Danske Bank’s former chief executive has been charged by Danish economic crime prosecutors investigating the €200bn money-laundering scandal at the country’s biggest bank.
Thomas Borgen’s house was raided on March 12 and he has been indicted, his lawyer Peter Schradieck told Danish newspaper Borsen.
A person familiar with the investigation confirmed to the Financial Times that Mr Borgen had been charged with failure to prevent certain transactions.
Mr Borgen becomes the first senior manager of Danske to be charged in one of the largest money-laundering scandals ever seen. Danske itself has been indicted in Denmark while several junior employees in its Estonian branch at the heart of the scandal have been charged by prosecutors in the Baltic country. It is also facing a criminal investigation in the US.
Having announced his resignation in September last year, Mr Borgen was then ousted a couple of weeks later before a successor had even been found. Danske’s chairman also resigned and the bank is still searching for a replacement for Mr Borgen.
Questions have been raised about what Mr Borgen knew about the scandal and when he knew it. He was in charge of Baltic banking from 2009 and 2012.
The Financial Times revealed in September that in October 2013 Mr Borgen, who had become chief executive a month earlier, was told by a senior executive that the level of non-resident banking from outside Estonia was higher than rivals and needed to be reviewed, according to minutes of the meeting.
Mr Borgen in response “emphasised the need for a middle ground and wanted to discuss this further outside of this forum”. People involved in Danske’s own investigation said this was the crucial meeting where a decision was made not to stop the business. Danske’s own report into the scandal said that Mr Borgen did not remember “which ‘middle ground’ he was referring to”.
Danske is expected to be dealing with the fallout from the decade-long scandal for the next few years. Its new chairman, Karsten Dybvad, a former head of the main Danish business lobby group, has emphasised the need for the bank to regain trust in the Scandinavian country.
Shares in Danske halved last year with analysts estimating it could be facing fines of billions of dollars over the scandal, which has also embroiled one of its main correspondent banks, Deutsche Bank.
Mr Borgen became chief in part due to the good results from the Baltic business after the global financial crisis.
Danske’s non-resident portfolio in Estonia had a return on allocated capital of 402 per cent in 2013 compared with 7 per cent for the bank as a whole, something that should have sounded alarm bells, according to Danish regulators.
Danish prosecutors declined to comment while Mr Borgen’s lawyer did not respond to several calls and messages.
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