November 30, 2022

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Media reports prompted Thomas Burgen to investigate suspicious transactions in 2017: - Now we saw that what we thought we knew wasn't true.

Media reports prompted Thomas Burgen to investigate suspicious transactions in 2017: – Now we saw that what we thought we knew wasn’t true.

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The court continued to consider the case against Norwegian businessman Thomas Borgen on Monday morning. Borgen served as CEO of Danske Bank from 2013 to 2018, past and current shareholders Claims compensation from Borgen in the amount of 3.3 billion NOK. These plaintiffs believe Borgen should pay for the financial losses and damage to the stock price after the money laundering scandal that hit the bank in 2018.

The oil fund is responsible for nearly half of the claim in the lawsuit.

castle defense

In a courtroom in Lyngby just north of Copenhagen on Monday, Thomas Burgen himself sat in the witness box to be questioned by the other party’s lawyer. This is the first time Burgen has spoken publicly about the scandal that has hit the bank since he left today four years ago. He will initially be about his version of the events leading up to the case’s termination in 2018.

Borgen’s attorney, Peter Schradek, was the first to ask questions of his client.

Burgen and the defender began to pass through the management levels of Danske Bank, one of the largest banks in the Nordic region. They have spent a lot of time describing all levels of liability for law, compliance and anti-money laundering (AML).

This was clearly about showing how responsibility was delegated in the system.

My career path has been to work on the front lines in banking. I didn’t, Burgen said, specifically leading departments in compliance and anti-money laundering.

Then the defender asked if Burgen himself could take up the matter with the experts in each district, or if one of them had gone through each administrative level. Burgen says he didn’t always follow the “straight path,” but it was still a strict discipline.

When you are the CEO of Danske Bank, you are interested in having the right information at all times. Therefore, the group management meeting and the board of directors meeting are the appropriate bodies to discuss important and relevant topics. It should be brought there. Burgen said everyone should report if things are going according to plan.

It wasn’t the focus

Defender Peter Schradek returned to Borgen’s former position as Executive Vice President for International Activities from 2009 to 2013. Borgen was then asked how much time he spends on activities in the Baltic states and Estonia.

Borgen responded by noting that Estonia accounts for roughly one per cent of the group’s turnover.

Not at all important to the group. Not important at all for a CEO. The more I get into the system, said Burgen, that’s another thing.

Did the management of the group have any special focus on the Baltic states or Estonia?

The Baltic states were not an area of ​​focus. The Bank has faced relatively significant challenges with our Irish activities.

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Borgen has had to answer countless media reports from 2017 to today which indicate that the Estonia branch has been making extraordinarily good profits for many years. Burgen disputed the fact that the branch’s profits in 2011 were 10-11 percent of the group’s total, and argued that the relative size that year was unusually large, because the group incurred significant multi-billion dollar losses in other countries, notably Ireland.

The defender referred to an investigative report from 2018, in which it was found that Borgen, in his time as CEO, was asked by managers at the Estonian branch if they could start activities for clients who did not have operations in Estonia – therefore – called “non-residents”.

– Then I answered him: You are welcome to do so, so long as it does not go beyond compliance, said Burgen, and added that it was especially important for him to say it at that time.

– There were no indications that everything was not going well in this area, said Burgen.

“Is there anything I should know?”

Then the defense entered the period when Borgen took over as CEO in the fall of 2013, and the managers under his leadership suggested that they consider reducing the portfolio of “non-residents” in Estonia, in order to reduce risk.

Then I say: “Let’s find a middle ground.” I do this for purely commercial reasons. That’s a perfectly normal reaction from the new CEO, when I hear they’re thinking about it. Well, let’s find out, but is there anything I should know? If it was something of an important nature, Burgen says, it should have been included in the group management meeting, but we didn’t get that far until a whistleblower came forward.

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An investigation in 2018 found that turmoil in the administration under Burgen in the fall of 2013 over high risks was linked to reports of concern from a London bank with which Danske Bank collaborated.

Borgen says he first heard information about a whistleblower in Estonia through an executive in January 2014.

Then came a new disturbing message from the CEO to Burgen in February 2014:

– This is one of those “decisive moments” where I receive an email from a CEO, where there is a draft report on a “difficult situation” in the “non-resident” portfolio. Ha might have said, “It doesn’t look good, and I’ll take immediate action.” Then my immediate reaction is that we should stop all new business and begin a controlled liquidation. This is my recommendation.

– Can you easily get such an opinion? asked the defender.

– I can’t instruct anyone in the administration. The positive thing is that he says he agrees.

Then a group, called internally the “work team”, was formed, to find out issues related to suspicious transactions and reduce this activity.

What reports do you get from the group? asked the defender.

– It is very clear to me that the reports are unambiguous. It goes according to plan and we implement the changes. We receive confirmation from Internal Audit that changes are in progress or completed.

Do you receive worrying reports? Shradek asked.

“I don’t get any reports that things are not going according to plan,” Burgen answered in the witness box.

Thomas Burgen arrived at the courthouse in Lyngby on Monday morning.

Thomas Burgen arrived at the courthouse in Lyngby on Monday morning. (Photo: Christian Rieder Nielsen)

He claims he can’t know

The Borgen defender held a tough courtroom training session on Monday, and it was all about showing that Borgen acted on relatively little information via other executives. Borgen claims he does not know how bad things are about suspicious transactions through the Estonian branch.

At a strategic meeting with the board and management in the summer of 2014, the seriousness began to sink in, and the future of the Estonia branch was specifically discussed. According to Burgin, there was no talk of large-scale money laundering at the meeting.

On the topic of the Baltic states and Estonia at the meeting, Burgen said in the witness box:

– One of the options was to sell the Baltic states, if we did not want to be there. I was clear that it was not wise to sell for reasons that create value. This has nothing to do with the “non-resident” portfolio. There we launched a race to evaluate customer specifications and authority reports. I was told that things are going according to plan.

Hajib’s lawyer referred to an audit conducted by the Estonian Financial Supervisory Authority at the time.

– It was critical, but it did not take into account the fact that we have implemented it since the beginning of the year. I was told “don’t panic”. It is reassuring to the CEO when the legal director makes such justification.

Borgen’s attorney asked a rhetorical question whether Borgen had not received letters in the fall of 2014 about circumstances – suspicious transactions or the like – that had not been dealt with.

– No, we are receiving constant reports that things are going according to plan. Various expressions are used, but the clear perception is: “There are no red flags.”

The media made Borgen turn around

The questioning then addressed the period from February 2017, when the bank first encountered press reports in Denmark about challenges in Estonia. Borgen says he was surprised and that “the press knows more than the bank itself” about the suspicious transactions in Estonia. Burgen said that during a management meeting outside, he “sat at the end of the table” during a break and gathered close colleagues.

It was to understand what it was, whether we had overlooked one thing or the other, says Burgen.

Only in September 2017 the bank announced an external audit.

We have now seen that what we thought we knew was not true. We haven’t fulfilled our commitments, so it’s only natural that we dig deeper. It’s something the council deals with and they go through with the whole thing. I’ve started a portfolio review. Burgen says the liability investigation is the responsibility of the board of directors.

Later on Monday, the plaintiffs’ attorney, Casper Westberg of the law firm Elman, was allotted time to begin questioning Burgen. Primarily, it was a matter of the division of responsibilities between Burgen and the bank’s executive vice president of major clients until fall 2018, Lars Morsch.

– He was also responsible for foreign units. That includes the Baltic states, Burgen said.

Two days have been set aside this week for Burgen’s questioning.

Unclear about the insurance agreement

However it A question with no answer at all If Danske Bank had run an insurance plan that could cover all or part of any compensation, if claimants win.

– Upon request, Burgen’s lawyers refused to show insurance details, Edward Fremault told Deminor Recovery Services, which filed the lawsuit, to DN last week.

“I can’t comment on that,” Borgen’s attorney Peter Schradick told DN outside a Copenhagen courtroom, when asked directly about potential insurance coverage.

Danske Bank will not comment on the bank’s alleged situation Managers and OfficialsInsurance in 2018, the year Burgen was forced to retire.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links that lead directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.