capital Management whose lawyer Sergei Magnitsky was beaten to death in jail after uncovering the alleged fraud, told the Financial Times that he would also file a new criminal complaint in Estonia as the number of legal fronts multiply for Danske.
The Estonian branch of Danske Bank was one of the main money-laundering nodes out of Russia, said Mr Browder on Thursday, adding that it was “one of the main conduits related to the fraud uncovered by Magnitsky.”
Danske is under mounting pressure over the alleged money laundering. Mr Browder and local media claimed this week that the amount of transactions that flowed through the Estonian branch of Denmark’s biggest lender may have been as much as DKr53bn ($8.3bn), more than double previous estimates.
Danske, whose shares fell another 2 per cent on Thursday after a 3 per cent drop the day before, declined to comment on Mr Browder’s impending criminal complaint. It said on Wednesday that it could not comment further ahead of the publication of its own year-long investigation into the matter in September.
It has conceded that there are signs that customers in Estonia used it for money laundering and that the amount involved would probably be higher than the DKr25bn already indicated.
The alleged money laundering, exposed by several reports in the Danish daily Berlingske, took place from 2007 until 2015. It involved cash from the likes of Russia, Azerbaijan and Moldova.
Estonian and Danish financial regulators are looking into the recent evidence to see if further action needs to be taken against Danske. The Danish Financial Supervisory Authority reprimanded Danske in May for weak anti-money laundering controls but did not impose a fine nor recommend a criminal case against individuals.
Mr Browder said he had first brought the case to Estonian law enforcement officers in 2012, before alerting Danish authorities later to further fraud related to what Magnitsky discovered.
“The regulators and law enforcement bodies in Denmark and Estonia have been asleep at the switch. And it’s one of the most important money laundering cases out of Russia in recent times,” he added.
Danske was placed under investigation by a French court last year, but earlier this year its status was downgraded to that of “assisted witness” — somewhere in between a witness and somebody being formally probed.
The scandal has provoked fury among Danish politicians. Rasmus Jarlov, the new business minister, has suggested that the government could confiscate any profits Danske made in Estonia. The Danish FSA’s report in May said that the profits from Danske’s non-resident business in Estonia — that not involving domestic customers — was DKr325m in 2013 alone, equivalent to about 2 per cent of the group total.