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Howard Wilkinson testimony before Danish Parliament - Q/A with Stephen Kohn Whistleblower Attorney — Transcript

by National Whistleblower Center · 3,663 words · 526 segments · language en · Watch on YouTube

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0:00in various countries I the important
0:02thing with money laundering is it's a
0:04it's a cross-border it's a cross-border
0:06thing not to spend too much time in this
0:11chart but you can see there's ten banks
0:12ten banks there I think how many
0:15countries have we got Russia Lithuania
0:16Estonia Denmark us we've got European
0:22subsidiaries here's a lot of countries
0:24involved and in the case of this Danske
0:29Bank money-laundering scandal they all
0:32failed it's not just estonia and not
0:34just denmark every single one of those
0:37banks had an obligation to check the
0:42money that was going through them and
0:43every single one of them failed i think
0:46it's important to remember that we're
0:47not just talking about dirty money going
0:50through danske estonia there are two
0:52other danske units involved Lithuania
0:56and Denmark and I think very important
0:59is to look on the far end the money
1:01moves from a left to right no one really
1:04knows where any of this money went all
1:05we know is that the last people to see
1:07it were these three banks in the US well
1:11they're the last the last check and when
1:13that failed the money was into the
1:15global financial system it was clean it
1:18was free we actually don't really know
1:22very much about what these banks did we
1:24just know they didn't really do anything
1:25or very much let's talk about Basket
1:28banking Denmark if we read the may FSA
1:31report on the first page we find out
1:34that there were some payments but they
1:36were only technical now for 18 months
1:40people in one unit in Estonia were
1:43talking multiple times a day to people
1:47in a unit in Copenhagen is that just
1:50technical maybe in Lithuania there was a
1:54comment about some money moving through
1:56Lithuania a customer in the through a
1:59NIA and then ending up in into danske
2:02Estonia definitely silence what happened
2:05why is no one telling us in terms of the
2:08banks operating in Russia nothing let's
2:12talk about the three banks which
2:14dance which danske Estonia was using in
2:16the United States
2:17let's take large large bank one as I
2:21think the Chairman mentioned up front
2:23I'm not standing here doing any names
2:27priority one safety priority to not
2:30being arrested priority three not being
2:33sued priority for telling you what I can
2:38let's take together large US bank one
2:41and US subsidiary of European Bank now I
2:44joined the old sample Bank a few months
2:47before Danske Bank acquired it both
2:51large Bank u.s. Bank One and the US
2:54subsidiary both of them had dollar
2:57accounts open at the time so look we've
3:01got twenty thirteen that's seven years
3:04at least because I actually don't know
3:05how long they had them before after
3:07seven years this US bank decides that
3:10maybe it doesn't kind of want the
3:12account anymore but it doesn't just
3:14close it
3:15no we read in the report that they
3:16kindly asked them kindly would you would
3:19you mind just closing it and so the bank
3:21Richard wrote to said we've decided that
3:23we want to close our account yeah you've
3:26got all this all this money going
3:27through and that's that's apparently
3:29what happened and it took seven years
3:30still that's better than the US
3:33subsidiary of the European Bank because
3:35they were the last to go they went right
3:37through till 2015 at least nine years
3:40now this was the major correspondent
3:43bank for dollars so if we're talking
3:45about this two hundred and thirty
3:46billion dollar number of suspicious
3:48funds I would guess that a hundred and
3:51fifty billion went through this
3:53particular bank in the US and they were
3:56the last one to go it took them until
3:572015 at least nine years and there was
4:00one of the u.s. bank which got involved
4:02when the first one the the accounts were
4:05closed down and it went for two years
4:08and after two years it realized didn't
4:09like the business that was going through
4:11still took two years though I think one
4:15of the problems looking back so I would
4:21like to I would I would like to have
4:23been able to spot the things were going
4:24on earlier
4:25trouble was there weren't any red flags
4:27so weren't even Annie amber flags yeah
4:29all along everything was everything was
4:32fine let's just pick out a couple of
4:34things in June 2012 the Danish FSA
4:38reprimanded Danske Bank for various AML
4:41failures throughout the group but what
4:43was the message we got in Estonia best
4:46procedures in the group best procedures
4:48in the group yep you're not sitting
4:51there in Estonia feeling very worried at
4:53that point I mean let's also take June
4:552013 in June 2013
4:58this large US bank asked danske bank to
5:02close its dollar account because of AML
5:04so what was the message we got
5:06well this emails about it actually and
5:09the message was it didn't have anything
5:11directly to do with danske Estonia it
5:13was a more general thing that they
5:15didn't want to be working in the Baltics
5:17how worried is how worried - how worried
5:20are you about that and this is the
5:21problem they were not even there were no
5:22amber flags that we should all be
5:24particularly alert in terms of my
5:28whistleblowing I made for whistleblowing
5:30first one was on 27th of December 13
5:34that was one company and after that the
5:38question was in my mind was it just a
5:40one-off a really bad one but a one-off
5:42or was it something more systemic so
5:46beginning of January I looked at the
5:48three largest UK ll pieces limited
5:51liability partnerships the three most
5:54profitable ones in Estonia and appalled
5:56the accounts and it was quite
5:57interesting they were all fake not just
6:01that they all basically look the same
6:03and it turned out that they all had the
6:05same registered office in the UK fast
6:08though was on March carried on carried
6:13on with a bit of digging I decided to
6:15look at the ones that were registered in
6:17this office in a suburb of North London
6:21so I went for the next 12 biggest ll P's
6:25that I could find that had filed
6:27accounts and had a head office in
6:29Potters Bar in the United Kingdom they
6:32were all profitable for a bank because I
6:34was searching doctor bottom
6:37accounts all exactly the same you know
6:40the numbers were changed a little bit
6:41but they all look the same and they also
6:45were all fake have I made the fourth
6:48reports just before I left
6:50in April 2014 and this related to Danish
6:53limited partnerships Danish KS companies
6:55which is the Danish equivalent to a UK
6:58LLP and I will cover that in a second
7:02can I just grab some water the trouble
7:17was by April of 2014 it was pretty clear
7:22that the bank actually didn't intend to
7:24do anything so at that time I took legal
7:27advice in Estonia and I based on what my
7:30lawyer told me I wrote to the bank and
7:32what I highlighted that after more than
7:35three months no client account that I'd
7:38flagged had actually been closed down
7:40not just that that people had only just
7:43worked out that they'll help these even
7:45filed accounts so we've got this issue
7:47that's built up regarding ll peace and
7:51the people working in the bank don't
7:53even know they have accounts let alone
7:54that anyone has tried to investigate so
7:58based on what my lawyer said I asked the
8:00bank to confirm that they really did
8:01intend to do a proper investigation and
8:04I made a warning I warned them that if
8:06they didn't if they didn't do a proper
8:08investigation and make the appropriate
8:10reports to the police then I was going
8:12to do it myself that one hasn't been
8:16leaked to the papers amazingly and so a
8:20couple of weeks later our reply came
8:22from two gentlemen in Copenhagen let me
8:25pick up a few things from this this
8:27reply and this definitely hasn't been in
8:29the papers hasn't been in the bank's
8:30report either
8:31so we've taken proper legal advice and
8:35where we should have reported customers
8:37we have done and yet now we find that
8:40six thousand customers is it or being
8:42reported to the Estonian FIU five years
8:47on six thousand reported and yet
8:50in 2014 they were able to say it was all
8:52done properly we're closing accounts
8:55with related entities this is actually
8:58not true and it's not true in a very
9:00serious way that I'm actually not able
9:03to talk about but there's a very serious
9:04case where related accounts were not
9:07closed down and therefore that
9:09suspicious transactions were able to
9:11continue in large volumes for many many
9:13months no breaches of Estonian law have
9:17been indicated and now how many people
9:20have been reported how many people have
9:22been reported let alone how many
9:23companies okay and then well I got it
9:27all wrong haven't I
9:28because what danske bank was going to do
9:30was going to correct shortcomings in
9:32customer documentation you know getting
9:37that email had sitting where we are now
9:39you have to wonder did they really
9:43believe it was true or was it just a
9:45pack of lies another example of the
9:50conduct within within Danske Bank
9:53illegal surveillance so so I found out
9:56that people were the people my phone
9:59line was recorded and I found out that
10:01people had got recordings of my phone
10:04calls with the Internal Auditors from
10:07Copenhagen who were actually
10:08investigating what was going on in
10:10Copenhagen I don't know whether we have
10:12any orders here but think that's quite
10:14inappropriate at best not just
10:17inappropriate but actually an official
10:20said to me it's quite criminal isn't it
10:23in fact the opinion from my legal
10:26counsel which I sent to the bank
10:27explicitly cited that it breached a
10:30section of the Estonian penal code there
10:33must be a legitimate aim does it can
10:35anyone think of a legitimate aim for
10:37listening to the phone calls of people
10:39who are investigating you or what did
10:42the bank do nothing
10:48another thing I think without something
10:50that's particularly important in Denmark
10:52because if this is one country where
10:54people should care what happens with
10:56Danish limited partnerships is probably
10:59Denmark and probably Danish banks should
11:01be kind of interested but there was a
11:05polite word curious lack of interest at
11:08the senior level so in April 14 I sent a
11:12list of Danish KS companies which had
11:15mysteriously got counts in Estonia and
11:18warned management and what do we read in
11:23the bank's report 53 Danish KS companies
11:26in Estonia all were suspicious for then
11:29worse we find out that when they was
11:32reporting within the bank allegations
11:35relating to KS companies were left out
11:37completely so largest bank in Denmark
11:40Danish companies just ignored I found
11:48this and I think this is very relevant
11:49going forward first this was from the
11:51website of an offshore company services
11:54provider and I just like to make clear
11:56no I'm not suggesting in any way that
11:59there's any misconduct by the service
12:00provider just to be just to be clear but
12:03they list a number of different
12:05countries and a number of different
12:06legal forms this is what they have to
12:09say about Denmark well a Danish KS is
12:11its fully tax exempt and it's a
12:13prestigious European country and
12:15obviously if you're you want to have
12:17your business in a prestigious European
12:18country Danish corporate tax is avoided
12:20completely yeah but what I found most
12:24interesting was that the KS is an
12:26excellent option when you need a white
12:28entity what's a white entity is that
12:32what you're aiming for in Denmark wide
12:34entities yeah it does kind of make you
12:36wonder if there are gray entities and
12:37black entities as well isn't it white
12:40entities let me move on and share some
12:45thoughts on the Danish FSA I think that
12:48there are serious questions we read in
12:52the bank report that Danish FSA is very
12:54worried because they've confirmed to the
12:56US authorities that we comply with the
12:59Danish FSA's requirements on AML and I
13:02know there was a question from was
13:04paulsen in the in the previous session
13:06on list but the bank report missed out
13:08the worst bit the worst bit is this the
13:11FSA has helped the bank in a critical
13:14situation I think that most of you here
13:16thought that the idea was that the FSA
13:18was supposed to regulate in a neutral
13:20way the companies leave the financial
13:23sector in Denmark helping out does that
13:26comply with Danish law does that comply
13:29with European law but if that raises
13:32serious questions
13:33I think this raises slightly more
13:35serious ones I can't identify the people
13:39what I'll say is that name 2 is a person
13:43who I hold in very high regard as being
13:46a very honest person
13:48I'd like the second thing that these
13:50comments were made to be in January 2015
13:54now to be honest anything what we've got
13:58now is to be not terribly polite as
14:00we've got a massive ass-covering
14:02exercise going on by officials in
14:04various countries so anything that
14:05anybody says now I take with as we were
14:08saying England a massive pinch of salt
14:10but in January 2015 why would anyone be
14:14making things up then so let me read
14:16this I don't care in the slightest what
14:18happens in Estonia my job is to protect
14:21Danske Bank does that comply with
14:24European law does that comply with
14:26Danish law it actually took almost nine
14:32years from the first warning for the
14:34Danish FSA to issue a reprimand even
14:39issuing this reprimand took nine months
14:41of drafting now the whole reprimand
14:43related to Estonia I think is about 20
14:45lines 20 lines 9 months okay
14:48the interesting thing though is at the
14:50bottom and this actually relates to
14:53quite a lot of the questions that were
14:55asked so in theory supervision in AML is
14:59the responsibility of the local
15:01authorities in theory but the FSA finds
15:05the circumstances constitutes such a
15:08material risk that the FSA is looking
15:10into the matter
15:11so the FSA has decided to get
15:13volved although now they say that they
15:15didn't really get involved what they
15:18find where they looked into the matter
15:19in 2016 well we don't know because you
15:22never hear anything about it you can
15:24read the May report from the FSA and
15:27there's no mention about anything in
15:292016 it's almost as though it's been
15:31airbrushed from history another
15:35troubling thing is the 12th of March as
15:40it's well known the Danish FSA never
15:42contacted me before it issued its report
15:44but it's a lot worse than that so on
15:47Friday the 9th of March I got an email
15:50in the evening from an official in the
15:52Estonian FSA asking is it okay to share
15:55my contacts with the Danish FSA under
15:58which I replied course it is he then
16:00sent me an email on the Monday morning
16:02this was at 651 CET on Monday morning
16:06saying he passed my details on and on
16:10the same day the Danish FSA sent his
16:13draft decision to the bank they never
16:16contacted me what happened what happened
16:20what plausible explanation is there for
16:23the events of the 12th a sort of the
16:25events of the third of the events of the
16:2712th of March doesn't make sense let me
16:32now say something about the the
16:34non-disclosure agreement which our side
16:36so 8th of April 2014 I explicitly warned
16:41the bank that I was going to make my own
16:43report about the money-laundering to the
16:45Estonian fiu obvious though the
16:48equivalent to the I think
16:49money-laundering department within
16:50psyche and Denmark 28th of April you
16:57could you could have some severance
16:58money for leaving the bank but you have
17:00to sign this agreement and you have to
17:02sign this agreement which includes a
17:04non-disclosure agreement now I've heard
17:08this idea that this was perfectly normal
17:09well let me tell you how normal it was I
17:11was working in Estonia why I was working
17:15in Estonia I was employed by Estonia and
17:17I had a contract under Estonian law the
17:20agreement was prepared by a lawyer
17:23senior lawyer in Denmark a gentleman
17:26flew from Denmark to present the
17:29agreement to me and to negotiate it he
17:32signed it he told me that his boss now
17:34he was very seen his boss was even more
17:37senior he told me that his boss had
17:39personally approved it now when I
17:42threatened to go to the police and then
17:44I'm offered money
17:45everything's fine have some money signed
17:48the NDA now the NDA he was very specific
17:51I wasn't allowed to disclose information
17:54to anyone unless the words are required
17:57by law now
17:59I'm not required by law to be here I'm
18:01not required to answer any questions
18:03from the FSA I'm not required by law to
18:05answer any questions from the prosecutor
18:08I'm certainly not required to
18:10voluntarily go in and present evidence
18:12of my own volition the purpose of the
18:15NDA was to obstruct any it was to
18:18obstruct any criminal investigations and
18:21any proper investigation of what was
18:23going on we now move into summer of 2018
18:27and then the waivers starts so 28th of
18:29June waiver to talk to the Danish FSA
18:3625th of July it's extended now I can
18:40talk to the Estonian FSA as well of
18:42course that's total rubbish and the
18:44reason is total rubbish is because the
18:45Estonian FSA and this I think is perhaps
18:48a relevant point to you as lawmakers the
18:50Estonian FSA has the statutory power to
18:52ask me questions they don't need no
18:54danske bank to tell me that I'm allowed
18:56to it's about is ridiculous to someone
18:59for as me coming out with a public
19:02statement that you were allowed to pay
19:04your tax
19:04it's about as ridiculous as that
19:06completely ridiculous and then we moved
19:10to 29th of October and then we had a
19:11really busy day because we got three
19:13waivers we got a waiver to come here a
19:15waiver to go to Brussels a waiver to
19:17talk to the Department of Justice and
19:19the SEC in the US and a waiver to talk
19:22to say but it's now 19th to November no
19:27waiver to talk to the Estonian
19:28prosecutor what's wrong with them you
19:33know the words never standing in the way
19:35that's what you read never standing in
19:37the way so let me give you an extract
19:39from an
19:40email I wrote to the Danish FSA in July
19:42I went that extract is this should I
19:45wish to make a criminal complaint about
19:47crimes committed by danske bank I have
19:50to seek permission from the bank to do
19:52so what was the reply the bank's
19:55perplexed why I need such a broad scope
19:58to talk to the Danish FSA the bank's
20:01perplexed let me sum up and sometimes
20:05language works in a really good way and
20:08I'm not joking here laundry list is
20:10really the correct English expression
20:12and it just seems so appropriate for
20:14here so sometimes language is good so
20:16let me make four suggestions it cannot
20:20be right in any civilized country that
20:23companies can get anybody to sign an
20:25agreement which prevents them disclosing
20:28wrongdoing to the authorities now
20:30actually my green was under Estonian law
20:33so when you have the learning law
20:34professors in Denmark pontificating
20:36remember that my green walls under
20:38Estonian law but it seems that it's the
20:39same in Denmark that it's okay it's okay
20:42legally is it okay morally we've seen
20:47how banks behave to think there's a need
20:49for legislation on that there's a need
20:52to protect whistleblowers I mean let's
20:55sort of I read a very good
20:57characterization of whistleblowers and
21:00it pains me but I can't when I went back
21:03to find it so I could reference it
21:04properly I couldn't so whoever gave this
21:06respect whistleblowers like a smoke
21:10detector every building should have one
21:12and sometimes you know the smoke
21:15detector goes off and there's no fire
21:17but sometimes the smoke detector goes
21:19off when there's a fire that's in the
21:21basement that no one's found well what's
21:23happened in this case well the smoke
21:26detector went off four times there was a
21:30huge fire the smoke was filling all the
21:32corridors not just did the bank ignore
21:37the smoke detector the bank actively
21:39tried to switch the smoke detector off
21:41that's what you've got to stop the smoke
21:43detector should not be switched off with
21:47it the FSA I'm sorry I just things to me
21:52seem to be so serious that
21:54there's a need for an independent
21:55investigation it's not simply not good
21:57enough
21:58for the people to investigate themselves
22:00it just doesn't work yeah I think
22:03there's it honestly say that there's a
22:05need for a formal investigation into how
22:07the FSA regulated Danske Bank in
22:09relation to Estonia from 2007 and I
22:12think that has to consider the issue of
22:14whether there was misconduct not just
22:17bad decisions everyone makes bad
22:19decisions whether there was misconduct
22:21by senior officials and if there has
22:23been misconduct then they need to be
22:25referred to the prosecutor there can't
22:26be exceptions and finally I think
22:29there's a need to fix the problem with
22:31cases with Danish limited partnerships
22:34it's a problem in the past it's a
22:36problem now and based on how Danish ks's
22:40are being pitched as a business
22:41structure it's going to be a problem for
22:42the future I think that's a something
22:45the way there's a need for for
22:46legislation I think I will stop there
22:50water yes thank you very much mr.
22:53Wilkinson and thank you for a good
22:59hearing

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