Like most Americans I have long been a fan of 60 Minutes. Yet of all the episodes I have seen there are just a few that stick in my head. One of them was Arthur Mitchell, one of the first African America stars at the New York City Ballet, under George Balanchine. Mitchell later founded the Dance Theater of Harlem, bringing the 400-year-old European art form to a group of Americans it had traditionally shunned. According to his New York Times (NYT) obituary, what Mitchell “considered his greatest achievement, he said, “That I actually bucked society, and an art form that was three, four hundred years old, and brought black people into it.”” Mitchell danced with a grace, power and style that has been rarely duplicated. He was also a pioneer in the field of dance. I know they are dancing away in the great beyond tonight.

Another place they are celebrating tonight is at the senior management and Board of Directors at Danske Bank AS. While they are probably not celebrating the Bank’s 30% drop in stock price since the revelation the Bank processed over $206bn in suspicious transactions through its Estonia branch from 2007 to 2016. However, what these august bankers in Denmark are celebrating is the scathing report issued by the Danish law firm Bruun & Hjejle which completely exonerated the Bank Chief Executive Officer (CEO), Thomas Borgen, and the Chairman of the Board, Ole Anderson, concluding, according to the Financial Times(FT), that “Mr Borgen and Mr Anderson as well as the board had not breached their legal responsibilities.”

Yet here is the money line; the firm said that the report was neither impartialnor independent.

 No pretense here from this firm. We are here to exonerate the senior management and Board. No mincing of words – we got your back! The FT article quoted Edouard Fremault, a partner at Deminor Recovery Services, who said, “It’s pretty special to see an investigator say that it is neither impartial or independent.” No wonder Borgen, Anderson and the rest of senior management and the Board are dancing away tonight. All of this was in the face of a timeline including numerous reports of suspicious activity.

How bad was the evidence? As early as 2007 the Russian Central Bank warned Danske about suspicious activity. In the same year the Estonian banking regulator warned the bank about suspicious transactions. In 2009 an internal whistleblower alerted the corporate office of shenanigans in the Estonian branch. Senior executives at the Bank discussed the issue as early as 2010 but did nothing. That doing nothing included not even bothering to hire an anti-money laundering compliance head.

How could all this happen? How does the sound of money raining down sound? The Bank’s Estonian branch rose to over 10% of the Bank’s total profits. How much of that was non-Estonian money? The FT reported it at “over 99%”. Borgen himself was head of Danske’s international banking from 2009-2012 and the prime beneficiary of these outsized profits. He rode that wave of suspicious money all the way to the CEO’s chair in 2013.

At one point did Borgen become aware of the problems in the Estonian branch? My bet is that he knew all along but made the conscious decision not to do any investigation, look or even peak at the branches operation. Even with the whitewash of an internal investigation, the law firm report said, “In our view, Thomas Borgen could have taken a more active role in setting the overall standard and direction by making sure that relevant issues were thoroughly debated, that investigation results were properly documented, that presentations and materials were adequately reflected in minutes, etc,”

What about the law firm and there not-independent and not-impartial investigation? I wonder if there is anything close to a lawyer’s duty of professionalism in Denmark? Even the American Bar Association(ABA), that august group which advocates keeping shell corporations anonymous, has rules on professionalism which says that lawyers are supposed to tell the truth. I guess if your report is bought and paid for to exonerate senior managers, perhaps that is a form of truth, at least in that law firm’s eyes.

For those who do not read the FT’s Lex Section, you are missing some of the most snarkily funny journalism around. But even Lex outdid itself when writing about Dansk yesterday. The column opened “Dirty deeds, a whistleblower, stonewalling, disclosure and a vengeful ending. Danske Bank’s money laundering scandal has followed the plot arc of Hamletsave for the conclusion.” Of course there is the hamstrung Danish regulator who apparently cannot levy monetary sanctions but has now reopened its investigation after the release of the faux report. No doubt they will speak sternly to the Danish national bank, warning them not to do it againor we will be really, really upset. (The ‘wait ’til your father gets home’ line.)

But Lex did not stop there. It said, “A report from Danske’s lawyers whitewashes the board of serious culpability. Deployed at Elsinore Castle, the firm of Bruun & Hjejle would be likely to find nothing to connect King Claudius to his brother’s poisoning.” One can only wonder when the ghosts start appearing.

But the ghosts of money-laundering past is not the real worry; the Bank’s real worry is the Americans. The US has taken a very dim view of bank’s that allowed money laundering and then when they found out about it turned into ostriches. Danske has said they “only” made $200m million on its $200 billion plus money laundering escapade and have announced they are donating that amount to charity to – you guessed it – fight money-laundering. However, the American approach understands that money-laundering leads to many bad activities by many bad actors – like multiple terrorist attacks.

Any chance you might think Denmark will extradite these bankers to face justice in the US? No wonder they feel like dancing.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2018

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