An international coalition of pension funds, government entities and asset managers is suing Danske Bank over a far-reaching money-laundering scheme tied to Russia, and its subsequent cover-up.
Law firm Grant & Eisenhofer announced the lawsuit as being tied to “one of the most egregious money laundering scandals in history.” The suit seeks $475 million in damages for investors in 19 countries, saying numerous institutional investors, “including many of the world’s largest pension funds, suffered substantial losses at the hands of Danske Bank’s unchecked laundering of funds passing through its branch in Estonia.”
The lawsuit alleges that Danske knew about the problem since 2013, but failed to take any action, deciding instead to continue to keep the issue covered up.
“Although the criminal laundering scheme flowed through the little Estonia branch, our lawsuit asserts that something was indeed rotten in the state of Denmark, namely that Danske Bank leadership failed to take any corrective action for nearly five years,” said Olav Haazen, a lawyer with Grant & Eisenhofer who represents the investor group. “No one would have expected an elite, well-established European bank like Danske to be involved in money-laundering of any sort, let alone of the scale uncovered in this case — it’s one of the most egregious money laundering scandals in history.”
The fallout from the scandals continued internally as shareholders at Danske Banks annual meeting called for bank management to be held personally responsible for the scandal, while others said they wanted the bank to be split up, according to a report by Reuters.
The heart of the investigation lies with over $226 billion in payments that flowed through the bank’s Estonian branchbetween 2007 and 2015.
In response, members of the bank’s executive board have waived bonuses for 2018.
The bank is currently under numerous probes and investigations all around the world, and the U.S. Securities and Exchange Commission also said it was opening a probe last month. Investors in the bank lost almost $9 billion following the fallout of the scandal, when the bank’s stock lost half of its value.
“The real scandal isn’t about a small foreign bank branch going rogue — it’s about the shocking concealment of criminality that went straight to the top of the enterprise,” Haazen said in the law firm’s announcement of the suit. “Danske Bank’s management engaged in a concerted cover-up of its enormous money laundering exposure, while continuing to paint a rosy picture to investors. For years, leadership made no disclosures about the problem and then misrepresented the extent of its participation in the scheme, while touting the bank’s anti-money laundering policies and practices.”
PYMNTS.com | March 18, 2019