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Dirty-money probe into Swedbank sees fight over key documents

Scandal involving Sweden's biggest mortgage bank has exploded; investigators exploring more charges


A CRIMINAL probe tied to money laundering allegations engulfing Swedbank drew sharp recriminations from both sides over the weekend, and raised serious questions about the role of the board.

After the prosecutor accused Sweden's biggest mortgage bank of refusing to hand over key information, Swedbank's lawyers responded with claims that investigators were ignoring the norms of Swedish law. Meanwhile, a report in Swedish media said the bank's board was behind a decision to withhold documents from police.

Since last week, Swedbank's dirty money scandal has exploded. The potentially suspicious amounts involved may now exceed US$100 billion, while alleged beneficiaries include convicted felon and former Trump campaign chairman Paul Manafort, as well as deposed Ukraine president Viktor Yanukovych.

On Thursday, Swedbank fired chief executive officer Birgitte Bonnesen as allegations against the bank piled up.

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On top of a criminal probe, the lender is being investigated by the financial supervisory authorities of Sweden and Estonia, as well as by authorities in the US, amid claims it was part of the US$230 billion Danske Bank A/S Estonia scandal. Swedbank's share price has plunged by roughly a third since the case first erupted on Feb 20.

Swedbank said on Sunday it is using Nordia as its external legal counsel to handle a criminal investigation that focuses on potential fraud. The probe is tied to the broader laundering case and focuses on what appear to have been misleading statements from the bank.

Swedbank published a statement by Nordia on Sunday, in which it challenged the prosecutor's assessment that the lender had hindered the investigation. Newspaper Dagens Industri had cited chief prosecutor Thomas Langrot as saying that the bank had obstructed a police raid by refusing to hand over some key information.

According to Nordia, "it was pointed out that information covered by attorney client privilege cannot be seized". The law firm said the prosecutor's subsequent decision to seize the documents is "in direct conflict with Swedish law".

The money laundering case surrounding Swedbank reached a fever pitch last week, making the CEO's continued presence untenable.

Amid media allegations that management had misled US authorities, Swedbank's headquarters were raided on Wednesday by Sweden's Economic Crime Authority as part of an investigation into a potential breach of insider information rules.

The same day, after markets closed, the public learnt that the Economic Crime Authority was also investigating Swedbank for fraud, following what appeared to be misleading statements by the CEO.

Some of Swedbank's biggest investors have since signalled that they're not satisfied with the board's handling of the case, suggesting that the CEO's head may not be the last to roll.

In the case of Danske, the chairman was ejected by the bank's biggest shareholder roughly a month after CEO Thomas Borgen was removed. Since then, Danske's share price has stabilised.

The Swedbank money-laundering scandal has been complicated by the bank's apparent attempts to mislead the public as to the seriousness of the case.

In interviews to local media given since her dismissal, Ms Bonnesen has said she's confident she did nothing wrong. BLOOMBERG

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