Biggest Nordic Bank Under Political Fire as Panama Fallout Grows

  • Municipalities in Denmark consider severing ties with Nordea
  • Danish minister says Nordea lacks a ``moral compass''

Nordea Bank AB is struggling to shake off allegations it helped clients hide their wealth as expressions of political indignation mount.

The biggest bank in Scandinavia, where record tax burdens go toward financing the region’s famed welfare system, now faces lost business in the public sector as lawmakers criticize its ethical code in light of leaks showing Nordea may have helped clients evade taxes.

In an opinion piece titled “Nordea lacks a moral compass,” Denmark’s minister for culture and ecclesiastical affairs, Bertel Haarder, said “ethical conduct will be an important competitive parameter in the future. It won’t be enough that a transaction is legal. It also needs to be morally defensible.”

Nordea has consistently said it has no evidence it has done anything illegal. But the deluge of criticism from media, shareholders and politicians is forcing the bank to respond to allegations of unethical conduct. Casper von Koskull, Nordea’s chief executive officer, has vowed to make compliance a top priority for the bank.

The debate has shifted from a defense of the strict legality of actions described in the so-called Panama Papers to questions on the extent to which businesses uphold the spirit of the law. Scandinavians, who are used to living in a region associated with high levels of transparency and low levels of corruption, have been shocked to establish that their biggest bank featured so prominently in the Panama leaks.

Sweden’s financial regulator is investigating Nordea while Financial Markets Minister Per Bolund said the Swedish government is considering tightening its laws to prevent tax evasion. Denmark’s regulator is also conducting a separate probe of Nordea and other lenders under its jurisdiction that were mentioned in the leaks.

Nordea has said it tightened its standards at the end of 2009. In light of the latest revelations in the Panama Papers, Von Koskull will “look into this issue and see what the actual situation is and when we have the answers, decide what to do,” Magnus Nelin, a spokesman for the bank in Sweden, said by e-mail on Tuesday.

Meanwhile, shareholders, lawmakers and customers have voiced their concern. In Denmark, state broadcaster DR reported that the municipalities of Frederiksberg and Odense are considering “boycotting” Nordea after allegations it helped clients evade taxes.

“We need to send a clear signal that tax income can’t be sent to tax havens,” Brian Skov Nielsen, council member for the Red Green Alliance in Odense, told DR. “We have an ethical investment policy, so it’s ironic that our bank should be Nordea.”

Some investors say they are reconsidering their holdings in the bank. Carina Lundberg Markow, head of corporate governance at Folksam, which owns shares in Nordea, says “it’s not acceptable to avoid taxes with the help of one of Sweden’s largest banks.” Shareholders have been taken aback because the scale of allegations against Nordea “was very surprising,” she said last week.

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