In the midst of the growing money laundering scandal, Swedbank’s AGM on Thursday was a stormy affair, which began with the dismissal of Birgitte Bonnesen as chief executive and ended with a further fall in the bank’s share price.
Shareholders eventually decided to grant the Board of Directors discharge from liability, but voted not to discharge Bonnesen. This means that she may be found liable for any harm she has caused Swedbank in the past year, and she may also be required to pay damages to the bank.
Commenting the CEO’s dismissal, Chairman Lars Idermark said after the AGM that Wednesday’s raid by the Swedish Economic Crime Authority, EBM, and the widening of the investigation to include fraud, “were too much”. He promised the bank would be transparent and improve its communication. CFO Anders Karlsson will take over as acting CEO until a replacement to Bonnesen is found.
Idermark said he had no plans to step down, but Swedbank shareholder Alecta announced yesterday that it did not rule out the possibility of calling an extraordinary meeting in order to replace the bank’s current Board of Directors.
The Swedish Economic Crime Authority, EBM, raided the Stockholm head office of Swedbank on Wednesday, as part of a money laundering investigation.
In the evening, EBM said a review had been conducted of a number of public statements and other information provided by executives from 23 October 2018 through to 20 February 2019 and that Swedbank appears “to have spread misleading information to the public and market about what the bank knew about suspected money laundering within Swedbank in the Baltic States”. The investigation has now been widened to include suspected fraud.
Swedbank CEO Birgitte Bonnesen said it had been a tough day for the bank and that she was doing everything in her power to handle the situation, adding that “no unit or individual” at the bank had been charged with committing a crime.
Earlier in the day, state broadcaster SVT reported that Swedbank was under investigation by the New York Department of Financial Services (DFS) for having allegedly misled US authorities. The bank had apparently failed to inform DFS that it had customers who could be linked to Mossback Fonseca, the Panamanian law firm involved in a tax avoidance scheme.
Swedbank shares closed 11.9 per cent down on Wednesday, and the bank has now lost more than a quarter of its stock market value, since news of the scandal broke in February.
Telia Company began its capital markets day on Tuesday by lowering its profit forecast for the first half of 2019, following a decline in underlying organic EBITDA in January and February. It added that the slowdown was not having an impact on the operational free cash flow and that it expected its EBITDA performance to improve in the second half of 2019.
Meanwhile, the Riksdag Committee on Defence said yesterday that an analysis and “necessary tools” would be required, before any discussion could be held about a divestment of the Swedish state’s minority holding in the operator, in order to protect defence policy interests.
The Swedish Armed Forces have warned of serious consequences, were the holding to be sold, but Moderate policy spokesperson Elisabeth Svantesson has told Dagens Industri that the party’s aim is for a restructuring of Telia, so that the commercial operations can be divested. There is much to suggest that this may eventually happen, given that there is now a majority in Parliament for such a move, following a U-turn by the Sweden Democrats.
Sweden’s Air Force is in desperate need of new training aircraft, transport planes and surveillance aircraft. However, in addition to the need for new aircraft, the Air Force is facing a shortage of personnel.
Forecasts suggest that the Air Force will need to recruit up to 7,000, if MPs do decide to boost the service’s budget in the coming years.
The service will need to train twice as many pilots, for instance. “But there is a similar problem with aircraft technicians and fighter command,” says Anders Persson, chief of the air staff
Federal prosecutors in Brazil say that they have identified a sophisticated, criminal system for the payment of bribes connected to electromechanical components for a nuclear power plant, west of Rio de Janeiro.
In addition to a large number of politicians and other individuals, prosecutors have named three companies suspected of involvement: ÅF Consult Ltd, Swedish consultancy ÅF’s Brazilian subsidiary, and two Brazilian engineering companies, Engevix and Argeplan.
The prosecutors claim former president Michel Temer received the equivalent of SEK 2.6 million in bribes during the bidding contest for work on the Angra 3 nuclear reactor. In exchange, the companies won orders from state-owned Electronuclear, which owns the power plant.
According to an ÅF press release from May 2012, the order sum for the contracts related to Angra 3 amounted to SEK 700 million.
Cathrine Sandegren, ÅF’s head of communications, has declined to comment the ongoing investigation. She said, however, that a previous, independent investigation of ÅF’s subsidiary, in connection with the Angra 3 contract, had dismissed any wrongdoings.
This morning Swedbank published the external, initial inquiry into the bank’s suspected money laundering in the Baltic region. Many of the details in the report, which was made public at 7 am this morning, are redacted. DN writes that neither the conclusions of Swedbank nor the investigators are apparent, but according to the bank, they will now launch a more in-depth inquiry.
Swedbank’s board published a statement regarding the position of CEO Birgitte Bonnesen: “After having seen the status report from FRA, Swedbank’s board confirms it continues to have faith in its CEO and her ability to lead and drive the bank’s efforts against money laundering.”
Birgitte Bonnesen has decided to create a specialised unit within Swedbank to counteract financial crime, which will be called Financial Crime Intelligence.
SvD reports that Avanza’s savings economist Johanna Kull calls the report a “rush job” and it is difficult to analyse it as much is redacted. She comments, “You could question the value of the report considering that, according to SVT, they have already an internal report in which suspicions of money laundering are presented.” (DN online, SvD online)
Sweden exports extensively to Brazil and Sao Paulo has long been called one of Sweden’s largest industrial cities, with giants such as Sandvik and Scania having been established there for decades. A new tax deal that has been reached between Sweden and Brazil is good news for the over 200 Swedish companies in the country. The agreement means that some tax rates will be lowered, including those linked to dividends and royalties.
Finance Minister Magdalena Andersson comments, “This means that Swedish companies’ investments in Brazil have sustainability, but also competitive conditions that are in line with many other countries.”
CEO of Hermitage Capital and activist Bill Browder writes in DI today that his lawyer Sergei Magnitsky was murdered on 16 November 2009 after having been tortured in Russian prison for 358 days. “He was murdered because he uncovered a corruption scandal encompassing USD 230 million and involving Russian officials, including some of Vladimir Putin’s closest men.”
As justice has not been served in Russia, “my colleagues and I have fought to serve it in another way, through the so called ‘Magnitsky Law’. It aims in the short-term to punish individuals that commit human rights crimes by denying them permits to travel and freezing their assets.”
Several countries now have a Magnitsky Law. It is a significantly more effective measure than conventional sanctions, as it focuses on foreign-placed assets and autocrats’ lackeys rather than ordinary citizens.
The investigation also led to the discovery of significant money laundering through Danske Bank’s subsidiary in Estonia, which also affects Swedbank. This makes international money laundering an issue for Sweden.
“Sweden still lacks a national Magnitsky law. In reality, this means that people with links to the Russian government, including serious criminals, still can move freely and manage their money in Sweden. I suspect that the majority of the Swedish people oppose Vladimir Putin and his companions using Sweden as a sanctuary in this way.”
After several revelations about involvement in suspected money laundering, analyst companies are reviewing their sustainability ranking for Swedish banks.
“Our rating of Swedbank and Nordea already reflects our low confidence in the companies’ ability to manage ethical risks,” writes Fouad Benseddik, head of the French analyst firm Vigeo Eiris.
The Dutch Sustainalytics, which carries out ESG analyses (Environmental, social and governance), is also currently reviewing Swedish banks after recent reports.
Fouad Benseddik also writes that the revelations show that the banks have been exposed to significant risks financially, legally and in terms of reputation. Vigeo Eiris must inform customers that the banks have not yet been shown to be guilty.
During an internal investigation last year, Swedbank identified suspect transactions with Danske Bank worth almost SEK 80 billion, according to several DI sources.
When CEO Birgitte Bonnesen, a month later, presented the bank’s quarterly results she indicated that Swedbank would not be drawn into the Baltic money laundering scandal. Asked directly by DI if she could talk about the conclusions, she said the bank had been through everything and “there is nothing”.
On Friday SVT and DI revealed that the internal investigation also revealed the bank is linked to “the Russian Laundromat”, which is a money laundering set-up used to move hundreds of millions of dollars out of Russia.
On Saturday, SvD reported that the news came just before Swedbank’s CEO Birgitte Bonnesen and several other bank directors were to meet Financial Markets Minister Per Bolund. During the meeting the minister underlined the seriousness of recent reports and informed them that the rules will be tightened.
SvD contacted Birgitte Bonnesen for a comment. Swedbank’s press office instead referred the newspaper to a written message on the bank’s homepage.
“We received on average around 80 warning signals daily. We carried out in-depth analyses on the transactions. This led to around four reports per day to the Estonian financial police.”
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