Scandal-plagued Norwegian bank DNB has agreed to turn over information to state tax authorities about Norwegian customers who have held bank accounts set up in tax havens by DNB’s own operation in Luxembourg. The future of DNB’s board of directors, meanwhile, was in doubt following heavy criticism that neither DNB’s chairman nor other board members have done their jobs in monitoring the bank’s business.
State broadcaster NRK reported Monday that the legal department of Norway’s tax directorate will receive access to information about Norwegian customers of DNB Luxembourg. DNB’s Luxembourg office will send the information to tax authorities in Luxembourg, who in turn will forward it to their Norwegian counterparts.
DNB has landed in trouble after documents leaked from the Mossack Fonseca law firm in Panama detailed how DNB worked with the firm, to set up accounts in the Seychelles on behalf of wealthy customers in its “private banking” division. Around half of the roughly 40 accounts were set up for customers living in Norway and responsible for paying tax in Norway.
DNB denied that it was betraying its customers’ confidence, saying the pending disclosures of their offshore accounts resulted from a “dialogue” between tax authorities in both Luxembourg and Norway. The Luxemboug authorities have thus contacted DNB Luxembourg, “so that we in turn could release this information,” said DNB spokesman Even Westerveld.
He stressed that it’s the responsibility of the customers themselves to declare taxable assets and income, suggesting that DNB was now merely “contributing” to efforts by tax authorities to clarify whether such declarations were made. “Hopefully our customers have clear consciences,” Westerveld added.
Tax authorities appear satisfied, while other state authorities charged with monitoring the state’s own investment in DNB have continued to raise critical questions over DNB’s Luxembourg operations. Several calls have gone out for top DNB executives to resign, and now the bank’s board of directors is under fire as well.
The board is headed by Anne Carine Tanum, who’s up for re-election along with four other members of DNB’s board at this week’s annual meeting of DNB shareholders. The biggest of those shareholders is the Norwegian state itself, which bailed DNB out of a major bank crisis in Norway in the early 1990s and still owns a major stake.
Trade Minister Monica Mæland has sent dozens of questions to the board in recent weeks, putting severe pressure on Tanum and her board colleagues to account for DNB’s controversial tax haven operations. Mæland is far from the only one raising questions about the board’s alleged lack of supervision of bank operations, or sheer failure to ask questions themselves.
“I hope the board members themselves feel like they’ve been caught with their pants down, and that they should have done a better job,” Torgeir Knag Fylkesnes, a member of the Parliament’s business and trade committee for the Socialist Left party (SV). “Given the pay they receive (hundreds of thousands of kroner in compensation for board duty) and the responsibility they have, I had expected they’d be a much more active board.”
Career board members
Many of the board members hold seats on the boards of several companies, with Tanum herself serving as chairman not only of DNB but also of the Norwegian Opera and Ballett, E-CO Engergy Holding, E-CO Energi and Nordisk Film Kino AS. She’s also a member of the boards of publishing firm Cappelen Damm, public relations firm Try AS, retailer Europris, Europris Holding, and IRIS (the International Research Institute of Stavanger.) Critics, including several business professors in Norway, argue that’s far too many board seats to be able to fully monitor operations of the organizations involved.
Until a few weeks ago, it nonetheless was expected that Tanum and her fellow members would be re-elected as a matter of routine. Now that’s not so sure, with the leader of DNB’s board election committee, Eldbjørg Løwer, having second thoughts along with Members of Parliament including Hans Olav Syversen, leader of the Parliament’s finance committee.
Tanum herself, who has claimed she still has confidence in DNB’s top management, has mostly ducked questions on her own role. Both the board and top management have claimed they were unaware of the bank’s tax haven operations run from Luxembourg. Abid Raja, a Member of Parliament for the Liberal Party, has joined Syversen in seeing a need for “new blood” on DNB’s board. Løwer, a former Defense Minister from Raja’s Liberal Party, may well agree when she finally reveals the election committee’s recommendations at DNB’s annual meeting.