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Wednesday, May 22, 2024

Embattled DNB boss won’t quit

Rune Bjerke, the embattled boss of Norway’s biggest bank, DNB, opted against resigning on Monday after delivering an impassioned account of DNB’s controversial but not illegal private banking practices. “I’ll fight for as long as I have something to fight for,” Bjerke told reporters at the bank’s press conference Monday afternoon.

DNB Chief Executive admitted he was not proud of what DNB has done, but he was not stepping down. He also denied that claiming ignorance was a conscious strategy to distance himself from the scandal. "We can't say we knew what was going on when we didn't," Bjerke said. PHOTO: NRK screen grab
DNB Chief Executive admitted he was not proud of what DNB has done, but he was not stepping down. He also denied that claiming ignorance was a conscious strategy to distance himself from the scandal. “We can’t say we knew what was going on when we didn’t,” Bjerke said. PHOTO: NRK screen grab

Bjerke added that it’s always up to the bank’s board of directors to decide “who is best suited to lead DNB.” His own decision not to step down came after DNB’s board leader Anne Carine Tanum claimed that she and the board still had confidence in Rune Bjerke as the bank’s chief executive. An internal investigation did not, in Tanum’s opinion, provide a reason for board members to question their confidence in him.

It remains to be seen whether the government minister in charge of the state’s investment in DNB, which amounts to 34 percent, will retain confidence in Bjerke as well. His failure to question or even look into DNB’s private banking practices, which involved its Luxembourg office setting up postbox companies in tax havens that could be used by some of the bank’s wealthy customers, has in turn raised questions about his competence and credibility.

Violated own guidelines
As DNB itself delivered a written response to questions from Trade Minister Monica Mæland of the Conservative Party, Bjerke admitted at Monday’s press conference that the bank had violated its own guidelines, also after he took over as CEO in 2007. Two years earlier, he claimed, a “business plan was formulated” that he called “a strategy for Private Banking and DNB Luxembourg.” It involved buying companies registered in the Seychelles by a law firm in Panama. The companies made it possible for wealthy bank customers to use them to hide assets and evade taxes, if they chose to do so.

Violations included failure by the bank to carry out a round of hearings on the strategy, using an internal accountant to run it from DNB Luxembourg and ignoring the bank’s own ethical guidelines.

“Are we proud of what happened?,” Bjerke asked rhetorically before answering, “No. Do we wish this hadn’t happened? Yes. Should information that emerged have led others to raise questions, or send (the private banking practices) upwards (in the management chain)? Seen with today’s eyes, that should have happened.”

He claimed that even though he was unaware of the use of tax havens, he was responsible. He also revealed how a DNB employee in Luxembourg was fired, for offering to conceal a bank account from those reported to tax authorities in Norway. Bjerke admitted he “should have done more” to examine DNB Luxembourg’s operations, not least after former Finance Minister Kristin Halvorsen had criticized its marketing of private banking services as early as 2007. She suspected at the time that they were designed to help bank customers avoid taxes.

Clinging to board support, so far
Bjerke declined to submit his own resignation, though, and seemed to have DNB’s board leader’s support.

“DNB’s legal department has done a thorough job and gone through a large number of documents and spoken with several employees and former employees,” Tanum stated on Monday. She claimed she still had confidence in Bjerke, a former Labour Party politician and close friend of former Prime Minister Jens Stoltenberg. Bjerke was appointed DNB’s chief executive during Stoltenberg’s first government and he served under several different business and trade ministers from the Labour Party until Mæland took over when the Conservatives won government power in 2013.

DNB (Den Norske Bank) was formed through a merger of the deeply troubled Bergen Bank and Den norske Creditbank (DnC) when both had to be bailed out by the state in the early 1990s. That’s why so many Norwegian officials, politicians and DNB’s own customers are so critical of how documents leaked from a Panama law firm have disclosed DNB’s use of tax havens. A demonstration was planned for Monday evening in front of the Parliament, to protest the tax havens and how Norway’s own state pension fund called the “oil fund” also uses them as well, mostly in connection with real estate holdings. Berglund



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