by Dr. Manfred Gerstenfeld
Israel should use the Danske Bank case as a key example of fraudulent anti-Israeli moralists.
BESA Center Perspectives Paper No. 973, October 12, 2018
EXECUTIVE SUMMARY: Denmark’s
largest bank, Danske Bank, has admitted that its Estonian banking
subsidiary has been involved in what is probably the largest dirty
money-laundering scandal in Europe’s history. In recent years, this
deeply corrupt bank has boycotted several Israeli companies on “ethical
grounds.” Israel should use the Danske Bank case as a key example of
fraudulent anti-Israeli moralists. Revelations from further
investigations into the bank’s misbehavior will likely result in many
additional disclosures in years to come.
Somewhat surprisingly, Denmark has provided an
example of a huge, morally corrupt, anti-Israel, BDS-promoting body. It
was far more probable for such an organization to come to light in
Norway or Sweden, where there are many more anti-Israel inciters.
It has recently become known that Denmark’s
largest banking group, Danske Bank, has been involved for years in a
vast dirty money-laundering scandal. This criminal activity was
conducted by its subsidiary in Estonia between 2007 and 2015. The amount
of money transferred abroad and being currently investigated is a
staggering $234 billion. The bank estimates that a significant
proportion of these payments was suspect.
Fifteen thousand accounts were reviewed. Of these,
6,200 had the most risk factors. The customers involved were primarily
Russians and other Eastern Europeans non-resident in Estonia.
To carry out this scheme, Danske Bank’s subsidiary
needed the help of major foreign banking correspondents. It has not yet
been ascertained to what extent those banks were aware of what was
going on. Yet, in 2013, JP Morgan terminated its correspondent banking
relationship with the Estonian bank over doubts about its activities. It
was replaced by Bank of America. Deutsche Bank also continued to make
US dollar wire transfers on behalf of the Estonian bank.
In 2014, when Danske Bank had already received
warnings about the unethical activities in its Estonian business, it
decided to add Bank Hapoalim to a list of companies in which it could
not invest due to its corporate accountability rules. The bank claimed
that the exclusion was for “legal and ethical reasons.” Danske Bank said
Bank Hapoalim was funding settlement activities and was “acting against
the rules of international humanitarian law.” Danske Bank had also
withdrawn its investments from the Israeli companies Africa Israel
Investments Ltd., Elbit Systems, Aryt, and Danya Cebus.
The boycott of Bank Hapoalim was not without
consequences for Danske Bank. Several states in the US, including
Colorado and New Jersey, ceased doing business with the bank and/or sold
their investments in it. In 2016, Danske Bank reversed its decision
concerning Bank Hapoalim.
A year ago, the British daily The Guardian
revealed that, based on leaked data, Azerbaijan’s leadership had used
the bank to fund a secret $2.9 billion scheme to pay prominent Europeans
through a network of British companies. The paper claimed that between
2012 and 2014, more than 16,000 covert payments were transacted through
Danske Bank’s branch in Estonia. Part of this money appears to have been
passed on to politicians and journalists within a lobbying operation
framework.
The scheme was nicknamed “the Azerbaijan
Laundromat.” Among those receiving payments were former members of the
Council of Europe’s Parliamentary Assembly, as well as a board member of
the European Bank for Reconstruction and Development (EBRD).
It has not been proven that all recipients knew
the source of the money as it was disguised via intermediaries. Still,
what was disclosed at the time was enormously shameful. But in view of
what is now public knowledge about the extent of the money-laundering
scandal, it is minor.
Danske Bank’s CEO, Thomas F. Borgen, recently
tendered his resignation but said he would stay on until a suitable
successor was found. He has since been ousted by the Board. A report on
the scandal was prepared by a Danish law firm that had previously
advised the bank – a choice that was criticized due to that prior
relationship.
The report outlines how incompetent and negligent Danske Bank’s management was. It states inter alia
that no adequate controls were put in place by the bank of its Estonian
branch. Nor did it react to serious indications of wrongdoing over the
years. There are also suspicions that some employees in Estonia assisted
in the money laundering or colluded with clients.
Although the scandal has reached gigantic
proportions, the full extent of its repercussions have not yet been
fully exposed. Many more ramifications will take time to investigate.
The UK National Crime Agency announced that it has begun an inquiry into
the use of UK companies by the Danske Bank group involved in money
laundering activities. The organization Corruption Watch has requested
that serious consideration be given to withdrawing the bank’s UK
license.
Danske Bank’s money-laundering activities are
probably the largest in European history. Danish Business Minister
Rasmus Jarlov said he expected Danish authorities to fine Danske Bank
the equivalent of more than $600 million. Analysts expect that the bank
may also be fined billions of dollars by US and European regulators.
There are already voices urging the bank’s Board to assess whether
management breached its fiduciary responsibilities and can be held
liable. If so, they should be sued.
Israel is subjected to a constant barrage of
extreme hate propaganda and discrimination by morally corrupt
individuals and organizations. If Israel had, as it should have, an
anti-propaganda agency, the Danske Bank scandal could be used as a prime
example of fraudulent ethics. This case would be all the more useful as
revelations from further investigations into the bank’s misbehavior
will likely result in many additional disclosures in years to come.
BESA Center Perspectives Papers are published through the generosity of the Greg Rosshandler Family
Dr. Manfred Gerstenfeld is a Senior Research Associate at the BESA Center and a former chairman of the Steering Committee of the Jerusalem Center for Public Affairs. He specializes in Israeli–Western European relations, anti-Semitism, and anti-Zionism, and is the author of The War of a Million Cuts.
Source: https://besacenter.org/perspectives-papers/denmark-bds-bank/
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