Monday 29 April 2019

Danske Bank scandal buried in Europe

Last year a huge scandal was uncovered. The Danish bank, Danske Bank, had bought a few years earlier an Estonian Bank. This bank was being used as a piggy bank for various Russian Oligarchs. Danske took over, promptly saw that the moving of hundreds of millions to the West via the Bank was the only source of profit and decided to look the other way, or to find ways of making that business feel compliant.

Eventually, this was discovered and the Bank looked to be in deep trouble for breaching Money Laundering regulations. But the European Banking Authority has reviewed the report published into all the above shenanigans and closed the case. It has said that although there were failings there was not wrong-doing.

The obvious conclusion to this is that the Board members of the EBA are other National Bank regulators and they have concluded that their own banks may well be doing this, so it is best to make sure there is no punishment for this, as they and their own countries will be next.

Interestingly then, the EU commissioner, Valdis Domrbovskis, is infuriated with this decision, as are many Euro MEP's. They want to see the report and see some action. They will see action of course, but it will be by the US who will no doubt decide on massive fines for money laundering.

It is an interesting case of supra-national governance failure. More akin to Fifa than anything else, where the members pretend to be upholders of justice but in reality vote for their own interests alone. Notably the EU does not have its own Banking regulator - maybe it needs to give the ECB come teeth?

More worryingly perhaps is that Denmark and Estonia should be worried about their own houses and reputation for Financial Affairs, but will now hide behind this ruling. All this rule by international, undemocratic and unaccountable bodies seems not to be the way forward for clean business - who would have thought?


Matt said...

Slippery slope investigating financial irregularities. The EU accounts for the same period were not "Fair and accurate" and contained lots of "Material errors" (or basically fraudulent payments).

hovis said...

Supra national bodies make it easier to get to this point as the bucks stops... nowhere.

Then again all regulatory bodies are prone to capture - for example Lloyds looks to be systemically fraudulent and criminal in its (ongoing) cover ups and not a finer lifted..

Anonymous said...

If you purchase £100 of Euro from Thomas Cook when you book your holiday, you are required to show photographic I.D. to assist in Money Laundering prevention.

If you transfer £100,000,000,000 into euros, via your same regulatory compliant bank, no one asks to see anything.

Anonymous said...

FIFA is a good analogy. I remember when Stanley Rous stepped down the Guardian and BBC were ecstatic that the age of paternalistic Brit oversight were done with. Turned out the days of no corruption were done with, too, though I'd never have forecast that a German would be Der KorruptionKonig.

Belgraviadave said...

... or with someone like Christine Lagarde, a convicted criminal.