Danske Criminal Probe Leads to First Bankers Being Detained

(Bloomberg) -- An international criminal investigation into Danske Bank A/S has led to the first group of bankers being apprehended, and prosecutors say more will probably follow.

Police in Estonia have detained 10 former Danske employees in connection with what may be Europe’s biggest ever money laundering case. The country’s head of central criminal police, Aivar Alavere, said the group is thought to have acted as a “network” and is suspected of having knowingly enabled laundering. Two of the suspects are also thought to have facilitated or taken bribes.

Danske Criminal Probe Leads to First Bankers Being Detained

The prosecutor general in Tallinn, Lavly Perling, told reporters that the detentions were tied to about 300 million euros ($342 million) in suspicious transactions that have been traced back to crimes committed in Azerbaijan and Georgia, more specifically tax fraud and embezzlement.

It’s “very likely” the number of suspects related to the Danske investigations will grow, Alavere said on Wednesday.

A $230 Billion Scandal

Denmark’s biggest bank has admitted that much of about $230 billion that flowed through an Estonian branch between between 2007 and 2015 was probably suspicious in origin. Since acknowledging the dubious trades, Danske has purged its upper ranks, including the removal of its chief executive and chairman, and reported eight employees in Estonia to the police. The bank has so far asked authorities in Estonia to investigate 25 billion euros in questionable transactions.

Danske is under criminal investigation not only in Estonia and Denmark, but also in the U.S. The development has unnerved investors, who are now bracing for hefty fines. Danske’s share price has plunged more than 40 percent this year, wiping over $15 billion off its market value.

Estonian prosecutors said they have been in contact with authorities in the U.S. in relation to the case. They’re also in touch with their counterparts in Georgia and Azerbaijan, among other countries. The prosecutor said that Danske Bank had been cooperating in the investigation.

Perling underscored the fact that the suspects hadn’t been arrested and said that they “most likely” wouldn’t be, after 48 hours of detention. But the courts have been asked to seize assets from the suspects totaling about 1.5 million euros of alleged proceeds from the criminal activity, State Prosecutor Marek Vahing said on Wednesday. This includes cash, money on accounts and cars.

Bill Browder

Wednesday’s developments shed more light on the length and depth of the investigation into Danske. Estonian police said they initiated their probe back in November 2017, which is earlier than previously thought. Previous efforts to dig up evidence had stalled due to a lack of proof. But media reports, which were led by the Berlingske newspaper, helped revive the investigation. Prosecutors said a criminal complaint by Hermitage Capital founder Bill Browder also helped support their probe, allowing them to continue digging.

Danske Criminal Probe Leads to First Bankers Being Detained

Alavere said that most of the former Danske people detained were on a list of 26 suspects provided by Browder.

Kenni Leth, a Danske spokesman, said the bank wasn’t able to comment on the people apprehended and couldn’t say whether the eight former employees it reported to police were among the 10 detained in Estonia. “We continue to cooperate with all relevant authorities,” he said.

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