Swedbank Estonia Executives Are Fired Amid Laundering Probe

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(Bloomberg) -- Three top executives at the Estonian branch of Swedbank AB, including a one-time candidate for central bank governor, have been fired amid an ongoing investigation into a vast money-laundering scandal.

The news came not long after police in Estonia confirmed that the former chief executive officer of the local branch of Danske Bank A/S had committed suicide, as criminal probes into the Danish lender’s involvement in a $220 billion dirty-money affair continue. Swedbank is being investigated for its possible involvement in the Danske saga.

Estonia has emerged as ground zero for one of Europe’s worst laundering cases ever, after the local branches of both Danske and Swedbank were allegedly used to funnel billions of dollars in suspicious funds from the former Soviet Union into the West. Danske said on Tuesday its local branch has been put in liquidation as it completes an exit from Estonia first announced in February, following an order from the financial supervisor.

Stockholm-based Swedbank, which dominates the financial industry in the Baltic region, said late on Monday that its former Estonia CEO Robert Kitt, who had been suspended since June, has now lost his job. He had been seen at one point as a candidate to replace Ardo Hansson as the governor of Estonia’s central bank, a position that would also guarantee a seat on the governing council of the European Central Bank.

Swedbank said it appointed Olavi Lepp, its head of risk management, as its permanent CEO to run the Estonian unit.

In an interview with local media, Lepp said the Swedbank unit may have had too few resources to do more to “prevent money laundering.” He said management felt that it “always met the minimum legal requirements, but it could have been done better.”

Since 2016, Lepp said that Swedbank has made “very principled” changes to prevent money laundering, and now feels that it is “ahead of others.” Lepp has been with the bank in Estonia since 2000, before it was taken over by Swedbank. His roles have included handling payments and cash management.

Vaiko Tammevali, who had been chief financial officer at Swedbank in Estonia before being suspended in June, also lost his job, as did Kaie Metsla, the current head of the bank’s private customer division, according to a statement late on Monday.

The decision to remove the executives was based on “information concerning historical shortcomings connected to anti-money laundering work,” according to Bjoern Elfstrand, council chair of Swedbank Estonia.

According to the bank, ongoing investigations into money laundering have so far not shown that there was any criminal activity.

Danske said a liquidation committee will now manage what’s left of its Estonian operations. Its corporate loan portfolio will be transferred to Danske’s Lithuanian branch for winding-down, while its retail loan portfolio will be transferred next month, after its sale became unconditional.

“All Danske Bank logos and signs will be removed from the head office building in Tallinn in the coming days,” the bank said.

©2019 Bloomberg L.P.

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