Swedbank scandal puts spotlight on CEO’s history of denials

Bloomberg

Birgitte Bonnesen, the chief executive officer of Swedbank AB, has consistently denied that her bank had any involvement in the Estonian money-laundering scandal engulfing Danske Bank A/S.
This week, her words came back to haunt her. Swedbank was forced to backtrack on its previous assertions and has now acknowledged that it also handled suspicious transactions, which it says have been reported to the police. The admission follows a report by Sweden’s main broadcaster, SVT, alleging that the bank helped transfer 40 billion kronor ($4.3 billion) in illicit funds from Danske Bank between 2007 and 2015.
Bill Browder, the investor best known for chasing money launderers, says he also has evidence directly linking Swedbank to the Danske scandal. Browder says a claim by Bonnesen that he’s assured Swedbank he won’t file a criminal complaint is “not true.”
The sequence of events unnerved investors, and Swedbank lost more than a fifth of its market value as the news broke this week. For now, the bank’s board has stood behind the CEO, with Chairman Lars Idermark saying he “absolutely” thinks Bonnesen should continue in her role.
But others are less convinced. “Bonnesen’s communication strategy has been beyond all criticism,” said Joakim Bornold, a savings adviser at Soderberg & Partners, which helps Swedish retail investors decide where to put their money.
At Swedbank’s third-biggest shareholder, Alecta, head of ownership Ramsay Brufer says that they “welcome the bank’s decision to have an independent review of the events. The important thing now is to let the investigation take its time, that it’s handled in a professional way and that all information comes forward.”
Swedbank’s plight comes as a $230 billion dirty-money scandal dragging down Danske Bank continues to spread. Danske is accused of letting a tiny branch in Estonia become a hub through which illicit funds from the former Soviet Union made their way to the West. The bank is being investigated by the US Justice Department and the Securities and Exchange Commission, among others, and investors are bracing for fines, potentially of billions of dollars.
Browder has consistently made the point that Danske wasn’t alone. “What’s emerging is that a good part of the Nordic banking system has been used by Russian money launderers and neither the regulators nor the banks did anything about it for many years,” he said.
Stefan Ingves, the governor of Sweden’s Riksbank, hinted that banks operating close to the Russian border are putting themselves at risk.
“Given the history in the Baltic countries and their geographic location, one has to be aware that you’re not too far away from some bad guys,” he said in an interview with Swedish newswire TT.
Bornold says it’s positive that Swedbank, which is the biggest bank in the Baltic region, has now started an independent investigation to get to the bottom of the matter but warns that that’s not enough to regain investors’ trust.