Laundromat Whistle-Blower Testifies to Lawmakers: Danske Update

(Bloomberg) -- Howard Wilkinson, the whistle-blower behind allegations that Danske Bank A/S helped funnel billions in illicit funds through an Estonian unit, is one of several high-profile individuals testifying to Danish lawmakers this morning.

Key Developments:
  • Wilkinson just walked into the chamber. He says at least 10 banks were involved in the flow of suspicious money, including 3 Danske entities.
  • He also says he suspects that about $150 billion went through a U.S. subsidiary of a large European bank, and that he was offered money by Danske, as part of a severance package, to keep quiet.
  • Wilkinson says he thinks there are “serious” questions around the role of the FSA.

Danish FSA Head Defends Failure to Stop Laundering (10:35 a.m.)

Danish lawmakers are now peppering the head of the FSA with questions about why more wasn’t done to stop the alleged laundering at Danske.

Jesper Berg, the head of the Danish FSA, tried to capture the current mood with the following words: “Two years ago there were lawmakers who wanted us to hug bankers. Today, there are lawmakers who want us to string them up. We’ll do neither, we’ll follow the law.”

Danske Hopes the Hearing Will Help Rebuild Trust (10:10 a.m.)

Danske just put out a statement saying it wants to use the hearings to rebuild trust in the bank. It’s sending its interim CEO Jesper Nielsen to answer questions today. He’ll testify before EU lawmakers on Wednesday.

There’s Been a Surge in Reports of Laundering (10:05 a.m.)

Denmark’s state prosecutor Morten Niels Jakobsen says the number of reports of money laundering in Denmark has jumped five-fold over the past five years.

Danske Represented Small Part of the Total Flows (9:45 a.m.)

Berg told lawmakers that the biggest risk in terms of laundering stems from Russian money flowing into western Europe. Berg says that Danske represented just a small part of the total flows from Russia and into western Europe via the Baltics. He also noted that the Danish bank inherited a number of suspicious accounts when it got the Estonian assets in connection with a takeover of Sampo Bank in 2007.

Opening Remarks (9:30 a.m.)

Morten Bodskov, a former justice minister and a key lawmaker for the opposition Social Democrats, opened the hearing by describing the allegations against Danske as “unfathomable” given the “astronomical amounts” under investigation. He also said that the whistle-blower won’t be completely free to answer all questions, even though his non-disclosure agreement with Danske has been waived by the bank.

Another Social Democrat, Benny Engelbrecht, has told Bloomberg that lawmakers will try to find out just how much illicit trading was going on at the Estonian branch before Danske bought it from Sampo in 2007.


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