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Desmond Bank Fined €80m In Laundering Case

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Desmond Bank Fined €80m In Laundering Case

Rietumu Banka, a Latvian bank in which Dermot Desmond is a 33% shareholder, has been fined €80m by a Paris court for taking part in a vast tax avoidance scheme. The bank was charged with allowing French clients to avoid paying their taxes and launder at least €200m.

On Thursday a French court convicted the Latvian lender of money laundering and fined it €80m for facilitating a scam to “democratise” tax evasion among ordinary taxpayers and small businesses in France.

In a statement on its website following the ruling, Rietumu Banka said it would appeal the decision.

Desmond is the bank’s third largest shareholder, having been involved since 2005, and sits on its governing council.

The Irish financier was not named in court proceedings and there has been no suggestion that he had any knowledge of, or involvement in, any wrongdoing. He did not respond to a request for comment through IIU, his investment fund.

According to Associated Press, Rietumu was last week barred from operating in France for five years, as the presiding judge said the proven amount of money laundered in the scheme was €203m — a “minimum assessment”.

Investigators believe Rietumu helped launder up to €850m between 2008 and 2012 with the complicity of the French financier Nadav Bensoussan and his company France Offshore, according to court documents. The court said the defendants organised “large-scale” tax evasion through offshore companies located in tax havens.

Alexander Pankov, a senior officer at Rietumu, received a suspended four-year prison sentence, and Sergejs Scuka, the bank’s representative in France, got a one-year suspended term.

Rietumu and other defendants were also sentenced to pay a combined €10m to the French government in damages.

Rietumu Banka said last week that it would “carefully examine the full text of the decision and together with our attorneys decide about further actions”.

“At this moment it can be said that we strongly disagree with the decision and this decision will be appealed,” added the company.

“We have never been involved in the tax evasion and [state] that neither the bank nor its president personally had any interest in these actions. Therefore the imposed fine of €80m and sanctions against the president of the bank appear widely ungrounded.”

The bank also pointed out that “until the moment of entry into force of the decision, the obligation to pay the fine does not arise”.

“Taking into account all following instances the legal process may continue for a long period of time taking up to 2-3 years or more. During the period of the upcoming legal proceedings, the bank will take into account the possible fine in its plans and make provisions,” it said.

The fine would effectively wipe out the €80m the Rietumu Banka made in profits last year.

During the trial, which took place in March this year, the prosecutor Ulrika Delaunay-Weiss lamented an “obvious shortcoming” in the European regulations that had allowed an EU bank, in this case Rietumu, to carry out criminal activities in France while being out of reach of French regulators because it was being overseen by Latvian authorities.

In delivering the ruling, the presiding judge Benedicte de Perthuis said the bank could not ignore the “fraudulent” origin of the funds. “It was part of its business strategy in France,” she said.

While the bank has argued it complied with anti-money laundering regulations in Latvia, Delaunay-Weiss said Rietumu was able to take advantage of flaws in European legislation.

Rietumu Banka has recently become more involved in the Irish market. It has financed a number of projects including the purchase of an office complex in south Co Dublin and building schemes developed by Johnny Ronan.

Source: TT

By Pathay Singh on 07/12/17