11th Dec 2018

Whistleblower: Danske Bank gag stops me telling more

  • Danske Bank employs 20,000 people and holds assets worth 140 percent of Denmark's GDP (Photo: danskebank.com)

The man who uncovered the biggest money-laundering scandal in EU history has told a parliamentary hearing that the bank behind it has gagged him from telling all.

But the chief executive of Danske Bank denies that - setting the scene for a clash with MEPs on Wednesday (21 November).

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  • Wilkinson said there was "defeaning silence" on Danske Bank's Lithuania branch (Photo: Kohn, Kohn & Colapinto)

The dispute over the non-disclosure agreement (NDA) signed by the whistleblower, Howard Wilkinson, before he left his job at Danske Bank's Estonian branch took centre stage at a hearing in the Danish parliament on Monday.

Danish MPs wanted to know how the country's biggest lender, Danske Bank, funnelled €200bn of suspicious money, mostly from Russia, between 2007 and 2015.

Wilkinson said he had new information on that, as well as on how Danish authorities "helped" the bank to keep it quiet, but that the NDA would expose him to lawsuits and grave financial losses if he made it public.

He added that he would be equally gagged even if the MPs had held the hearing behind closed doors.

Wilkinson showed a slide saying the money was funnelled via a "US subsidiary of a European bank", as well as via a "large US bank 1" and a "large US bank 2" - but said he could not name those banks.

That "US subsidiary of a European bank" was a "major correspondence bank handing US dollar transactions. I would guess $150bn [€130bn] went through this bank ... I'm telling you what I can," he said.

He also had an email from one Danske Bank executive to another which indicated that the Danish Financial Supervisory Authority (FSA) took part in a cover-up.

"The FSA has helped the bank in a critical situation," he quoted the email as having said, but he could not name who it was from or who it was sent to.

When Danish MPs asked him if he knew whether other banks were also handling dirty money, Wilkinson said he had seen an internal Danske Bank slide, from 2013, which named "the players" involved, but added: "I can't tell you what it said."

Danske Bank's Lithuanian branch also ought to be investigated, he hinted. "There's a deafening silence about what happened there," he said.

EU normality

Danske Bank has said it was standard practice for departing employees to sign NDAs to protect bank and client secrets.

"I've heard this idea that this was perfectly normal - let me tell you how normal it was," Wilkinson said.

He said he told his bosses at Danske Bank four times that there was wrongdoing, but heard back each time that everything was fine.

He then informed it on 8 April 2014 that he planned to alert the Estonian authorities, prompting the bank, 20 days later, to draw up the NDA, which he had to sign or lose his severance pay and other benefits.

"The agreement [NDA] was prepared by a senior lawyer in Denmark. A gentleman flew from Denmark [to Estonia] to present the agreement to me and to negotiate it. He was very senior, and his boss was even more senior, and he told me that his boss had personally approved it," Wilkinson said.

The net result was that he now had to ask Danske Bank's permission for "waivers" to give bits and bobs of information to Danish, Estonian, and US authorities, as well as to the European Parliament.

"The purpose of the NDA was to obstruct any proper investigation of what was going on," Wilkinson said.

Danske Bank's waiver, granted on 29 October, enabling him to speak to Danish MPs and to MEPs in Brussels, came with threats attached, Wilkinson's lawyer, Stephen M. Kohn, noted.

The bank said that if he named staff or identified shell firms in the UK used to move money, then he would be liable to criminal prosecution under Danish bank secrecy and EU data protection laws, Kohn said.

Kohn, who is based in Washington, said that that would be "laughable" in the US and would constitute "obstruction of justice" by the bank, even if it was acceptable in the EU.

"As long as these laws remain in place, you will never tackle money laundering ... you will never get to the bottom of this scandal as long as these threats remain in place," Kohn said.

In denial?

Danske Bank's acting CEO, Jesper Nielsen, denied Wilkinson and Kohn's version of events, however.

"It's not our view that we have placed the whistleblower in a situation where obstacles were made to talking with authorities or police," he said.

"We cannot find any documentation that people at the bank were offering him money to keep his mouth shut," Nielsen said.

When Danish MPs pressed him on why he did not just "tear up" the NDA in order to show good faith, the CEO again denied knowledge that the gag order existed.

"We [Danske Bank] have not entered into any specific contracts [with Wilkinson], but of course things may have happened in Estonia," he said, referring to Danske Bank's Estonian branch.

He then appeared to contradict himself, adding: "In hearings like today, Danske Bank can only waiver responsibilities we're involved in. We can't let whistleblowers go against bank secrecy acts".

That drew the ire of at least one MP - Rune Lund, from the Red-Green Alliance party.

"If there were waivers, there's also an agreement," Lund pointed out.

"Either Howard Wilkinson is telling us the truth, or the CEO of Danske Bank is telling the truth - there is no other option," Lund added.

Nielsen replied that even if there was an NDA, then there was nothing in it keeping the whistleblower from cooperating with police.

But when asked by MPs if he was willing to publish the contract, he said he needed to seek legal advice.

"Whether we can share it, I can't here and now say the legal consequences. In principle, I don't mind," he said.

EU stage

The Danish hearing sets the scene for Wilkinson, Kohn, and Nielsen to clash at a debate in the European Parliament (EP) in Brussels on Wednesday.

The NDA will once again take centre stage, with Jeppe Kofod, a Danish centre-left MEP who co-chairs the EP's anti money-laundering committee, also planning to call for its publication, his office told EUobserver.

Nielsen's testimony in Copenhagen "doesn't clarify anything," an EP official said.

"First they say he [Wilkinson] is free to speak, then they feel he needs special permission [waivers] to speak to Danish authorities or to MEPs," the official added.

The hearings come amid European Commission proposals to tighten up anti-money laundering rules in light of the Danske Bank scandal, as well as other complaints, for instance, that Nordea Bank, the Nordic region's largest lender, funnelled €150m of dirty Russian money via its branches in Denmark, Finland, Norway and Sweden.

Russia posed the "greatest risk" for EU regulators trying to "stop the bleeding from this wound," Jesper Berg, the head of the Danish FSA, said on Monday.

The volume and speed of financial transactions, with hundreds of billions of kroner going through Danish banks each day, meant that most due diligence "has to happen at bank level", he added.

"You can do cross-border transactions at the click of a mouse," Morten Niels Jakobsen, from Denmark's' serious fraud squad, the SOIK, said.

Regulators also needed to react more quickly to bank alerts of suspicious activity, Julie Galbo, a senior Nordea Bank executive who used to work at the FSA, said.

"We can't do it alone," she told Danish MPs.

But the delays caused as a result of buck-passing meant that people who abused the EU banking system were getting away with it, Wilkinson noted.

"There's no chance in the world that any of the suspicious money going through Danske Bank will ever be traced or that any of those criminals will ever lose a single cent of it," he said, after more than five years have passed since he first told his bosses there was something rotten in their bank.

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