Swedbank Criminal Probe Intensifies in Fight Over Documents
Swedbank Hires Nordia to Represent It in Criminal Investigation
(Bloomberg) -- A criminal probe tied to money laundering allegations engulfing Swedbank AB drew sharp recriminations from both sides over the weekend, and raised serious questions about the role of the board.
After the prosecutor accused Sweden’s biggest mortgage bank of refusing to hand over key information, Swedbank’s lawyers responded with claims that investigators were ignoring the norms of Swedish law. Meanwhile, a report in Swedish media said the bank’s board was behind a decision to withhold documents from police.
Since last week, Swedbank’s dirty money scandal has exploded. The potentially suspicious amounts involved may now exceed $100 billion, while alleged beneficiaries include convicted felon and former Trump campaign chairman Paul Manafort, as well as deposed Ukraine President Viktor Yanukovych.
On Thursday, Swedbank fired Chief Executive Officer Birgitte Bonnesen as allegations against the bank piled up. On top of a criminal probe, the lender is being investigated by the financial supervisory authorities of Sweden and Estonia, as well as by authorities in the U.S., amid claims it was part of the $230 billion Danske Bank A/S Estonian scandal. Swedbank’s share price has plunged by roughly a third since the case first erupted on Feb. 20.
Swedbank said on Sunday it is using Nordia as its external legal counsel to handle a criminal investigation that focuses on potential fraud. The probe is tied to the broader laundering case and focuses on what appear to have been misleading statements from the bank.
Swedbank published a statement by Nordia on Sunday, in which it challenged the prosecutor’s assessment that the lender had hindered the investigation. Newspaper Dagens Industri had cited chief prosecutor Thomas Langrot as saying that the bank had obstructed a police raid by refusing to hand over some key information.
Swedbank Board Obstructed Police Raid, Dagens Industri Says
In its statement, Nordia said that allegations by the prosecutor that Swedbank “has not cooperated during the search in the desired way, but to the contrary has hampered the search by not waiving the attorney client privilege and the confidentiality” is “completely incorrect and incomprehensible.”
According to Nordia, “it was pointed out that information covered by attorney client privilege cannot be seized.” The law firm said that the prosecutor’s subsequent decision to seize the documents is “in direct conflict with Swedish law.”
In an emailed comment on Monday, Swedbank spokesman Gabriel Francke Rodau noted that an earlier statement from the bank said the decision not to hand over documents was made by “management.” He declined to comment further.
Swedbank has, on Nordia’s advice, placed the documents in question in a sealed envelope that’s been marked to make clear that the material is subject to attorney client privilege, the law firm said.
Langrot told Dagens Industri that he had “never experienced that a bank or another player in the financial market has opposed giving us access to documents or information that is needed for our preliminary investigations, even if lawyers have contributed to the information we need.”
The money laundering case surrounding Swedbank reached a fever pitch last week, making the CEO’s continued presence untenable. Amid media allegations that management had misled U.S. authorities, Swedbank’s headquarters were raided on Wednesday by Sweden’s Economic Crime Authority as part of an investigation into a potential breach of insider information rules. The same day, after markets closed, the public learned that the Economic Crime Authority was also investigating Swedbank for fraud, following what appeared to be misleading statements by the CEO.
Some of Swedbank’s biggest investors have since signaled that they’re not satisfied with the board’s handling of the case, suggesting that the CEO’s head may not be the last to roll. In the case of Danske, the chairman was ejected by the bank’s biggest shareholder roughly a month after CEO Thomas Borgen was removed.
The Swedbank money-laundering scandal has been complicated by the bank’s apparent attempts to mislead the public as to the seriousness of the case.
In interviews to local media given since her dismissal, Bonnesen has said she’s confident she did nothing wrong. Speaking to the finance section of Jyllands-Posten, the former Swedbank CEO said she hopes her exit will take pressure off the bank and help it “focus on handling the situation.”
Meanwhile, Sweden announced on Monday it won’t be pursuing a separate complaint by Hermitage Capital Management co-founder Bill Browder, in which he alleged the Swedbank scandal was linked to the fraud case surrounding the death of Sergei Magnitsky. Swedish authorities cited the country’s statute of limitations. The Browder complaint was focused on the years 2006-2012. The Economic Crime Authority said the decision won’t affect other investigations into Swedbank.
--With assistance from Hanna Hoikkala.
To contact the reporter on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net
To contact the editor responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net
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