Former banker found dead
Estonian bank centre of probe for laundering
FRANKFURT, GERMANY • Aivar Rehe was once one of Estonia’s most prominent bankers, the chief executive of Danske Bank’s unit in Tallinn, Estonia, and an integral part of the former Soviet state’s transition to a free-market economy.
But when investigators revealed last year that customers from Russia and Eastern Europe had used the Danske subsidiary to launder billions of dollars in dirty money, Rehe inevitably shared the blame. The money laundering, from 2007 to 2015, took place on his watch.
On Wednesday, Rehe was found dead, an apparent suicide, in his backyard in Tallinn, Estonian police said.
Rehe, 56, had been the focus of an intensive search since Monday when his family reported him missing from his home.
Rehe’s death is another twist in the money- laundering scandal, which prompted a criminal investigation and forced Danske Bank, Denmark’s largest lender, to withdraw from Estonia and other Baltic countries.
Police said there was no sign of foul play, and prosecutors said Rehe was not a suspect in their criminal investigation of the money laundering. Still, his death focused renewed attention on money- laundering allegations that have tainted the previously upright image of Scandinavian banking; led to official investigations in Sweden, Germany and the United States; and even threatened the economies of the Baltic countries.
The scope of the investigations widened Wednesday when prosecutors in Frankfurt confirmed that they were investigating Deutsche Bank’s role as an intermediary that helped Danske Bank process transactions in U.S. dollars for suspect customers. The New York Times has reported that Danske Bank was part of a federal investigation of whether Deutsche Bank complied with laws meant to stop money laundering and other crimes.
A team of about a dozen investigators visited Deutsche Bank headquarters in Frankfurt on Wednesday and collected documents. “Deutsche Bank has comprehensively examined the facts of the matter and has voluntarily provided the requested documents as far as possible,” the bank said. “The bank will continue to co-operate with the prosecutor.”
The action in Frankfurt was not on the same scale as prominent raids in the past when police arrived in dozens of vehicles unannounced and seized boxes full of documents. But it was a reminder that Deutsche Bank remained under close scrutiny for alleged lapses of the past, even as it tries to address chronically poor profits.
In Tallinn, as many as 50 police officers and volunteers had searched for Rehe before his body was found Wednesday morning, authorities said. He had left his home without his cellphone or wallet, and police considered him a suicide risk. Rehe’s family had previously searched the area where he was found, said Marianne Ubaleht, senior press officer for the Estonian Police and Border Guard.
Police are not investigating Rehe’s death further, according to a police statement. Ubaleht would not comment on how Rehe had died. Police were still investigating what he had done and where he had gone between Monday and Wednesday, she said.
Rehe was not considered a suspect in the criminal investigation, a spokeswoman for Estonian prosecutors said. However, he supervised the bank from 2006 to 2015, and from 2007 to 2015 there were “major deficiencies in controls and governance that made it possible to use Danske Bank’s branch in Estonia for criminal activities such as money laundering,” the bank said in a 2017 statement.
Previously, Rehe was director general of Estonia’s Tax and Customs Board, according to the Postimees newspaper in Tallinn. He later worked for another Estonian lender, Bigbank, but had left in November, Postimees said.
He told the newspaper in an interview in March that he believed Danske Bank’s money- laundering controls had been adequate.
Swedish banks, once considered to be some of the best managed in Europe, have since been swept up in the scandal. In April, the two highest- ranking executives of Swedbank resigned under pressure after Swedish television reported that the bank was under investigation by the New York state Department of Financial Services.
The New York regulators had questioned Swedbank’s New York subsidiary about transactions involving Ukrainian politicians accused of corruption, Russian businessmen, offshore companies, and banks in Ukraine, Cyprus and other countries that have been considered money- laundering hubs.
Swedish regulators have disclosed that they are also investigating how SEB, another major Swedish bank, manages money- laundering risks in Estonia, Latvia and Lithuania. An SEB spokesman said the bank was being scrutinized because it had extensive operations in the Baltics, not because there were any specific allegations of wrongdoing.
Faced with intense regulatory scrutiny, many European and U. S. banks have decided that Latvia, Estonia and Lithuania are too risky and have cut ties. That is a problem for the Baltic economies, potentially raising the cost of credit and making it more difficult for local banks to conduct transactions in dollars.