Swedbank Money Laundering Scandal Deepens with Possible Ukraine Connection

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Allegations of money laundering against Sweden’s oldest bank grew this week to draw in some of the former Soviet Union’s most notorious individuals.

Viktor Yanukovych, the president of Ukraine until 2014, used an account at the Baltic unit of Swedbank AB to transfer money out of the country, Sweden’s main broadcaster, SVT, reported on Wednesday.

Pressure on Swedbank is growing as Sweden’s state prosecutor said on Wednesday it will investigate insider information allegations against the bank, after it reportedly told its 15 biggest shareholders that SVT was planning a broadcast two days before it was aired. Swedbank has denied wrongdoing.

The most recent report by SVT, which the broadcaster says is based on thousands of pages of documents that link Swedbank to the $230 billion dirty money scandal engulfing Danske Bank A/S, appears to contradict previous statements by the Swedish lender. Chief Executive Officer Birgitte Bonnesen had repeatedly denied any link to the Danske scandal, arguing that Swedbank is a local bank servicing local clients.

But the allegations point to a broader network of banks that were allegedly used by criminals in the former Soviet Union to funnel vast sums of money into the West until as recently as 2015. Bill Browder, who has brought a criminal complaint against Danske and says he’s planning to do the same with Swedbank, says he has evidence pointing to banks in the Nordic and Baltic regions as a hub in Europe for money launderers.

‘Catastrophic Communication’

Joakim Bornold, a savings adviser at Soderberg & Partners in Stockholm, said the latest development points to what he described as “catastrophic communication management from Swedbank, more than anything else.” He said the content of the new report is “very vague” making it hard to draw conclusions.

Shares in Swedbank opened roughly 2.9 percent lower on Wednesday before trading little changed about an hour after the market opened. Since allegations of handling suspicious transactions were leveled against the bank last week, its share price has slumped more than 20 percent, wiping almost $6 billion off its market value.

The SVT report shows that, via a company called Vega Holding Limited which had an account with Swedbank in Lithuania, Yanukovych transferred 3.7 million euros ($4.2 million) through the Swedish lender in 2011. According to Ukrainian prosecutor Andriy Radionov, the money came from a suspected bribe that was disguised as a book deal, SVT said.

Yanukovych, who was Ukraine’s president until early 2014 when he was ousted in a revolution, is currently hiding in Russia to escape prosecution in his home country. A Kiev court in January found Yanukovych guilty in absentia of treason, sentencing him to 13 years in prison.

Russian Oligarch

A separate report in Baltic publication Postimees said that Swedbank was also used by Russian oligarch Iskandar Makhmudov, who transferred at least 1.4 billion euros through a network of at least 20 accounts at Swedbank. Postimees said the transfers were made by Carbo One, which is registered in Cyprus and alleged to be linked to Makhmudov.

Carbo One was one of Swedbank Estonia’s largest corporate clients at the time of the transfers between 2007 and 2015, Postimees said. Makhmudov’s representatives, contacted by SVT, rejected any links to Carbo One and to any illicit activities, Postimees wrote.

Investigations

Since SVT started reporting on the Swedbank story last week, the bank has admitted that it handled suspicious transactions, which it says have been reported to the police. Swedbank is now being investigated by the financial supervisory authorities of Sweden and Estonia.

According to SVT, Swedbank has known about the Yanukovych transfer since 2017, when Ukrainian authorities sent a request to the bank for information about that specific account.

Asked by SVT whether he knew that Yanukovych had done business through Swedbank, spokesman Gabriel Francke Rodau said, “I didn’t know, and if I had I wouldn’t have been able to comment on it, because of bank confidentiality.”

Still, CEO Bonnesen has in recent months repeatedly claimed that the bank has found no link to the Danske Bank money-laundering scandal, stressing that Swedbank’s business model is entirely different from Danske’s and not focused on so-called non-resident clients.

SVT said that in addition to the suspected 3.7 million-euro transfer, another 12.6 million euros and $5.6 million were funneled via the company that Yanukovych used in Swedbank between 2007 and 2014.

The selloff in Swedbank shares suggests that investors have panicked that the lender might be facing the same value-destroying future that Danske experienced after its scandal exploded last year.

Denmark’s biggest bank admitted in September that much of about $230 billion that flowed through its Estonian unit was probably suspicious in origin. Danske is now being investigated by the U.S. Department of Justice and the Securities and Exchange Commission, as well as numerous prosecutors across the European Union. Its share price has slumped by about 50 percent over the past year, wiping roughly $18 billion off its market value.

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