Danske Gold Report Has Danish Lawmakers Calling for Broader Probe

(Bloomberg) --

Investigations into money laundering at Danske Bank A/S should be expanded to include the lender’s possible use of gold as a way to help clients in Estonia hide their fortunes, according to Danish lawmakers.

“Danske Bank has some explaining to do,” Torsten Schack Pedersen, a Liberal Party member on the parliament committee that oversees financial legislation, said by phone.

Business Minister Simon Kollerup said investigators now “need to get to the bottom of this case.”

The comments follow revelations that Danske Bank, at the height of its dirty-money scandal, started offering gold bars to wealthy clients to help them keep their fortunes hidden. The bank’s Estonian branch, which was already wiring billions of client dollars to offshore accounts, told a select group of customers, mostly from Russia, that they could also convert their money into gold bars and coins, according to the documents, which date back to the middle of 2012. A Danske Bank spokesman declined to comment on the story.

Kollerup said that if the revelations are true, the setup is “utterly despicable.”

Danske Bank is being investigated by the Department of Justice and the Securities and Exchange Commission in the U.S. In Europe, it’s the target of criminal probes by prosecutors in Denmark, Estonia and France. The bank has also had several class-action lawsuits brought against it, and its former chief executive officer, Thomas Borgen, is under preliminary criminal investigation in Denmark, along with many other former directors at Danske.

In Danske’s September 2018 tell-all report on its non-resident unit, the bank listed the services it provided to clients. Aside from payments, these included setting up foreign-exchange lines, as well as bond and securities trading. The bank didn’t list the sale of gold bars.

In an email to Bloomberg News, Stephen Kohn, the lawyer representing Danske whistle-blower Howard Wilkinson, confirmed that gold was sold via the now defunct Estonian branch. He said the total amount was $5 million. Wilkinson’s name appeared on some of the documents advertising the gold. Kohn also said he considered the Bloomberg article to be exaggerated and that clients were vetted before being sold gold. He said the report was an effort to discredit Wilkinson. According to documents seen by Bloomberg, clients didn’t require anti-money laundering approval if they left the gold they purchased in long-term storage.

Hans Kristian Skibby, a lawmaker for the Danish People’s Party who helps oversee financial legislation, said the Financial Supervisory Authority needs to look into the latest developments.

He also said that Danske’s own report into the scandal now “seems deeply unreliable,” given that “such a relevant -- and for Danske Bank incriminating -- piece of information doesn’t appear in such a big report.”

Kollerup said he assumes that prosecutors will take the development into account, as they continue their investigations.

“The people responsible need to feel that what they have done is completely unacceptable and that it will have strong consequences,” Kollerup said.

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