24 Feb 2020
The ousted chief executive of Danske Bank A/S, Thomas Borgen, has been personally targeted in an investor lawsuit arguing he withheld information about potential money laundering that subsequently destroyed the lender’s market value.
Deminor, a Brussels-based law firm, said on Friday it has filed a legal complaint against Borgen on behalf of 155 institutional investors seeking damages of 358 million euros ($387 million).
The case is the latest in a string of legal proceedings against Denmark’s biggest bank, after it failed to properly screen about 200 billion euros in non-resident flows through its Estonian operations, much of which was subsequently deemed suspicious. Prosecutors in Europe and the U.S. are now looking into the case, and the bank may be facing hefty fines.
Danske’s market value has halved since the beginning of 2018, leaving investors furious. Borgen, 55, was fired in late 2018 and has since had preliminary criminal charges brought against him by police in Denmark. He had been in charge of the bank’s international operations when the Estonian scandal was developing.
Deminor said it “believes that investors were misled as to the true situation of the bank as from February 2014.” A report published four years later showed that “the former CEO and other members of the senior management were briefed in detail by the internal audit team about the illegal activities in Estonia and the substantial risks the bank was facing at the group level.”
Edouard Fremault, a partner at Deminor, said that “as a former senior collaborator of the bank,” the expectation is that Borgen would “benefit from an indemnity clause issued by the bank, as it is standard practice,” in an emailed response to questions.
Danske Bank said it is “defending itself against these claims,” in an emailed response to a request for comment. “The timing and completion of any such lawsuit is uncertain, and we consider any development together with our external counsel. At this stage, we have no further comments.”
By Christian Wienberg, Bloomberg, 21 February 2020
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