Monday 16 July 2018

Danes threaten to make bankers pay 'big price' in wake of Danske scandal

Lokke Rasmussen, Denmark’s prime minister
Lokke Rasmussen, Denmark’s prime minister

Peter Levring

The biggest banking scandal in modern Danish history is prompting a growing number of lawmakers to argue in favour of much higher fines.

Business Minister Rasmus Jarlov says penalties should exceed the profits a bank stands to make through financial crime.

The idea is backed by the ruling Liberal Party, the Danish People's Party, the opposition Social Democrats and the Red Green Alliance, according to interviews conducted by Bloomberg News. Jarlov is a member of the Conservative Party.

"It's a moral problem that you can make more money than you'll be fined for committing the crime, and that might tempt some to commit it," Jarlov told lawmakers and reporters in Copenhagen. He also said any law change probably wouldn't be retroactive.

The comments follow a stream of revelations showing that Danske Bank, Denmark's biggest lender, became a laundromat for entities from Russia, Moldova and Azerbaijan over several years through 2014. Most recently, a client at the bank was tied to a 2009 illegal weapons deal linked to North Korea.

Last month, the Danish supervisor ordered Danske to enact a list of improvements in response to the scandal, including holding an additional DKK5bn (€670m) in regulatory capital. No Danske staff have been charged with any crimes.

One Copenhagen-based executive has stepped down, though he will continue to receive his pay until October next year.

Danske CEO Thomas Borgen has apologised for its failures and acknowledged that management ought to have stepped in sooner. The bank is still conducting its own internal probe, the findings of which are due to be published by September.

A spokesman for Denmark's ruling Liberal Party, headed by PM Lars Lokke Rasmussen, said "it simply offends your sense of justice if you're left with the suspicion that it might be good business to do this. There needs to be a price to pay - a big price".

Denmark has so far been considering a maximum fine for financial crimes of DKK50m (€6.7m). By comparison, profit at Danske's Estonian unit reached more than six times that amount in 2013 alone.

The Red Green Alliance, said: "We're on the same page as the minister. The fact that it's possible to simply apologise, change procedure and then just get away with it, that's insane."

Even Denmark's Bankers' Association is willing to discuss tougher penalties. But Denmark faces limitations on pursuing a criminal case because the alleged crimes were committed in Estonia. Both Denmark and Estonia have said they may yet take further action.

"This can't be a profitable business strategy," Jarlov said. "It can't be that it's possible to make money from engaging with deeply criminal activities of money laundering for dictators, weapons dealers and other scoundrels.

"So I think that the punishment must be so severe that it's impossible to make money from it." (Bloomberg)

Irish Independent

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