Danske money laundering whistleblower
labels UK structures a 'disgrace'
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[November 21, 2018]
By Jacob Gronholt-Pedersen
BRUSSELS (Reuters) - British company
structures which hide the identity of those behind them were branded a
disgrace by the whistleblower who brought to light an alleged 200
billion euro ($228 billion) money laundering scandal involving Danske
Bank.
"The role of the United Kingdom is an absolute disgrace. Limited
liability partnerships and Scottish liability partnerships have been
abused for absolutely years," Howard Wilkinson, who headed Danske Bank's
Baltics trading unit from 2007 to 2014, told European Union lawmakers on
Wednesday.
And in a sign of the wider repercussions of the Danske Bank affair,
Deutsche Bank said it played only a secondary role as a correspondent
bank, limiting its need to know about the people behind the
transactions.
Chief Regulatory Officer Sylvie Matherat said that the German bank had
acted once it noticed suspicious transactions, but declined to comment
on the volume of payments.
Deutsche Bank helped process up to $150 billion in suspicious payments,
a source with direct knowledge of the case told Reuters on Monday.
Payments made through the tiny Estonian branch of Denmark's biggest bank
between 2007 and 2015 have triggered investigations by authorities in
Denmark, Estonia, Britain and the United States and caused anger among
shareholders who have seen the value of their investments in Danske Bank
tumble.
Britain's National Crime Agency (NCA) has said it is investigating the
use of UK-registered companies and a number of so-called professional
enablers in connection with the widening scandal, which has already led
to the departure of both Danske's chief executive and chairman.
Danske Bank shares: https://tmsnrt.rs/2PKHpuE
WHISTLEBLOWER PROTECTION
On Tuesday, a coalition of law firms said they would be pursuing
compensation on behalf of investors, in the first move to claim damages
against Danske Bank.
Danske Bank's interim CEO Jesper Nielsen told the EU lawmakers that it
had found signs of internal collusion and suspicious activity that
needed to be investigated.
"It is up for the authorities now to determine the exact level of money
laundering and the same goes for what happens to the 42 people that have
been reported to authorities and the eight that has been directly to the
police," Nielsen said.
Wilkinson, whose anonymity was ended by an Estonian newspaper, said this
was a "gross abuse of human rights", in part because whistleblowers risk
never working again.
The Briton said he did not back mandatory internal reporting channels
for whistleblowers, although he said it would not have crossed his mind
to go to Estonian authorities in 2013 because he trusted his employer to
deal properly with his reports.
He also called on EU lawmakers to ban non-disclosure agreements (NDAs)
such as the one he signed with Danske Bank, which prevent former
employees speaking out over wrongdoing.
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Danske Bank whistleblower Howard Wilkinson speaks at a public
hearing at the Danish parliament in Copenhagen, Denmark, November
19, 2018. Ritzau Scanpix/Liselotte Sabroe via REUTERS
"I took the view that the right thing to do was to take his (a
senior executive's) word for it and take the money," he said when
asked why he had signed an NDA with Danske Bank.
AMERICAN CONNECTION
Wilkinson reiterated his view that almost all the money that flowed
through Danske Bank's Estonian branch passed through banks in the
United States, including one major European lender.
"In my estimate 80-90 percent of the money that went through Danske
Bank ended up in dollars leaving through U.S. correspondent banks
into the financial system," he said.
Deutsche Bank, JPMorgan and Bank of America all cleared dollar
transactions for Danske's Estonian branch, sources have told
Reuters.
JPMorgan ended the correspondent banking relationship with Danske in
2013 on grounds that transactions did not comply with anti-money
laundering rules, a person familiar with the matter said on Monday,
while Bank of America has declined to comment.
Wilkinson's U.S. lawyer Stephen Kohn has said the EU should
harmonize whistleblower protection with the United States to avoid
major money laundering scandals like the Danske incident.
In a written response to the EU lawmakers, Kohn called for the
establishment of a government agency where whistleblowers can report
confidentially or anonymously, as well as payments of 10-30 percent
of the proceeds obtained from wrongdoers to incentivize
whistleblowers to step forward.
A number of U.S. authorities offer financial rewards to incentivize
informants to help recover billions of dollars lost to large-scale
and often well hidden economic crime.
The U.S. Securities and Exchange Commission (SEC) says it alone paid
$168 million to 13 individuals in the latest financial year, up from
$50 million in the previous year. It has handed $326 million to 59
people since the program began in 2011.
Increased protection for whistleblowers against retaliation, and
remedies to compensate them for loss of reputation and income and
emotional distress, is also crucial, Kohn added.
Danish lawmakers pledged to improve legal protection for
whistleblowers following a public hearing on Monday.
(Additional reporting by Stine Jacobsen and Teis Jensen in
COPENHAGEN and Kirstin Ridley in LONDON; writing by Alexander Smith;
editing by Jason Neely/Keith Weir)
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