Norway’s dominant bank, caught up in the biggest money laundering scandal to ever involve a Norwegian financial institution, is now facing various investigations both at home and abroad. The new chief executive at DNB, Kjerstin Braathen, has called the situation “serious” and stresses that “we must bring forth all the information we can.”
Braathen just took over for DNB’s retiring CEO Rune Bjerke in September. News broke in mid-November that one of DNB’s major customers in Iceland, fishing firm Samherji, is suspected of having used DNB to transfer around USD 70 million to shell companies in tax havens. The money transfers are in turn tied to alleged bribes paid by Samherji employees to officials in Namibia in return for fishing quotas off the southwest coast of Africa.
DNB has remained mostly silent since Icelandic media revealed the scandal, claiming it would be illegal to comment on most aspects of the case. Braathen was able to stress to newspaper Dagens Næringsliv (DN), however, that DNB is taking the case seriously “and we can’t rule out that we have been misused.” That’s why it’s important, she acknowledges, to fully probe DNB’s involvement.
Norway’s finance minister, Siv Jensen, has said much the same, calling on DNB to “lay all its cards on the table.” Jensen was actually speaking at a conference on how to fend off money laundering shortly after the Icelandic case hit the headlines. She avoided mentioning it in her prepared remarks, but told DN afterwards that “all such cases are serious” and should be thoroughly investigated.
“DNB must contribute so we can get to the bottom of this, I think that’s in DNB’s own interests,” Jensen said. The Norwegian government owns 34 percent of the stock in DNB, which also has long ranked as the country’s largest and most profitable bank.
Jensen wouldn’t confirm whether Norway’s financial regulatory agency (Finanstilsynet) has launched a probe, or whether Norway’s economic crimes unit Økokrim is involved. She did note, however, that when regulatory violations emerge, the state must “chart what’s happened, the extent of it and the seriousness.”
One of the country’s leading experts on corruption and money laundering thinks the US’ powerful Securities and Exchange Commission (SEC) will also be examining how DNB allegedly transferred large amounts of money via accounts on Cyprus to Dubai, and via a shell company set up in the Marshall Islands. Tina Søreide, a law professor at the Norwegian business school NHH in Bergen, told DN on Tuesday that US authorities can become involved not least because DNB was alerted to the questionable money transfers by the Bank of New York Mellon, which halted some of them in May 2018.
Søreide has already questioned DNB’s own control mechanisms, wondering whether they’re strong enough to catch suspicious transactions. An increasing number of banks in the Nordic region have been caught in money laundering cases, she notes: “It can be coincidental, but it can also be a symptom of weaker alertness regarding the risk of economic crime.
Jensen also acknowledged the rising risk. “It’s clear that we can’t be relaxed about this here in Norway,” the finance minister told DN. The newspaper could also report last week that Norwegian financial regulators had reacted several times during the past year about allegedly weakening control routines at DNB. The regulators think DNB has reported too few suspicious transactions in major divisions of the bank.
Anti-money laundering chief quit
DN has also reported that the long-time head of DNB’s efforts to fend off money laundering, Roar Østby, handed in a notice of resignation as a divisional director at the bank earlier this autumn. An internal candidate who’d been working for Østby, Hege Hagen, was promoted to take over.
DNB claimed the personnel change “has nothing to do with the Samherji case or earlier cases.” Neither Østby’s resignation nor Hagen’s promotion were announced, even though Østby served as DNB’s public face on corruption issues for several years. DNB’s communications director Thomas Midteide said Østby quit voluntarily. Østby did not respond to DN‘s requests for comment. Hagen has already taken over leadership of a division that now has around 400 people working to ward off money laundering and other economic crime.
Distinction between bank and customer
Midteide told DN on Tuesday that the bank has now been in contact with the authorities. “We’re in ongoing dialogue with financial authorities in all the markets in which we operate,” he said. “We have made relevant authorities aware of this case, also in the US.”
Braathen, meanwhile, said she doesn’t want any “culture of fear” to spread at DNB, with employees thinking they must report everything to the crime fighters at Økokrim. She also stresses a clear distinction between the bank’s operations and those of one of its customers.
“Sometimes you can get the impression that it’s DNB that’s accused of criminal operations,” Braathen told DN. “I want to stress that these are complaints tied to a fishing firm in Iceland. It’s not nice when customers of DNB are alleged to be involved in crime. What we can do is bring forth information that can enlighten the situation.”