The compliance hypocrites? Some reflections on Nordic banks, money laundering and corruption enforcement

21 March 2019 - 12:24 pm UTC

By Anna Romberg, VP of Ethics and Compliance at Cargotec.
We have an issue here in the Nordics – we currently run a risk of becoming true compliance hypocrites. Let me explain why. Countries such as Finland, Denmark and Sweden are ranked on top of the Transparency International Corruption Perceptions Index. Denmark ranks number one on the index, whereas Finland and Sweden share a third place. We are used to freedom of speech, democratic elections and independent media. We do not suffer from corruption in our daily lives and the governmental decision making processes are transparent in relative terms. We live in a society where we assume people want to do the right thing and where we can trust and take people by their words. As a compliance professional I have, on several occasions, been challenged with the need for formalized policies and procedures. Formal controls, checks and balances are seen as a sign of mistrust. One high level manager asked me once why on earth we should put in place processes assuming that an employee, customer or business partner has bad intent. Should we not be able to trust them by their word as they are a nice person, a ‘nice guy’?
Well, in a global business environment it is not so easy. And this is where the issue surface. It comes as no surprise to anyone in the compliance community that some of the biggest banks in the Nordics, such as Danske Bank in Denmark, Nordea in Finland and Swedbank in Sweden have been accused of are being investigated for gross money laundering violations. And we are not talking about peanuts but of hundreds of billions of dollars. Billions of corrupt money have been ‘put back into the system’ via our reputable financial institutions. It is easy to forget, in the midst of the discussion on how the compliance systems in the banks have failed, what it ultimately is about. Money is not laundered just for fun, but it is criminals that have a need to put their dirty money back into the system. It is money that originates from Nordic companies, it is bribes paid to corrupt government officials in oppressive regimes for getting governmental contracts, permits and winning business.
Telia, the partly state owned Swedish telecommunications company, paid MUSD 965 in fines to the US and Dutch authorities for bribes, amounting to at least MUSD 330, to the former president’s daughter in Uzbekistan. Some of the bribe money was deposited at a Nordea bank account in Sweden. Now the banks are being scrutinized. But it is ultimately not about lack of compliance within the banks. The issue is ultimately that there is dirty money in circuit. Of course there should be checks and balances within the bank; however the criminals will find other ways for their money to re-enter the system. As long as there is a demand and supply of bribes, there will be money that needs to be laundered.
To combat money laundering the issue with foreign corruption has to be tackled as well. And here the track record in the Nordics is very bleak apart from some positive signs from Norway, which also are recognized by the OECD. Denmark, Finland and Sweden are however portrayed very poorly in the OECD reports on combating corruption. And the Telia case can again serve as a very fitting example. The settlement agreement with the US and Dutch authorities included a condition that part of the MUSD 965 settlement could be shared with the Swedish state. However, this would require that the key individuals in the bribery scheme would be convicted for bribery, where after the company could be sentenced. Just recently the verdict fell in this case and as expected the three former employees were acquitted of the charges. Some claim that it was because of that the case was tested under the old anti-corruption regime, but this is only half of the truth. The fact is that under the new legislation, in place since 2012, the verdict would have been the same. And here is where it becomes hypocritical. According to the Swedish law the daughter of the former president in Uzbekistan cannot be seen as a person who can be bribed. This reveals how the legal context is totally oblivious towards the realities on emerging markets and towards the real challenges that global businesses faces. The ongoing money laundering investigations will show whether our governments will be able to sentence gross criminal conduct or whether the trend will continue, leaving enforcement of gross corruption and subsequent crimes to foreign governments.
Anna Romberg is a driven compliance and investigations expert with broad experience from working with assurance and governance matters on a global scale. She was responsible for the well-recognized Anti-Bribery and Corruption and remediation program at Telia Company as a part of the settlement negotiations with the US DOJ and SEC as well as the Dutch authorities. At Cargotec, a company operating in several high risk industries and with sales to over 170 countries, she built a framework for Combined Assurance and an organisation for Ethics & Compliance, implemented ABC and Third Party management compliance programs as well as managed numerous complex internal investigations. She also has experience from developing and implementing processes for assessing and managing compliance risk as part of M&A transactions and from ensuring adequate response to compliance violations as part of cross-border enforcement activity. She is currently advising and assisting clients with a broad range of assurance and compliance related topics through her own business.