Danske whistleblower says big European bank handled $150 bln of payments

* Whistleblower says Danske did not take warnings seriously

* Wilkinson says was offered money by bank to keep quiet

* Wilkinson given waiver to talk to U.S. authorities

* $150 bln involved big European bank in U.S. -whistleblower (Writes through with context)

By Teis Jensen and Jacob Gronholt-Pedersen

COPENHAGEN, Nov 19 (Reuters) - The whistleblower who revealed alleged money laundering involving Danske Bank said on Monday that a major European bank helped process up to $150 billion in suspicious payments and two U.S. lenders were also involved.

Authorities in Denmark, Estonia, Britain and the United States are investigating payments totalling 200 billion euros ($228.5 billion) made through Danske Bank's tiny Estonian branch between 2007 and 2015 in a growing global scandal.

Howard Wilkinson, who was head of Danske Bank's trading unit in the Baltics from 2007 to 2014, told a Danish parliamentary hearing that other banks were also involved.

"I would guess that $150 billion went through this particular bank (the large European bank) in the U.S.," the Briton said, without naming any of the other banks.

Deutsche Bank, JPMorgan and Bank of America all cleared dollar transactions for Danske's Estonian branch, some until 2015, sources have told Reuters.

The leading German bank and JPMorgan, which one of the sources said ended its correspondent relationship with Danske's Tallinn branch in 2013, both declined to comment. Bank of America, which has previously declined to comment on the case did not immediately respond to an email seeking comment.

"No one really knows where this money went. All we know is that the last people to see it was these three large banks in the U.S. They were the last check, and when that failed, the money was into the global financial system," Wilkinson said.

Interim CEO Jesper Nielsen said the affair had tarnished the reputation of Danske Bank.

"We have breached the expectations society had of us. The case and the course of events around it does not reflect the bank we want to be," Nielsen told the Danish lawmakers after Wilkinson's testimony.

Wilkinson said that he had been offered cash by Danske Bank not to speak out, but had got a waiver last month allowing him to talk to some U.S. authorities, adding that he did not expect investigations into the "dirty money" to bear fruit.

"There is no chance in the world ... that any of that money is ever going to be tracked down and that any criminals lose a single cent," he said.

"LACK OF INTEREST"

Danske Bank has acknowledged that its money laundering controls in Estonia were insufficient, but in a report issued in September said its board, chairman and chief executive had not breached their legal obligations.

"In April 2014 it became clear that the bank didn't intend to do anything," the former Danske Bank employee said, referring to earlier whistleblower reports. "There was a curious lack of interest at senior management level."

Wilkinson said that at the start of January 2014 he had looked at the three most profitable accounts involving British limited liability partnerships (LLPs).

"They were all fake. Not just that, they all basically looked the same. And it turned out they all had the same registered office in a suburb in North London ... I passed those on. By April none of the accounts ... had been closed down."

"I warned them (Danske) that if they didn't do a proper investigation and make the appropriate report to the police, then I was going to do it myself," Wilkinson said.

In September this year Danske Bank said the first whistleblower report, which was titled "Whistleblowing disclosure – knowingly dealing with criminals in Estonia Branch", was sent to its executive board, group compliance and internal auditor at the end of December 2013.

However, the bank's report concluded that no "red flags" were shared with ex-CEO Thomas Borgen when he held ultimate executive responsibility for Estonia from 2009 to 2012.

Borgen stepped down as CEO following the September report, saying that although he was "cleared from a legal point of view" he held "the ultimate responsibility".

The scandal has emerged at the same time as a major government tax scandal and a fraud case in the Danish ministry for social affairs, undermining confidence in once trusted institutions and sparking calls for action from lawmakers.

Wilkinson said that Denmark's FSA financial regulator, which was not immediately available for comment, did not contact him before issuing a report on the allegations in May 2018 and called for Danish authorities to investigate the FSA's role.

"If Howard Wilkinson is correct in that he can't talk to the Danish authorities without being prosecuted that must obviously be changed. Authorities should investigate the case thoroughly and they can only do that if they can get the information, Danish business minister Rasmus Jarlov said on Twitter.

The FSA said in May it had not found sufficient basis for launching cases against members of Danske Bank's management. ($1 = 0.8760 euros)

(Reporting by Teis Jensen, additional reporting by Stine Jacobsen; Writing by Alexander Smith; Editing by Keith Weir)

First Published: 2018-11-19 12:07:29
Updated 2018-11-19 17:00:49


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