Tuesday, October 20, 2020

Institutional investors file lawsuit against Danske Bank for money laundering and cover-up

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A group of 64 institutional investors filed a new lawsuit against Danske Bank, accusing the firm of money laundering and a subsequent cover-up by senior leadership, said Olav A. Haazen, director at law firm Grant & Eisenhofer, which is representing the plaintiffs, in a phone interview.

The suit follows an initial set of lawsuits brought on behalf of Asian, Australian, European and North American pension funds on March 14 as a result of internal and external investigations, which found that Danske Bank’s senior management knew about a multiyear Russian money laundering scheme.

The case, filed Oct. 18 in Copenhagen City Court, brings the number of investors to 232 and the size of damages sought by investors to $800 million from $475 million, resulting from “economic losses” suffered, Mr. Haazen said.

“The case is a new lawsuit filed, and it is expected to be consolidated,” Mr. Haazen said.

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“We are also expecting a third wave of investors, which would like to be part of the case,” he added.

Mr. Haazen said the Danish court is at a point when it will choose a test case, which will have a “precedential value.”

In 2013, Danske Bank’s Denmark-based senior leadership did not react to the results of an internal audit that indicated $230 billion in money laundering at its Estonian operations and did not disclose information about it to its investors.

Mr. Haazen said plaintiffs are seeking to be reimbursed for losses suffered when Danske’s stock dropped after Danske’s management had kept the stock price artificially high to generate profit during 2018 as the scandal unfolded.

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A Danske Bank spokesman said in an email: “These claims are an extension of an existing lawsuit. We are defending ourselves against the claims and consider any development together with our external counsel. At this stage, we have no further comments.”

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