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Report on Business Danske money-laundering scandal might be ‘tip of the iceberg,’ whistle-blower’s lawyer says

Danske Bank’s €200-billion euro ($298-billion) money-laundering scandal might be the “tip of the iceberg” and investigators should examine whether major Western banks played a role, a lawyer for the whistle-blower said.

Stephen Kohn, a partner at U.S. law firm Kohn, Kohn and Colapinto who is representing Danske whistle-blower Howard Wilkinson, told Reuters that Danske may be only a bit player in a scheme to move wealth from countries like Russia to the West.

“It looks like the tip of the iceberg,” he told Reuters on the sidelines of a two-day London OffshoreAlert conference on financial intelligence and investigations. “The problem is far bigger than has been reported … If this is properly investigated, and the money followed all the way to the end – it all went to large, multinational Western financial institutions and either the U.S. government or other authorities have the ability to track down every transfer and any account,” he said, without providing evidence for the allegation.

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Mr. Wilkinson, a British former head of markets in Danske’s Estonian branch until 2014, was outed by newspapers in September as the whistle-blower who helped lift the lid on how billions of euros of non-resident money, much of it from Russia, had flowed through the tiny branch between 2007 and 2015.

After an internal investigation, published by Danske the same month, the bank said many transactions were probably suspicious. The scandal has sparked criminal investigations of Danske in Denmark, Estonia and the United States, forced out its chief executive and chairman and sent the bank’s shares plunging.

Britain’s National Crime Agency said in September it was investigating the use of British-registered companies in connection with the Danske Bank case.

RISK OF RETALIATION

Whistle-blowers who have been publicly named are at a greater risk of retaliation. Mr. Kohn said Mr. Wilkinson “has interacted with law enforcement” and is satisfied with their response. He declined to comment further.

The Briton is due to testify before the Danish and European Parliaments next week. But his testimony is likely to be limited because he remains potentially liable for anything he says.

“The threat of a lawsuit has a chilling effect,” Mr. Kohn says.

Mr. Kohn believes whistle-blowers need to be financial rewarded. He won a record US$104-million individual reward in 2012 for whistle-blower Bradley Birkenfeld, the man who exposed tax evasion facilitated by UBS – although Mr. Birkenfeld also served almost three years in jail.

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The European approach, that effectively turns “informants into martyrs,” is “a joke,” he says.

British lawmakers continue to call for better protection for whistle-blowers, who risk ending up blacklisted, bankrupt and damaged after lifting the lid on wrongdoing. But regulators have to date resisted calls for financial incentives, insisting this will not significantly increase integrity and transparency.

Mr. Kohn vehemently disagrees. He says whistle-blowers might sometimes participate in wrongdoing, but that they are essential to uncovering the truth because white-collar crimes are hidden – and crime is more profitable than honesty.

Since February, 1986, when U.S. whistle-blowing laws were modernized, the U.S. government has paid whistle-blowers US$6.5-billion – and billions more have been recovered, he said.

“Europe is asleep. I am angry at what I see in Europe,” he told the conference.

Mr. Kohn describes Mr. Wilkinson, who he says told Danske everything he knew before resigning, as credible, with an unblemished employment history, who risked his career and livelihood to stop one of the biggest money laundering scandals in history.

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“He’s the real McCoy. He gives whistle-blowing a good name,” he said.

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