Pahor Govt. (2008-2011) and Officials Blamed for €1bn Iranian Money Laundering Case at NLB

By , 17 May 2018, 15:07 PM Business
Pahor Govt. (2008-2011) and Officials Blamed for €1bn Iranian Money Laundering Case at NLB Flickr - TaxRebate.org.uk CC by 0

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STA, 17 May 2018 - A parliamentary inquiry into suspected money laundering at NLB and NKBM banks has spread the blame wide for suspected misdeeds at Slovenia's largest banks. In the case of NLB, it pointed the finger at the Borut Pahor government (2008-2011), former central bank governor Marko Kranjec and several senior bank executives. 

The coalition-led commission had been established ten months ago to look into suspected laundering of a billion dollars of Iranian money at the state-owned NLB bank in 2009-2010 in a scheme involving over 9,000 transactions via accounts opened by an Iranian citizen, Iraj Farrokhzadeh. It was supposed to determine whether the money may have been used to finance terrorism or nuclear proliferation.

Presenting its final report on Thursday, the commission said the Pahor government, specifically Pahor himself, Samuel Žbogar, his foreign minister, and France Križanič, his finance minister, bore political responsibility for "jeopardising national security." It accused them of dereliction of duty.

Križanič has already denied being responsible. He said the finance minister does not have the power to make decisions in individual money laundering procedures.

NLB currently has sufficient safeguards in place, but in 2008-2011 this was not the case, commission chair Jani Möderndorfer said, highlighting in particular the culpability of former board member Miran Vičič.

The central bank, meanwhile, failed to sanction the bank and in effect allowed the practice to continue by abandoning an investigation which it had already started.

While these officials are seen as having chain-of-command responsibility, the commission has pressed criminal charges against two mid-level bank employees, the head of the office for foreign clients at the time and a woman responsible for prevention of money laundering, both for perjury.

Möderndorfer said the bank ought to have sought special permission for doing business with Iranian banks, but it did not; it also made only a million dollars with the transactions, leading the commission to conclude it took on disproportionate risk. "Its earnings were now worth what it stood to lose," he said.

But he was also quick to point out that only one of the thousands of transactions initiated by Farrokhzadeh constituted classical money laundering, the others were a part of an "Iranian scheme directly in the hands of the Iranian state."

Farrokhzadeh was not an individual who tried to conduct foreign transactions, he was a part of a system of transactions of Iranian state banks via Slovenia.

Four transactions are suspected to have been targeted at the financing of nuclear proliferation and the purchase of dual-use goods that can be used for civilian or military purposes, he said.

The suspected misdeeds were first discovered by the opposition-led inquiry commission, the one which investigated the bank bailout of 2013 and its run-up. Along with the Commission for the Oversight of Intelligence and Security Services, it also adopted a special interim report in September 2017.

The NLB inquiry commission was established in July 2017 and its brief was expanded to NKBM in the aftermath of media reports that Italians were laundering money through branches at the border. Eventually, the NKBM part of the investigation focused on suspected money laundering by a Bosnian woman who loaned the money to the opposition Democrats (SDS) early this year.

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