Money laundering thread leads to infamous man

Yesterday revealed another puzzle piece in the money laundering scandal brought to light by international consortium of investigative journalists OCCRP, Novaya Gazeta, Berlingske, Guardian, Postimees, and other publications in March of last year. Back then, we wrote about how more than €20 million was taken out of Russia through Moldova – that was the first act.

The Estonian branch of Danske Bank was one of the largest western banks to stand out in the money laundering scandal. If the share of all Estonian banks in the scheme was €1.6 billion, Danske was responsible for no fewer than €1.2 billion of it.

The bank’s control mechanisms were poor, and money launderers quickly realized everything going in one end of the pipe would come out the other. This was not the case with other banks as they had functional control mechanisms.

In the second act, Berlingske, in cooperation with Äripäev and other publications, showed that Danske was also used to launder €2.9 billion directly from Azerbaijan. Because the money came from a company that could be directly tied to autocratic head of state Ilham Aliyev, Äripäev labeled Danske the dictator’s bank.

This was followed by six months of silence, until yesterday, when Berlingske and the Guardian wrote that Danske Estonia also handled the money of Lantana Trade LLP registered in the UK. The firm opened an account in Danske in 2012 for a period of 11 months.

Indirect embezzlement

While Lantana was seemingly a relatively inactive small business, their account in Danske saw sums in the millions every day. The Moldova transfers pattern was repeated: accounts of random British shell companies started seeing increasingly outrageous sums. Information available to Berlingske suggests that a Danske board member filed a secret complaint with the bank’s supervisory board in December of 2013. It concerned a discovery that the actual owners of Lantana likely included the Putin family and the Russian Federal Security Service (FSB).

Postimees wrote about the likely connection of Putin’s cousin Igor Putin to the Moldovan case last spring. Igor Putin was a member of the supervisory board of the Russki Zemelnyi Bank. The latter was one of the banks moving money from Russia to Moldova. The bank was owned by Aleksandr Grigoryev that the OCCRP associates with the FSB.

It turned out yesterday that both men also used Promsberbank, while being among its owners and supervisory board members, to move their assets to Danske. Executives of Promsberbank were also behind Lantana. That is how heads of Danske learned of the connection to Putin’s close circle. The companies’ accounts were closed which made the Russians furious.

Berlingske’s information suggests a meeting between two anonymous Russians and representatives of the bank took place soon after. The Russians did not introduce themselves but asked the bankers:

“Does it really seem safe to walk home in the evening?” Another threat was that the bank would soon collapse.

The most important piece of information in the story is that Danske executives knew where the money was from. Even though the Estonian Financial Supervision Authority carried out several checks at Danske in 2014, the watchdog said yesterday that it is considering new control action against the bank considering the Lantana information.

Tens of billions of euros

The authority said Danske did not inform them of an internal analysis having established the true beneficiary of Lantana or corresponding suspicions during the 2014 inspections. The company was among those ignorance concerning which the watchdog held against Danske Bank at the time. If the bank really did know about Lantana, it knowingly kept information from the supervision authority.

The watchdog communicated that misleading them is a serious offense which is the reason why it is considering new control action. The latter would not be public.

Danske’s comment remained unchanged since last time as the bank said it is in the middle of a thorough internal investigation concerning that period’s transactions.

It is probable more went on at Danske Estonia in 2011-2014 that the public doesn’t know about. Bank of Estonia statistics show astronomical spikes in sums transferred to accounts of British companies in Estonian banks. We are talking about tens of billions of euros.

The articles on Estonian and European banking brought Postimees and Äripäev journalists this year’s Bonnier Prize of investigative journalism.