Swedbank Laundering Case Explodes With Alleged Manafort Link

Mar 27 2019, 6:53 AMMar 27 2019, 12:11 PMMarch 27 2019, 6:53 AMMarch 27 2019, 12:11 PM

(Bloomberg) -- The Swedbank AB money laundering scandal widened as Sweden’s main broadcaster published a report alleging the bank misled U.S. authorities.

Former Trump campaign chairman and convicted felon Paul Manafort was among those to have received suspicious payments made through the Stockholm-based lender, the SVT network reported on Wednesday, amid intensifying scrutiny of Russian cash that passed through the bank’s Estonian unit.

Read more about the latest allegations against Swedbank

Separately, the bank’s headquarters were raided by Sweden’s Economic Crime Authority on Wednesday, as part of a probe into whether it breached insider information rules by giving its biggest shareholders advance notice of an SVT report on money laundering that was broadcast on Feb. 20.

The bank’s shares declined almost 8 percent in Stockholm trading, bringing losses since the scandal broke late last month to over 20 percent.

The allegations pile pressure on Sweden’s oldest bank after reports that it was used to handle more than $10 billion in potentially suspicious transactions tied to the Danske Bank A/S Estonian laundering case. SVT is now reporting that the sums could be much greater: Up to 20 billion euros ($23 billion) a year between 2010 and 2016.

Chief Executive Officer Birgitte Bonnesen, who has been criticized for giving evasive answers to some of the laundering questions, is likely to face tough questions at the annual shareholder meeting on Thursday. The Swedish press has expressed concern over the impartiality of those overseeing Swedbank, amid career ties and friendships that link the regulator, the bank, its board and some of its largest shareholders.

Deposed Ukrainian President Viktor Yanukovych, who’s now in hiding in Russia, is also among those alleged to have used Swedbank’s services. Philip Richards, an analyst at Bloomberg Intelligence, said "our concern is that Swedbank’s management is losing its grip on how to handle what are now snow-balling money-laundering accusations and allegations.”

“With analysts left with no clarity from the bank on potential suspicious transactions, other sources seem to be driving events," Richards said.

Swedbank Losing Grip on Snowballing Dirty-Money Links: BI React

In an emailed statement, Swedbank spokesman Gabriel Francke Rodau provided the following comment:

“Swedbank is limited by applicable law to comment on the existence of, or the contents of, any confidential potential communication with the New York State Department of Financial Services. Swedbank cooperates fully and communicates clearly, correctly and with the best intentions with all relevant authorities.”

Shareholder Confrontation

The bank will face shareholders on Thursday at its annual general meeting. The dirty money case has raised serious questions as to whether Bonnesen can continue as CEO, amid concerns that she may have deliberately misled the public as to what the bank knew about potential laundering activities.

Joakim Bornold, a savings adviser at Soderberg & Partners in Stockholm, said the SVT report is “hard to interpret,” adding that it’s “worrying information if it’s correct.”

“The new information, correct or not, increases the pressure ahead of the AGM,” Bornold said. “The board is safe when it comes to the big Swedish owners, the future of the board and CEO is very much in the hands of the foreign owners.”

Read More: Swedbank CEO’s Future at Stake as Investor Showdown Nears: Q&A

Wednesday’s SVT report alleges that Swedbank misled U.S. authorities seeking more information on its involvement in the 2016 Panama Papers scandal. The broadcaster claims that, in April of that year, the New York State Department of Financial Services, DFS, sent a letter to Swedbank’s local office, asking the bank to report all transactions that can be linked to Mossack Fonseca.

Read More: Dirty Money Allegations Against Swedbank Trigger U.S. Interest

Leaked documents now show that Swedbank did business with over 100 companies tied to Mossack Fonseca. But the bank told the DFS that it “did not identify reasons to suspect money laundering,” according to SVT.

In a separate report on Tuesday, SVT said transactions by Swedbank’s non-resident high-risk customers in Estonia amounted to between 10 billion euros and 20 billion euros each year in 2010 to 2016.