Browder Says Sweden's Dirty Money Case Has Only Just Begun

(Bloomberg) -- Bill Browder, the co-founder of Hermitage Capital Management, says the fallout of a money laundering saga involving the biggest mortgage bank in Sweden is “just starting.”

During a tour of the Nordic region this week, Browder said he won’t drop his accusations against Swedbank AB even after the Swedish prosecutor declined to take up his complaint, citing a statute of limitations. The avenues Browder is pursuing include garnering support among members of Sweden’s parliament, he said.

The activist investor claims Swedbank handled some of the proceeds of Russian tax fraud tied to the death of his lawyer Sergei Magnitsky. Browder, who got Danish prosecutors to take on similar charges against Danske Bank A/S, is trying to persuade Swedish authorities to pursue his case despite losing an appeal earlier this month.

While Denmark has acted forcefully in response to the allegations against Danske, including bringing preliminary charges against a number of its former executives, Browder says that “the game is just starting in Sweden.”

Legal Options

In Stockholm on Monday, the financier made clear that he and Hermitage Capital Management are “not done in our advocacy of getting the Swedish authorities to open a criminal investigation” into Swedbank. “We’ll continue to evaluate what the legal routes are, the administrative routes of changing this outcome.”

Sweden’s oldest bank and the largest financial presence in the Baltic region allegedly handled over $100 billion in potentially suspicious funds. Swedish media have reported that the beneficiaries of Swedbank’s dealings included Paul Manafort, the disgraced former campaign chairman of Donald Trump, and deposed former Ukraine President Viktor Yanukovych.

Swedbank is being investigated by regulators in Sweden, Estonia and the U.S., in connection with the allegations. It fired its chief executive officer, Birgitte Bonnesen, in March, while the chairman who’d supported her left less than a month later. The bank has lost about 30% of its market value this year, making it the worst-performing European financial stock in the period.

Swedbank has repeatedly said it is cooperating with the relevant authorities and that it has reported any suspicious dealings to the police. Spokeswoman Unni Jerndal said on Tuesday that Swedbank is “continuously providing the information that the authorities are requesting.” She also referred to an ongoing internal investigation at the bank and said that updates will be provided in connection with quarterly reports.

The Political Route

Browder says he’s also ready to take his case to Swedish lawmakers. “I’m expecting a very robust and sort of sympathetic response from parliament on the lack of action by the law enforcement agencies in Sweden,” he said. Hermitage expects to “have more to report on that” in the autumn, he said. He adopted a similar approach in Denmark.

“In the Swedbank case we’ve encountered something I would describe as extraordinary, which is that the Swedish authorities have refused to open an investigation in Sweden on the back of our complaint,” Browder said. “They’ve refused once, using very technical arguments; they are saying that individual transactions identified took place beyond the statute of limitations, saying that it doesn’t qualify as major fraud.”

Niklas Ahlgren, a spokesman at the Swedish Economic Crime Authority, said there might be reason to review the case again if some new information were to be brought forward. Any complaint about the decision not to proceed with an investigation would need to be handled by the Swedish Prosecution Authority. Browder’s appeal was rejected by the Economic Crime Authority.

Erik Thedeen, the head of Sweden’s Financial Supervisory Authority, said the agency expects to be close to concluding its investigation into allegations of money laundering in the Baltics by the end of October. He declined to comment on media reports that the FSA had been contacted by European regulators with a view to ensuring the investigation was being properly conducted.

Browder says he and his team are now trying to navigate Sweden’s legal system. He also said that many of the law firms he’s approached didn’t want to work with him because of their relations with Swedbank.

“Regardless what we do, it seems like an untenable position to take from a public policy perspective, to let Swedbank off the hook,” Browder said.

--With assistance from Jonas Bergman.

To contact the reporters on this story: Mikael Holter in Oslo at mholter2@bloomberg.net;Amanda Billner in Stockholm at abillner@bloomberg.net

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net, Tasneem Hanfi Brögger, Frances Schwartzkopff

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