(EUobserver) Foreign criminals sentenced to deportation from Denmark will in future be sent to the remote island of Lindholm, following a compromise between the country’s government and the anti-immigration Danish People’s Party on the country’s 2019 budget. The public has no access to the island, which has been used for research on viruses such as mad cow disease and swine fever. The research facilities will move to Copenhagen.
Deutsche Bank, Germany’s top lender, handled about €130bn of the “suspicious” money in the Danske Bank affair – the biggest money-laundering scandal in EU history.
“Deutsche Bank acted as correspondent bank for Danske Bank in Estonia. Our role was to process payments for Danske Bank. We terminated this relationship in 2015 after identifying suspicious activity by its clients,” the German lender told press on Tuesday (20 November).
A “correspondent bank” acts as an intermediary for other banks in countries where they do little business.
In this case, that meant Deutsche Bank helped Danske Bank’s clients in Estonia to move money into the US financial system.
Those clients were intimates of Russian president Vladimir Putin, Russian intelligence services, Russian mobsters, and members of the Azerbaijani elite, according to findings in Denmark.
Hundreds of millions of the funds were also ‘blood money’ linked to the murder of Russian anti-corruption activist Sergei Magnitsky, Magnitsky’s former employer, Bill Browder, has said.
The Deutsche Bank revelation comes after a Danske Bank whistleblower, Howard Wilkinson, testified to Danish MPs on Monday.
“I would estimate that $150bn [€130bn] has flowed through this particular bank”, Wilkinson said.
He named the bank only as a “US subsidiary of a European bank” and a “major correspondence bank handing US dollar transactions” because a Danske Bank gag order forbade him from saying more.
He said two US banks were also involved, with the Reuters news agency, citing sources, saying that these were JP Morgan and Bank of America.
“Nobody really knows where this money went, all we know is that the last people who saw it were people from those three banks in the US. They were the last control, and when it went awry was the money in the global financial system,” Wilkinson said.
“There’s no chance in the world that any of the suspicious money … will ever be traced or that any of those criminals will ever lose a single cent of it,” he added, given that it has already taken years for the scandal to come out.
Showdown in parliament
The fresh revelations set the scene for Wilkinson’s second testimony, due in the European Parliament on Wednesday.
The acting CEO of Danske Bank, Jesper Nielsen, will also take part, with MEPs, such as Danish centre-left deputy Jeppe Kofod, set to urge him to tear up the non-disclosure agreement that his bank forced Wilkinson to sign under threats of financial penalties.
The German and US banks all terminated their business with Danske Bank between 2013 and 2015, but the dodgy funds had flowed through their accounts for more than five years before they washed their hands.
The news saw Deutsche Bank’s shares fall a further three percent on Tuesday amid concern that German and US regulators might impose fines.
Deutsche Bank already paid €550m in fines to British and US regulators in 2017 for having funnelling about €9bn of illicit Russian money.
The scandal, which was itself the biggest in EU history before the Danish affair, saw Bafin, the German regulator, install a “special representative” in Deutsche Bank to oversee anti-money laundering compliance in an unprecedented step.
The US Department of Justice is still investigating the €9bn case in a process that could see the German lender pay out further penalties.
The Danish affair has prompted the European Commission to table new anti-money laundering laws to help clean up the European banking system.
More to come?
But if Danske Bank lifts its gag order on Wilkinson it could lead to further revelations of how small EU countries with large offshore banking sectors act as a conduit for dirty money into the EU and US financial system.
Its Estonian branch aside, there was a “deafening silence” on what Danske Bank’s Lithuanian branch has been doing, Wilkinson said on Monday.
Cyprus, Malta, and Latvia are also weak links in the EU’s anti-money laundering chain, Panicos Demetriades, Cyprus’ former central bank chief, previously told EUobserver.
The “political pressure” on bank supervisors in these countries was “so great that it’s very hard for them to do the right thing,” he said.
Banks in Cyprus handled €3.4 trillion of cross-border transactions including by non-resident or offshore clients between 2008 and 2015, according to European Central Bank (ECB) data obtained by the Bloomberg news agency in October.
Latvian banks handled €2.8 trillion and Estonian ones €900bn, the ECB said, indicating that the Dankse Bank and Deutsche Bank scandals could be just the tip of the iceberg.
(EUobserver) France has accused Iran of plotting a bomb attack against an anti-Iranian group in Paris, the NCRI. Danish police, last Friday, also sealed bridges and ferries on suspicion Iranian intelligence was planning a strike against another anti-Iranian group, the ASMLA, in Denmark, which Iran blames for a recent terrorist attack in Tehran. The news threatens EU-Iranian solidarity against a US plan to scrap the Iran nuclear arms treaty.
(EUobserver) Howard Wilkinson, a Briton who blew the whistle on Danske Bank’s Estonian money-laundering practices has asked Danish and Estonian authorities to protect him, complaining that his identity had been leaked without his consent by Estonian media, according to a statement from his American law firm. Berlingske, the Danish newspaper breaking the scandal originally, on Friday listed 72 Danish customers responsible for one percent of the total amount laundered.
(EUobserver) Thomas Borgen, the Norwegian CEO of Danske Bank, Denmark’s biggest lender, resigned Wednesday over allegations it laundered billions of illicit Russian money. “I really regret it … I have lived up to legal obligations, [but] I think it is best for all parties that I stop,” he said in a stock exchange notice. The bank published the “unpleasant” results of its internal probe into the affair on Wednesday.
(EUobserver) Danish state prosecutors on Monday launched an official investigation into Danske Bank over allegations that the country’s biggest lender has been involved in money laundering through its Estonian branch. Meanwhile, Bill Browder, champion of the Russian whistleblower Sergei Magnitski, killed in Russia, requested a criminal investigation of 26 officials of the Estonian branch of Danske Bank, who allegedly enabled the money laundering, Estonian daily Postimees reported.
(BBG) The chief executive officer of Danske Bank A/S has apologized for management’s failure to prevent criminals from using his firm to launder billions of dollars in illicit
funds over several years.
The apology follows an unusually harshly worded public reprimand by the financial regulator. The Danish government said management’s failings were “unforgivable” and the central bank warned that the reputation of the whole country was at risk.
“I’m very sorry on behalf of all stakeholders,” Danske CEO Thomas Borgen said in a phone interview. He also said the bank is “in a very different place today” with considerably more focus on preventing a money laundering.
The Danish Financial Supervisory Authority said on Thursday that Danske’s management failed on multiple counts to act in compliance with the rules. The assessment followed reports by the Berlingske newspaper that Danske was used as a laundromat by
criminals, including entities with ties to Russian President Vladimir Putin, the Russian security service, FSB, as well as members of the Azeri regime. The money laundering, alleged to have taken place between 2010 to 2014, was done via Danske’s operations in Estonia, which have since been terminated.
“It’s no doubt that we should have understood the depth and the breadth of the issues in Estonia better, faster than we did,” Borgen said.
The regulator said the failures have led to reputational damage not only for Denmark’s biggest lender but for the entire financial sector of its home country.
“This was a massive failure for years,” Jesper Berg, the director general of the Financial Supervisory Authority in Copenhagen, said in a phone interview on Thursday. The failures
penetrated all levels of the organization — across the executive and supervisory board — and reflected “a cultural issue of not bringing problems up through the system,” he said.
Danske was handed a list of orders and reprimands by the FSA, including a requirement that it hold additional capital.
Danske has until June 30 to show how it will comply.
The regulator stopped short of demanding that actions be brought against members of Danske’s current management team but signaled that decision wasn’t necessarily final.
Berg said the FSA didn’t find “sufficient evidence that, if we believe there were a court case, that we could win the court case, and that is the requirement for us.”
“If there’s new information that justifies bringing a court case or reporting to the police, then we will revisit these decisions,” Berg said.
Henrik Ramlau-Hansen, a former chief financial officer at Danske who became chairman of the board of the Danish regulator, is stepping down to ensure there are no conflict-of-interest issues at the FSA. “I acknowledge my share of responsibility,” he said.
Borgen, 54, acknowledged that the bank failed to act fast enough as the problems emerged. But he repeatedly made clear his job isn’t on the line. Chairman Ole Andersen told local newswire Ritzau he still has confidence in the CEO.
“As the CEO, you are ultimately responsible,” Borgen said.
“That’s a fact. It’s important to learn from this case and ensure it won’t happen again. With the support of the board, that’s my task going forward.”
A Sloppy History
The FSA noted that “Danske Bank has historically not lived up to its obligations” with regard to anti-money laundering. The agency pointed to a period from the end of 2012 to November 2013, during which Danske didn’t have a person responsible for anti-money laundering operations, despite this being a legal
The regulator criticized Danske for failing to terminate dealings with clients it knew were tainted. “Despite knowledge of the customer’s incorrect financial reporting, the branch
maintained the customer relationship for more than one year,” it said.
The FSA said the money laundering breaches related to non-resident accounts using Danske’s Estonian operations. The regulator also noted that “in the period up until June 2012, the bank’s current CEO was the person on the executive board responsible for the branch.”
In July 2013, a correspondent bank that the FSA didn’t identify by name ended its cooperation with Danske’s Estonian branch over concerns about non-resident customers. A year later, Danske finally decided to start terminating those operations, a process that took another two years.
Berg said the fact that it took so long suggests that “economic considerations obviously played a role,” rather than a clear focus on preventing money laundering as quickly as
Among the orders given to Danske by the regulator is a requirement to hold an additional 5 billion kroner ($803 million) in capital.
Shares in Danske fell 1 percent on Thursday. Sasja Beslik, the head of sustainable investing at Nordea Bank AB, said he’s “not planning any action” on the funds’ holdings of Danske shares, after assurances from the bank it is taking the necessary steps to deal with the matter. Beslik said he welcomed the regulator’s response, including the financial penalty.
Borgen said, “This is a time for reflection. When you’re the CEO, it is ultimately my responsibility and I have to look into what I should and could have done differently. That’s
something I need to bring with me going forward.”
Denmark’s top lender, Danske Bank, played an “organised” role in a Russian money-laundering scam, French prosecutors have said.
The Tribunal de Grande Instance de Paris said the bank’s branch in Estonia helped to move €15 million of “money from organised fraud and tax evasion” in Russia into France and other EU jurisdictions between 2008 and 2011.
It said the Danish lender did it via “multiple transactions … in an organised manner”.
It said the debits were “without any economic justification” and were designed to “hide the final destination of the defrauded funds and to benefit from them abroad”.
The French action, spearheaded by Renaud Van Ruymbeke, a hawkish magistrate, could end in a fine.
It also adds to Danske Bank’s reputational damage by tying its name to Sergei Magnitsky – a Russian whistleblower who uncovered the “organised fraud and tax evasion” scam, worth $230 million [€194 million] in total, and who later died in prison.
The Danish lender’s shares have continued to trade normally.
But the bank’s image already took a blow when it admitted, in September, that its Estonian operation took part in an Azerbaijani money-laundering scheme.
Flemming Pristed, Danske Bank’s top lawyer, said on Thursday: “We are not presently in a position to say whether the amounts [the Russian €15 million] came from illegal activities”.
Thomas Borgen, its CEO, told Berlingske, a Danish business daily: “It is clearly unsatisfactory that in Estonia we have historically not been good enough at avoiding potentially being abused for money laundering”.
The bank has hired Denmark’s former intelligence chief, Jens Madsen, to find out what happened in its Baltic branch.
Paintings and yachts
According to Berlingske’s sources, Argenta Systems, a Russian firm registered in Belize, a Caribbean tax haven, funnelled the stolen money via its account in Danske Bank Estonia to Decobat, a French firm managed by a French-Russian woman.
The money was then spent on real estate, art, and yachts.
The French action comes on the back of a criminal complaint filed by Bill Browder, Magnitsky’s former employer, in 2013.
Browder, a British businessman who used to be a hedge fund manager in Russia, became a human rights activist after Magnitsky’s death.
His campaign has seen the US, Canada, and Estonia pass so called Magnitsky Acts designed to freeze the funds of Russian human rights abusers in overseas accounts.
It has also seen him go after the stolen €194 million in several EU jurisdictions, including Austria, Cyprus, Estonia, Finland, France, Germany, Latvia, Lithuania, Luxembourg, and the UK, as well as in Monaco, Switzerland, and the US.
“We want to ensure that anybody in the West who benefitted from this crime or helped facilitate it are prosecuted to the full extent of the law,” Browder said in a statement on Thursday.
He previously told EUobserver he had traced €28 million of the stolen funds to France, €33 million to Germany, and €26 million to Cyprus.
France has frozen €8 million of it. Luxembourg, Monaco, and Switzerland have also frozen parts of the stolen funds.
Austria, Cyprus, and the UK have been the least cooperative.
The Cypriot justice minister, Ionas Nicolaou, obstructed French investigators by withholding documents requested by France back in 2015 for the best part of a year, Browder told the Cyprus Business Mail, a daily, on Thursday.
Nicolaou has vowed to help Russian investigators to interrogate Browder’s lawyers in Nicosia in an anti-Magnitsky smear campaign.
Cyprus has also done nothing to go after the illicit Russian funds despite being handed a 133-page bushel of documentary evidence by Browder on the money trail five years ago.
- Dutch Queen showed no signs of fatigue on day two of whirlwind Portugal trip
- Wore pink laser-cut dress and a flower hair-piece to the Champalimaud Centre
- Accompanied by King Willem-Alexander who was dapper in a blue suit
Just hours before she’d been clinking glasses with Portugal’s president at a lavish state banquet to welcome the Dutch royals to the country.
But despite the late night, Queen Maxima of the Netherlands looked radiant on Wednesday as she joined King Willem-Alexander on a visit to a biomedical research centre in Lisbon.
The Queen, 46, wore a laser-cut midi dress in a pretty shade of pink, with brown suede heels, a pearl necklace, and a striking floral hair accessory.
Queen Maxima and King Willem-Alexandre looked in great spirits as they posed for pictures
The Dutch royal couple shared a light-hearted moment as they explored the seafront in Lisbon
The Queen wore a pink laser cut mid-length dress with suede heels, and a flower hairpiece
(DN) Os reis da Holanda receberam hoje, nos Paços do Concelho, as chaves da cidade de Lisboa, seguindo num passeio a pé e de elétrico até Arroios, onde ficaram a conhecer a zona através dos testemunhos das suas gentes.
Depois dos encontros oficiais com o Presidente da República e com o presidente da Assembleia da República, que decorreram de manhã, os reis receberam as chaves da cidade pelas mãos do presidente da Câmara Municipal de Lisboa, Fernando Medina.
À saída, cerca de três dezenas de turistas estrangeiros aguardavam os monarcas na Praça do Município, tendo-os cumprimentado. Praticamente todos estavam de telemóvel no ar, a gravar o momento.
Os monarcas seguiram depois a pé até ao Terreiro do Paço, ladeados por Fernando Medina e acompanhados por alguns vereadores, até entrarem num elétrico, onde foram à janela com destino ao Arquivo Fotográfico Municipal.
Já dentro do elétrico, e quando questionada sobre o que achava de Lisboa, a rainha respondeu em inglês que, mesmo estando na capital portuguesa há apenas dois dias, já a considera “muito bonita”.
De lá, os reis seguiram a pé até ao Intendente, onde se reuniram com alguns parceiros sociais no Largo Residências, e participaram num debate sobre “vizinhanças em transição”.
A diretora desta cooperativa cultural, Marta Silva, explicou à agência Lusa que “este é um projeto que trabalha através de práticas culturais de intervenção social” e que pretende “criar uma ponte e uma mediação entre as pessoas e as políticas de mudança do território”.
A Holanda é um dos parceiros desta organização, através de uma rede europeia.
“Eu fiquei muito contente, porque no fundo esta foi uma opção de visita muito interessante, que é paralelo a um programa oficial de estar com o Presidente da República, com o primeiro-ministro”, confessou Marta Silva.
A responsável referiu que os reis “quiseram fazer uma visita não institucional, foi intenção da embaixada trazê-los cá para conhecerem um lugar que teve uma mudança, mas quiseram conhecê-lo com as pessoas que trabalham e que vivem aqui”.
Também presente na reunião, a presidente da Junta de Freguesia de Arroios disse à Lusa que os reis ficavam “com uma imagem bastante positiva, gostaram dos projetos que ouviram” e que têm sido implementados na zona ao longo dos últimos seis anos.
“Isso foi extremamente importante. Eles fizeram perguntas, gostaram, perceberam que era uma freguesia de inclusão”, acrescentou Margarida Martins.
A autarca disse que o rei Guilherme Alexandre e a rainha Máxima “vão voltar [a Lisboa] e vão gostar” e manifestou a esperança de que dessa vez o possam fazer “enquanto cidadãos”.
O aparato não passou despercebido a algumas das pessoas que se cruzaram com a comitiva e que se dirigiam aos jornalistas para perguntar de quem se tratava.
Alguns munícipes e turistas cumprimentaram o rei Guilherme Alexandre e a rainha Máxima, aproveitando ainda para elogiar a beleza da regente.
No final da visita, os monarcas foram agraciados com uma atuação do Grupo Limpeza Urbana Municipal (GLUM), um projeto que pretende ser “um alerta para a população local sobre higiene urbana”.
Leaked documents have caused red faces at a Danish bank and for UK regulators who failed to stop a €2.4 billion Azerbaijan corruption scheme.
The papers showed that Danske Bank, Denmark’s largest lender, helped to funnel most of the money out of Azerbaijan via four of its branches in Estonia into the EU and the Middle East between 2012 and 2014.
They also showed that four shell companies registered in the UK – Faberlex, Hilux Services, Metastar Invest, and Polux Management – were behind the majority of the 16,000 suspicious bank transactions involved.
The sloppiness of the British regulators was on show in the case of Faberlex, Hilux, and Polux.
All three firms were nominally owned by Maharram Ahmadov, a 51-year old Azerbaijani driver who lived in a humble house in the Gushchuluq neighborhood of Baku.
Some of the money was used to pay influential people in European institutions, including the Council of Europe, a human rights watchdog in Strasbourg, France, and in the European Bank for Reconstruction and Development (EBRD), as well as for EU lobbyists, the leaked bank documents said.
These included Eduard Lintner, a former German MP from the centre-right CSU party, who was a member of the Council’s parliamentary assembly (Pace), and Luca Volonte, an Italian MP from the centre-right UDC party, who was also a Pace member.
Lintner received $1.1 million from the scheme and Volonte got €2 million, the leaked bank records showed.
Both men defended Azerbaijan over its sham elections in 2013 and over its crackdown on human rights activists in the same period, which saw more than 90 activists and journalists jailed on political motives.
Kalin Mitrev, a Bulgarian board member of the EBRD, got at least €425,000.
All three men have denied wrongdoing, but the Volonte case was already subject to a separate investigation by Italian prosecutors.
Eckart Sager, a former producer at the CNN broadcaster who is now president of FactBased Communications, a London-based PR firm, got €2 million. Jovdat Guliyev, a member of the London-based lobbyist group, the Anglo-Azerbaijani Society, got €435,000.
Leading newspapers in Austria, Estonia, France, Germany, Hungary, Romania, Russia, Slovenia, and the UK also took part in the investigation.
Danske Bank told The Guardian, a British paper, that its due dilligence procedures in Estonia had been below par.
“We will not accept Danske being exploited for money laundering or other criminal purposes. We will do everything to prevent it from happening again,” it said in a statement.
It said it had “tightened procedures and controls” and “terminated relationships” with some clients in reaction to the leak.
Other payments went to members of Azerbaijan’s regime, such as deputy prime minister Yaqub Eyyubov and his son Emin Eyyubov, who was a former EU ambassador, as well as to president Ilham Aliyev’s press secretary Azer Gasimov,
Some of the money was spent on private school fees in the UK, for instance at Bellerbys, ICS, and Queen Ethelburga’s Collegiate, on investments in British soccer teams, designer dresses, flowers, luxury cars, real estate, and legal fees.
More than half the funds originated from an account at the International Bank of Azerbaijan – a Baku-based lender linked to the ruling clan that went bust earlier this year.
The account was owned by Baktelekom, a so-called doppelganger firm, which has the same name, except for one letter, as Baktelecom, Azerbaijan’s telecoms giant, but which is not related to the state company.
Other funds came from the country’s ministry of emergency situations, ministry of defence, and its intelligence service, the Special State Protection Service, as well as from Rosoboronexport, a Russian arms firm.
(BBG) Denmark has fined four Uber Technologies Inc. drivers for violating the country’s taxi laws in a test court case where prosecutors have lined up similar charges against another 1,500 people.
The four drivers received fines of 696,600 kroner ($111,700) between them for a total of 7,717 illegal trips, according to a statement published Monday on the website of the Copenhagen city court. The amount matched the gross income they received from transporting passengers in 2015 before the Nordic country late last year ruled that Uber was an illegal taxi service.
The San Francisco-based company earlier this year stopped its service in Denmark, citing new regulations that impose licensing requirements on cars that function like taxis, and require seat sensors and meters, instead of using a smartphone to calculate fares as Uber does. In a separate statement Monday, Copenhagen police said it will await any decision by the four drivers to appeal the verdict, before prosecutors go ahead with the other 1,500 cases.
The charges were based on documents, containing income lists of Uber drivers, that Denmark had received from authorities in the Netherlands.
(EUobserver) Denmark has said it would defy the European Commission on border checks if need be, opening a new front in some member states’ rebellion on migration policy.
Lars Loekke Rasmussen, the Danish prime minister, told parliament on Tuesday (16 May) that the amount of people coming from Africa to Europe via Italy was “much, much too high” to reopen borders.
“We will continue border controls unless the EU miraculously finds ways to regain control of its outer frontiers and Italy curbs the flow of refugees … into Europe”, he said.
He spoke after the Commission said on 2 May that Austria, Denmark, Germany, Norway, and Sweden were permitted to extend border checks for a further six months, but that this would be the last time they were allowed to do so.
The five states are all members of the Schengen accord on free movement in Europe, which is enforced by the EU executive.
Rasmussen added on Tuesday that “as long as EU borders are not under control, we need to uphold our own controls”.
He said that his “own prognosis” was that “this is not a likely scenario in the next six months”.
“Nobody in my political neighbourhood is in favour of open borders to Africa, rather on the contrary … We introduced rules to protect Denmark with great success. That’s why we now have the lowest number of asylum seekers in eight years,” the prime minister, who hails from the centre-right Venstre party, said.
He spoke in reply to a question from Kristian Thulesen Dahl, an MP from the anti-EU and anti-immigrant Danish People’s Party which holds almost one in five seats in the Danish parliament.
Denmark’s neighbour, Sweden, lifted ID checks on a bridge between Copenhagen and Malmo two weeks ago, but it said at the time that it would intensify spot checks and CCTV surveillance at other crossing points.
“Border controls are still needed and need to be strengthened”, Anders Ygeman, its interior minister, said.
Almost 13,000 people came to Italy via the central Mediterranean in April – a 19 percent increase on March and a 33 percent increase on April last year, according to EU border agency Frontex.
Most of them were from Nigeria, Bangladesh, and the Ivory Coast, it said.
The numbers coming to Greece (1,200 in April) via Turkey have dropped massively after a Turkey-EU deal to keep Syrian refugees in place.
The Geneva-based International Organisation for Migration said 53,912 people came to the EU via Cyprus, Greece, Italy, and Spain from 1 January to 14 May, compared to 189,075 last year.
It said 45,118 of them came via Italy compared to 32,292 last year and that at least 1,229 people drowned on that route, up from 966 last year.
The Danish statement on Tuesday came amid a bitter EU dispute over migrant relocations.
The Commission the same day warned countries such as Hungary and Poland that unless they started to take in asylum seekers from Greece and Italy by June then they would face legal action.
Hungary and Poland have taken in no one despite being outvoted in the EU Council on the burden-sharing quotas last year.
Polish prime minister Beata Szydlo told press in Warsaw on Tuesday that there was “no possibility [for Poland] to take in any refugees – that’s the government’s position”.
“We are saying very clearly: There’s no agreement by the Polish government to have forcibly imposed refugee quotas”, she said.
When a European government raises the pension age and makes cuts to welfare programs, it’s usually because of dire finances. In Denmark’s case, it’s because of ideology.
Greece, Italy and other highly-indebted countries are regularly urged by officials in Brussels to find ways of reducing public spending or making their labor markets more efficient. But of Denmark, the European Union’s commission said in its most recent report: Competitiveness indicators “don’t point to major challenges;” employment has “remained strong;” and the “risks to Denmark’s fiscal sustainability are low in the short, medium and long term.”
So why is the Scandinavian nation finding it necessary to make cuts to its fabled welfare programs? Driving the new government’s push is a desire to finance a major round of income tax cuts.
“We want to promote a society in which it is easier to support yourself and your family before you hand over a large share of your income to fund the costs of society,” the government of Prime Minister Lars Lokke Rasmussen wrote in its manifesto.
It’s all part of a Danish drift toward the political right heralded at the start of the millennium by another Liberal Party premier named Rasmussen, Anders Fogh. The push to reduce levies in one of the most taxed societies in the world received new impetus in November, when two free-market groups joined the Liberals’ minority government.
Rasmussen hasn’t yet presented any detailed proposals, but much of the preparatory work has already been done. The above chart shows fiscal projections based on last year’s plan to cut the top rate of income tax by 5 percentage points and boost the salaries of the lowest earners by an average of 7 percent. On that basis, balancing the budget would have been delayed by five years, with the deficit as a percentage of gross domestic product still at manageable levels.
The original proposal was eventually dropped after becoming a victim of a power struggle between the government and its biggest backer in parliament, the anti-immigration Danish People’s Party. A reconfigured cabinet is now hard at work on a new one, due to be unveiled by the summer.
Generating the resources needed to fund the tax cuts requires higher revenues, lower spending, or a combination of both. The government believes that the best way to achieve its objective is to get more people into the workforce.
Since Denmark is already close to full employment (the unemployment rate came in at 3.4 percent in December) and attracting more migrant workers is a political no-go area (the government imposed border controls and tightened the rules in the wake of the refugee crisis of 2015), the obvious solution is to encourage more youngsters and the elderly to work.
Reforms introduced by successive governments over the years have already ensured that Denmark’s expensive welfare state is sustainable for years to come, says Torben M. Andersen, a professor of economics at the University of Aarhus and a former government adviser. These include raising the retirement age to 67 years from 65 years by 2025.
The government now wants to raise the retirement age even further, to 67.5, and get students more quickly into the workforce by increasing the use of loans at the expense of grants.
The opposition has already said it plans to fight any tax cuts amid voters’ concerns over the future of the country’s cherished social model.
“The government has engaged in an ideological crusade away from the Nordic welfare state,” said Benny Engelbrecht, the finance spokesman of the Social Democrats, the country’s biggest opposition party.
(Express) EUROPEAN Union (EU) bosses needs to abandon their “arrogance” and stop talking about Brexit in a negative way otherwise Denmark could be the next to leave the bloc, a leading Danish MEP has warned.
The Vice Chair of the European Parliament’s Foreign Affairs Committee, took a swipe at the EU’s chief Brexit negotiator Guy “Mr Brexit” Verhofstadt who called Theresa May’s pledge to deliver a new EU trade deal by 2019 “impossible”.
He warned if the EU does not “appreciate and work constructively with the UK’s objectives” it risks being overcome by popular discontent and “Denmark could well be the next country to leave the bloc”.
Denmark could well be the next country to leave the bloc
“In order to avoid being overshadowed and left behind, the European Union should stop talking about Brexit in a negative and defensive way.
“It is high time that it abandons its arrogance and faces the reality as it is, not as it wishes it to be.
European Commission President Jean Claude Juncker has been outspoken in his anger about Brexit
“The EU has to become fully aware of the fact that a good trade deal is beneficial – not only to the UK, but also to all EU Member States.”
He said an ongoing battles over trade and more would have “no winners” which is why the EU needs to make “every effort” to ensure there is mutual satisfaction.
Danish PM Lars Løkke Rasmussen has been a strong supporter of Theresa May
EU bosses have been “arrogant” in their Brexit dealings, the Danish MEP said
With regards to Denmark, he said its trade relationship with the UK is “important” and the two countries are closely linked.
He also added Britain is a “close strategic and military NATO ally of the EU” and he sincerely hopes Brexit will not affect “this crucial and close military co-operation”.
Thanks to determined policies, Denmark has succeeded in breaking the seemingly inextricable linkage between water and energy use. But replicating the Danish model at European level won’t be easy, policymakers warn.
When it comes to environmental performance, Scandinavian countries are usually world leaders. And the so-called water-energy nexus is no exception.
“The Danish story on water is actually a fairy tale,” said Katrine Rafn, director for water resources at the Danish environment ministry. Over the last 30 years, she said Denmark has “succeeded in cracking the code” when it comes to combining economic growth with energy-efficient water management.
“The secret code is a spicy mix of policy development, intelligent regulation and technological innovation” involving cooperation between public authorities, private sector and water utilities, she told policymakers at a EurActiv event last December.
“Dealing with the energy efficiency of water management is about dealing with the entire water cycle,” Rafn explained. “It’s about water consumption, extraction and distribution, it’s about wastewater transport and treatment – it’s about everything.”
Energy production can be water-intensive. It is used in power generation, primarily for cooling thermal and nuclear power plants, but also in biofuels production and to clean up solar panels in concentrated solar power plants.
The International Energy Agency recently turned the spotlight on the water-energy nexus. In its latest World Energy Outlook, released on 16 November, it said almost all of the weaknesses in the global energy system – whether related to energy access, energy security or the response to climate change –, can be exacerbated by changes in water availability.
“The water business uses a lot of energy – about 4% of all the electricity on the planet,” said Mads Warming, global director for water and wastewater at Danfoss, a Danish engineering company, which supported the EurActiv event. That figure is expected to double by 2040 if no action is taken, the IEA report said.
“What we have shown is that it is possible to bring that down to zero,” Warming told the conference.
Denmark started realising in the 1970s and early ’80s that something needed to be done to make water management less energy-intensive. Back then, Denmark suffered from over-extraction of groundwater, pollution from wastewater in rivers and coastal regions, as well as high water consumption and low efficiency, the Danish official said.
Since then, Denmark has managed to reduce water use down to 107 litres per capita on average per year. In Copenhagen alone, consumption was reduced by 42% since 1985.
And the industry has also succeeded, Rafn said. At utility level, leakage was reduced to 8% average across the nation. Aquifers from which groundwater is extracted have been mapped comprehensively, allowing to “gain control of the resource,” the official said. “We know where they are and how much they are so we can protect them from pollution and over-exploitation”.
Reflecting a fundamental change in approach, Rafn said Danish authorities were now no longer referring to wastewater but to “resource water” instead.
Water pricing is key
As a result, the Danish water sector only uses 1.8% of the nation’s total energy consumption. And the technologies are there to make the sector energy neutral “right now”, the Danish official stressed.
The city of Aarhus, for instance, wants to make the water cycle energy neutral by 2020, said Lars Schröder, CEO of Aarhus Water who was speaking at the event. And other cities in Denmark have similar objectives.
Asked why the rest of the world wasn’t copying the Danish example, Mads Warming from Danfoss replied: “People generally believe that everything is expensive in Denmark, including electricity.” But he swiftly refuted that claim, saying electricity prices were higher in Germany and the UK, double in Italy, and on level with prices seen in Brazil and China.
“Does this sound too good to be true? Well, it can be done,” Rafn said, citing water pricing with “full cost recovery” as a driver behind the Danish success story.
“The water price includes the entire water cycle, including investments in new technology,” Rafn pointed out, saying Denmark introduced a penalty tax on water utilities as an incentive to stay below the 10% leakage mark.
Pavel Misiga, head of unit at for clean water at the European Commission’s environmental directorate, said the water and energy sectors were facing “similar problems” and “the same market failures”.EU water legislation ‘not implemented’
He reminded that EU regulators have not been standing idle on water issues, citing the Urban Wastewater Treatment Directive, first adopted 1991, and the Water Framework Directive, in place since 2000, which introduced water pricing as a policy tool at European level.
But he said “we are still not implementing this legislation across Europe,” citing lack of investment as one of the reasons. The European Investment Bank (EIB) estimates investment needs at around €90 billion, Misiga pointed out. As a result, environmental objectives are often not met and citizens do not enjoy the level of service they expect, the EU official said.
Water is also “creating enormous public debt” for European countries Misiga added, saying those figures do not currently show in national accounts. “But in the future, it will have to be addressed,” he said.
Rafn was more bullish on the EU’s potential role, calling for the Commission to set an ambitious European goal for water laws. “Why not have a common European law setting a maximum 10% loss in the water sector? I think it’s feasible, the technology is there, and we have a lot of good examples on how to do it.”
Another idea currently being implemented in Denmark is a benchmark on environmental indicators to complement those already in place for the economic efficiency of the water sector. “And I say, why don’t we have a European benchmark so you can check how well the member states are doing and learn from each other,” she said.
The Chinese have learned from the Danish experience, Rafn pointed out, saying Beijing had introduced a target to limit water losses to 10%. “If the Chinese can do it, we can do it as well,” Rafn said.
Pavel Misiga cited the revision of the WFD in 2019 as an opportunity to consider new EU-wide objectives or benchmarks.Water Framework Directive revision
But he warned there may be “political difficulties” in reaching agreement at European level, recommending “softer tools” such as improved access to finance, and “de-risking” investments in water management technologies.
“The problem with a universal benchmark or target is that we have huge differences in Europe,” Misiga stressed, contrasting countries like Denmark or Germany where water losses amount to only 6% and municipalities in Romania where losses can reach 40%.
“So we may not be able to agree,” Misiga warned, advocating a softer approach. “And for that, we don’t need to wait for new legislation,” he said, encouraging cities to tap into the European Fund for Strategic Investment (EFSI) – the so-called Juncker fund – to invest in water and energy projects.
In any case, the International Energy Agency underlined the urgency of tackling the water-energy nexus, saying the cost of inaction will eventually skyrocket.
“We don’t have time to wait,” said Kamel Ben Naceur, IEA director for Technology and Outlooks. “If we don’t do it now, the system to do it afterwards will be much more expensive. And if we don’t do it at all, the cost of adaptation will be much more expensive,” he warned.
While admitting that replicating the Danish example “would be somehow complex” because of the wide national differences, Ben Naceur also underlined the huge economic benefits of addressing wastewater collection and treatment in European municipalities.
The EU Water Framework Directive called for member states to create incentives for efficient water use by 2010. However, it is unclear whether this has, in fact, resulted in any change in national policies, the European Environment Agency says.
Water use by sector varies across the European Union – with agriculture the main consumer of freshwater in more arid regions, while energy, home and industrial consumption lead in damper climates.
Overall, households, business, hospitals and offices account for 20% of water use, according to a May 2012 report by the European Environmental Agency. Of that, flushing toilets consumes nearly one-third of water, but there are also big losses due to leakage from old pipes, commodes or public water supplies.
Calls for efficiency measures are growing, and not just from policymakers. Leading water-consuming industries, including beverage and food manufacturers, are taking steps to improve efficiency to cut costs, as concerns about supply security mount.
EU figures show that while much of Europe has ample freshwater, parts of Spain, France, Italy, Britain, Belgium and the Baltic states, along with much of Cyprus, have faced stress or extreme stress in recent years – with demand exceeding supply.
(BBG) Denmark’s financial regulator plans to take an aggressive approach with banks that don’t meet new rules designed to protect taxpayers.
“We need to act a lot earlier than we have acted,” Jesper Berg, the director general of the Financial Supervisory Authority in Copenhagen, said in a phone interview.
As a regulator in the first European country ever to force losses on senior bank creditors, Berg says Italy’s plight with Banca Monte dei Paschi di Siena is proof regulators can’t afford to wait when capital levels test lower limits. The same conclusion can be drawn from Denmark’s own experiences during the financial crisis, he said.
Denmark is taking an aggressive tack amid a lack of clarity over what regulatory action a breach of minimum requirements for own funds and liabilities (MREL) should trigger. The rule is the linchpin in Europe’s plan to avoid government bailouts of banks, but according to the European Banking Authority, the legal framework in question doesn’t specify what steps local authorities should take.
The EBA said in December the options that authorities have are generally “too slow” or “too uncertain,” creating “practical enforcement problems.” The EU has since proposed expanding regulators’ powers.
Berg says history shows it’s wise to err on the side of caution. “From the cases we had over the last couple of years there have been huge losses to simple creditors, so we need to act a lot earlier,” he said.
Danske Bank A/S and a handful of other Danish lenders deemed to be of systemic importance to the domestic economy must hold MREL equal to almost a third of risk-weighted assets. As well as the existing stack of capital requirements, MREL will include recapitalization and loss-absorbing buffers.
If a Danish lender eats through the thin top layer of its MREL reserves (and breaches the recapitalization buffer), the FSA is “of the view that we can at that stage actually transfer institutions to Financial Stability,” the country’s bad bank, Berg said. Experience shows that waiting means “there won’t be enough money,” he said.
Denmark’s biggest banks all passed the EBA’s stress tests last year as Scandinavia outperformed much of the rest of Europe on capital adequacy. Denmark’s systemically important banks will probably issue somewhere between 5.8 billion euros and 14.9 billion euros in so-called non-preferred senior notes to comply with MREL, Danske Bank estimated this month.
Berg ruled out the kind of precautionary recapitalization that Italy is planning for Monte Paschi after other efforts to support the world’s oldest bank fell short.
“Anything that smacks of the government taking losses, or the risk of the government taking losses, is not part of the government’s strategy” in Denmark, he said.
(It’s worth noting that a former Danish economy minister, Margrethe Vestager, will pass judgment on Italy’s plans for Monte Paschi in her current role as the EU’s competition commissioner. Though a staunch defender of strict bail-ins while a member of the Danish cabinet, she now says Italy’s handling of Monte Paschi is in keeping with Europe’s resolution rules.)
Denmark’s tough stance may prompt struggling banks to seek mergers instead, as was the case more than 20 years ago, when the FSA had a similar policy, Berg said. “We want to get back to the early 90s,” he said.
The biggest Danish banks face a 2019 deadline to comply with MREL, which the FSA says will need to be equivalent to 30 percent of risk-weighted assets, or twice total capital requirements. Under the FSA plan, even smaller lenders will face a requirement that exceeds minimum capital demands to avoid what the regulator has characterized as “messy” unwindings in bankruptcy court.
“You can just look at Italy right now to see the need for another approach,” Berg said. “The underlying assumption that you can use bankruptcy for small and medium-sized bank is, practically speaking, unrealistic, and we have the experience to show it.”
(BBG) Without Britain’s contributions, the remaining European Union members will need to get by on a smaller budget, according to Denmark.
No one, including Germany, wants to fill the 7.6 billion-euro ($7.9 billion) hole that will be left once Britain — a net contributor to the EU — leaves the bloc, Danish Finance Minister Kristian Jensen said in an interview in Copenhagen on Friday.
“The EU cannot continue spending the same amount of money when one of the largest countries, one of the largest contributors, leaves,” said Jensen, who had been foreign minister before a new Danish government was formed last month.
The comments offer a preview of the bitter talks ahead on a key challenge facing the EU once Britain exits. The bloc has operated with an annual budget of about 140 billion euros, an amount that is agreed every seven years after national governments fight over everything from agriculture subsidies to research support. The current budget period, which ends in 2020, marks the first time the bloc has reduced spending, following insistence from former British Prime Minister David Cameron.
Denmark, which is also a net-contributor to the EU, last month snubbed a European Commission proposal to increase spending. The Danes argued it would be inappropriate to commit to budget changes before there’s more clarity on what Brexit means for the bloc.
Jensen says the EU needs to accept that there won’t be room for the kinds of programs that have existed to date. More specifically, the “enormous sums” in agricultural subsidies that Denmark, and others, received from the EU over the years will probably shrink, according to Jensen. That means “we need to look very critically at the expenditure, even the more difficult parts,” he said.
Subsidies are a particularly sensitive issue for the EU’s eastern members, which have relied on the bloc’s regional development, agricultural and industry development funds to build up their economies. Jensen says Britain’s departure means there’ll now be less money for that kind of investment in the future.
Meanwhile, Denmark and other northern European contributors like Germany, the Netherlands, Sweden and Finland are worried they won’t be able to muster enough votes in the bloc to prevent an increase in EU spending after Britain leaves.
But the gap between what Britain wants and what the EU is willing to give remains considerable and, ultimately, implies that the U.K. will need to continue making contributions of some sort to the bloc if it’s to get any concessions, according to Jensen.
“There’s no such thing as a free lunch. Not even for a country like Britain, which has been a close ally of Denmark for many, many years,” he said. “So if the EU is to stay open to Britain, then Britain has to follow the same rules as other countries like Norway.”
Meanwhile, the stakes for Britain are growing higher. Scotland is now planning to hold a referendum on separation from the U.K. unless it can stay in the EU’s single market.
In a commentary published in the Financial Times on Sunday, Scottish First Minister Nicola Sturgeon said that “independence must remain an option for safeguarding our European status, if it becomes clear that our interests cannot be protected in any other way.”
(Reuters) The European Union and Denmark have found a way to continue police cooperation vital to counterterrorism and crime fighting after Danes voted to leave Europol, two EU sources said.
Foreshadowing Britain’s vote to leave the 28-nation bloc in June, the Nordic country last December rejected a government proposal for new laws needed to keep the country inside the European police agency.
Since then, the government has sought a compromise to maintain police cooperation with the EU.
The deal is expected to be confirmed on Thursday when Danish Prime Minister Lars Lokke Rasmussen and EU leaders meet, on the sidelines of a regular EU summit, officials said.
Rasmussen has a mandate from all parties in the Danish parliament to strike a deal, a source said.
As full members of Europol, Denmark could automatically access its database. The draft deal will allow it to request data from an Europol agent as long as it remains a member of the border-free Schengen area.
The database is crucial to acquire information from other EU police forces.
As part of the accord, Denmark committed to remain a member of the Schengen area, the officials said.
The Danish government and Europol declined to comment on the negotiations.
After half a decade of negative interest rates, Denmark’s economy is headed for an economic “boom” and risks running out of the labor resources needed to support sustainable growth, the central bank said on Wednesday.
“The Danish economy is in a solid upswing, and as the signs of labor shortage are becoming still clearer, the structural government budget should be brought to balance within the next couple of years so that fiscal policy will contribute to stabilizing the economy,” Governor Lars Rohde said in a statement on Wednesday.
The warning comes despite a downgrade in the economic forecast, with gross domestic product seen expanding 1.4 percent in 2017, versus an earlier forecast for 1.5 percent. The bank also cut its 2018 outlook to 1.5 percent from the 1.8 percent predicted in September.
“The slightly lower growth expectations for the coming years primarily reflect a weakened outlook for Denmark’s export markets,” Rohde said. Household spending is expected to drive expansion, he said.
Watch more: follow the Danish Central Bank’s news conference on LIVE <GO>.
The comments follow almost half a decade of negative interest rates that have created imbalances in Denmark’s housing market, which the central bank has characterized as a worrying side-effect of its need to shape monetary policy around the krone’s peg to the euro. House price developments in the Danish capital are of particular concern, Rohde said.
“Copenhagen homeowners will be relatively more severely hit by rising interest rates than homeowners in the rest of Denmark,” he said. The housing market in the capital is “vulnerable to sudden interest rate rises” and “there is a considerable risk that if the real price increases seen in recent years continue, they will be followed by falls of the same size,” Rohde said.
The central bank warned lenders not to let credit standards slip amid competitive pressures or to assume that recent reversals of loan impairment charges would continue. Losses happen and charges “can be expected to rise at some point,” the bank said.
The bank also spent time analyzing the potential fallout of President-elect Donald Trump’s economic proposals. The planned fiscal spending boost has the potential to create accelerating wage and price pressure, especially if the supply of labor isn’t increased, according to the Danish central bank. The reality TV star’s ideas also mark a departure from tradition in that he plans pro-cyclical measures, the central bank said.
Aside from the risk of creating an “overheated” economy, such policies will also lead to growth in U.S. government debt from an already historically high level, the bank said.