Sealed Envelope Takes Center Stage in Swedbank Laundering Drama

(Bloomberg) -- A sealed envelope reported to contain sensitive information and criticism of Swedbank AB has become the centerpiece in the unfolding scandal involving billions of dollars of cash flowing out of Russia through Estonia.

It holds a report by Norwegian lawyer Erling Grimstad, who was commissioned by the bank to look into its activities after the scandal erupted with revelations about Danske Bank A/S. The report is now in the hands of prosecutor Thomas Langrot. He was reluctantly handed it in the sealed envelope during a raid of the bank’s Stockholm headquarters on March 27.

Langrot, whose team visited the bank as part of a probe into whether Swedbank committed aggravated fraud by providing what appeared to be misleading statements about the alleged money laundering, has slammed the bank for failing to cooperate. On its end, Swedbank has said that it’s cooperating fully, but that the report is covered by attorney-client privilege and can’t be seized.

The bank won’t waive this privilege until “all foreseeable consequences are known and assessed," it said in a statement. “It’s incomprehensible that the prosecutor doesn’t respect the law and instead uses media to cast suspicion over the management of the bank by implying that the management is hampering the investigation."

Meanwhile, the Swedish Financial Supervisory Authority has received the same report as part of a separate probe and had no qualms about perusing its contents. The financial watchdog also released it to the media, albeit in a heavily redacted form.

Read more: See the redacted Grimstad report here

Sealed Envelope Takes Center Stage in Swedbank Laundering Drama

According to broadcaster SVT, which obtained the report earlier, Grimstad found that Swedbank’s Estonian branch handled as much as 20 billion euros a year in transactions from non-resident, high-risk customers from 2010 to 2016. The report, dated Dec. 10, 2018, advised Swedbank to immediately inform authorities in Sweden and Estonia.

The date indicates that Swedbank’s management were informed about potential breaches of money-laundering rules well ahead of the Feb. 20 SVT investigative news program that broke the allegations into the open.

It also raises serious questions about comments made by now ousted Chief Executive Officer Birgitte Bonnesen when the bank published its fourth-quarter earnings on Jan. 29. Bonnesen, who was fired in late March, then reiterated previous comments that it had no link to the Danske Bank scandal.

Comments like that prompted the Swedish Economic Crime Authority to start its aggravated fraud probe.

It’s now sitting on potential evidence in a sealed envelope. The question is whether the prosecutor decides to ignore Swedbank’s argument. It could potentially also ask the financial regulator for its copy.

Langrot was not available to comment.

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