By Jacob Gronholt-Pedersen
BRUSSELS (Reuters) – British company structures which hide the identity of their beneficiaries are a “disgrace”, the whistleblower who brought to light an alleged 200 billion euro (178 billion pounds) money laundering scandal involving Danske Bank <DANSKE.CO> said.
Howard Wilkinson, who headed Danske Bank’s Baltics trading unit from 2007-2014, highlighted the use of British limited liability partnerships (LLPs) to hide the beneficiaries of the payments in the alleged money laundering.
“The role of the United Kingdom is an absolute disgrace. Limited liability partnerships and Scottish liability partnerships have been abused for absolutely years,” he told European Union lawmakers on Wednesday.
Authorities in Denmark, Estonia, Britain and the United States are investigating payments made through the tiny Estonian branch of Denmark’s biggest bank between 2007 and 2015.
Britain’s National Crime Agency (NCA) has said it is investigating the use of UK-registered companies and a number of so-called professional enablers in connection with the widening scandal, which has already led to the departure of both Danske’s chief executive and chairman.
Wilkinson, whose anonymity was ended by an Estonian newspaper, said this amounted to a “gross abuse of human rights”, in part because whistleblowers who are named risk never working again.
But he stopped short of agreeing that there should be mandatory internal reporting channels for whistleblowers.
The Briton said it would not have crossed his mind to go to the Estonian authorities in 2013, because he trusted his employer to deal with the problem.
He also called on EU lawmakers to ban non-disclosure agreements (NDAs) such as the one he signed with Danske Bank, which prevent former employees speaking out over wrongdoing.
Wilkinson reiterated his view that almost all the money that flowed through Danske Bank’s Estonian branch, much of which the Danish bank has said was suspicious, passed through banks in the United States, including through one major European lender.
“In my estimate 80-90 percent of the money that went through Danske Bank ended up in dollars leaving through U.S. correspondent banks into the financial system,” he said.
Deutsche Bank, JPMorgan and Bank of America all cleared dollar transactions for Danske’s Estonian branch, sources have told Reuters and a source with direct knowledge of the case said on Monday that Deutsche Bank had processed most of the payments.
Deutsche Bank said on Monday it ended the relationship in 2015 “after identifying suspicious activity”.
JPMorgan ended the correspondent banking relationship with Danske in 2013 on grounds that transactions did not comply with anti-money laundering rules, a person familiar with the matter said on Monday, while Bank of America has declined to comment.
Wilkinson’s U.S. lawyer Stephen Kohn has said the EU should harmonise whistleblower protection with the United States to avoid major money laundering scandals like the Danske incident.
A government agency where whistleblowers can report confidentially or anonymously should be established, Kohn said in a written response to questions from EU lawmakers, as well as payments of 10-30 percent of the proceeds obtained from wrongdoers to incentivise whistleblowers to step forward.
Increased protection for whistleblowers against retaliation, and remedies to compensate them for loss of reputation and income and emotional distress, is also recommended, Kohn said.
The scope of so-called nondisclosure agreements that are used in employment agreements or severance agreements, must be restricted in scope to avoid any prohibition against an employee’s right to disclose misconduct and fraud, he added.
Danish lawmakers pledged to improve legal protection for whistleblowers following a public hearing on Monday.
(Additional reporting by Stine Jacobsen and Teis Jensen in COPENHAGEN and Kirstin Ridley in LONDON; writing by Alexander Smith; editing by Jason Neely/Keith Weir)