Norway’s biggest bank, DNB, is under suspicion of having facilitated the transfer of USD 70 million from Iceland’s largest player in the fishing industry to shell companies set up in tax havens. From there, the money allegedly found its way to government officials in Namibia, who in turn granted the Icelandic company fishing quotas in their territorial waters.
It’s become a huge embarrassment for DNB, after Icelandic media, Al Jazeera and Wikileaks exposed the Norwegian bank’s connection in a series of reports earlier this week. Newssite Stundin cooperated with the TV documentary program Kveikur and Al Jazeera.
DNB was reluctant to comment, but it’s been reported that it shut down the accounts allegedly used by one of the shell companies after Bank of New York Mellon refused to carry out a transaction from the same company (Cape Cod FS, registered in the Marshall Islands) last year. That led to an investigation into the company and, finally, a former employee of the large Icelandic fishing firm Samherji publicly explaining in the Icelandic TV documentary how the alleged bribery operation functioned.
Samherji’s chief executive Thorsteinn Már Baldvinsson claimed he and the company were “disappointed to learn” that the former manager of the firm’s operations in Namibia “apparently had been involved” in questionable business practices and “possibly” had drawn Samherji into “illegal activity.” The former employee countered that Baldvinsson had given a green light for the bribes. Baldvinsson then resigned his post at the firm that’s now charged with corruption and for transferring money to a tax haven. Both the justice minister and the fisheries minister in Namibia resigned their posts on Wednesday, although one of them denies the corruption allegations. Officials in Namibia have launched their own investigation.
Questions were also flying in Oslo Friday over how DNB could have allowed itself to get involved with such transactions involving a shell company in a tax haven. Newspaper Dagens Næringsliv (DN) reported on Friday that the large and highly profitable Norwegian bank has a staff of more than 400 people responsible for hindering economic crime.
Calls for clarification
“Now the bank needs to clarify how USD 70 million (equal to NOK 640 million at current exchange rates) went from the Icelandic fishing company Samjerji via DNB accounts to shell companies located in tax havens,” wrote DN commentator Bård Bjerkholt. “The money allegedly ended up in the pockets of civil servants in Namibia as ‘payment’ for fishing quotas. The Norwegian banking industry’s lighthouse against money laundering should not find it natural to clear the way for bribes to disloyal officials in an African nation.”
Bjerkholt added that the case now unfolding in Iceland tends to bolster warnings that even though Norwegian banks have not been involved in such scandals earlier, they remain highly vulnerable. “Since Norway has its own currency and generally enjoys a good international reputation, it can be more vulnerable than banks in many other European countries when it comes to this type of crime,” he wrote.
Tina Søreide, a professor at the Norwegian business school NHH who ranks among Norway’s leading experts on corruption, also had many questions regarding DNB’s monitoring systems. “This is a serious situation for DNB,” Søreide told DN. “Should DNB’s whitewashing team have discovered this?”
DNB reportedly became alarmed after the US bank had refused to let one of the Cape Cod FS transactions go through its system. “An American bank reacted, but not DNB,” Søreide said. “What does that say about the control systems within DNB? Are DNB’s systems as good as American regulations and the EU’s money laundering directive demand?”
DNB ‘not allowed to say…’
DNB executive Thomas Midteide responded to the professor’s questions by saying that DNB “can’t comment on this type of speculation. Our job is to report suspicious payment to Økokrim (Norway’s economic crimes unit). We report in thousands of payments every year, but aren’t allowed to say what we send to the police.”
Kristin Holth, who leads DNB’s division in charge of maritime-related business customers, also said the bank was “not allowed” to say whether it had reported any suspicions about its Cape Cod customer to Økokrim last May. Media reports claim there were many other transactions in addition to the one rejected by Bank of New York, including one for NOK 1.4 million from a DNB account on Cyprus to a shell company in Dubai (Tundavala Invest Ltd) that was tied to a high-ranking official in Namibia. There were transactions where money was transferred from Samherji in Iceland to one its subsidiaries called Esja Seafood Ltd on Cyprus (also a customer of DNB) and then through DNB to both Cape Cod and Tundavala.
“I can’t comment on customer relations,” Holth told DN. She insisted, however, that DNB “works continuously to ensure that we have the best possible evaluation of risk. We use the information we have and cooperate with Økokrim.”
It’s unclear how much of the money sent through DNB can be tied to actual bribes or money laundering believed to have occurred between 2011 and 2018. The company set up in the Marshall Islands was also used to pay the wages of crew on board Samherji’s trawlers that fished for mackerel off Mauritania, Morocco and Namibia.
DN reported, meanwhile, that Norway’s state financial authority, Finanstilsynet, strongly criticized DNB for poor anti-money laundering routines in 2018. DNB was accused of being deficient in its work to hinder money laundering. The bank has since beefed up its staffing in the area.
Professor Søreide cites three possible scenarios for DNB now:
*** Norwegian financial authorities can evaluate whether DNB has adequate control systems now and decide not to fine the bank for its actions that occurred before stricter rules took effect.
*** Norway’s economic crimes unit can launch a probe of DNB to clarify the facts and evaluate possible punitive action.
*** The US Securities and Exhange Commission may react with its own assessment of whether DNB’s system meets its standards for monitoring money laundering.
Law professor Jon Petter Rui at Norway’s Arctic University in Tromsø told DN that he thinks Økokrim must investigate DNB’s involvement in the case.
“This is without question the largest (corruption) case to hit a Norwegian bank,” said Rui, who led a state commission that drafted Norway’s own law to hinder money laundering. It took effect last autumn.