Rietumu Banka, a Latvian bank, has just been fined EUR 80 million by a Paris court on charges of laundering hundreds of millions of euros through a major scheme allowing French citizens to evade taxes.
The scam aimed to "democratise" tax evasion among ordinary taxpayers and small businesses in France, investigators claimed. They suspect Rietumu Banka of helping to launder as much as EUR 850 million from 2007 to 2012 with the complicity of a French financier, Nadav Bensoussan, and his company, France Offshore.
Mr Bensoussan, who once promoted a "tax haven for all” scheme was sentenced to two years in jail and a EUR 3 million fine. The Panama papers disclosures suggest he was among those customers of the Mossack Fonseca law firm.
Alexandre Pankov, a senior officer at Rietumu, got a suspended four-year prison sentence, and Sergejs Scuka, the bank's representative in France, a one-year suspended term. Most of the 10 other defendants were given suspended prison sentences.
Judge Benedicte de Perthuis, whose court specialises in high value tax crime, said the bank could not ignore the fraudulent nature of the funds gathered. She said, “It was part of its business strategy in France.”
Rietumu was also banned for operating in France for five years.
In a statement on its website, Rietumu declared it “strongly disagrees with the decision” of the Paris court and will launch an appeal. The bank stressed that it had fully cooperated with French judicial authorities during the investigation and the trial.
“We have never been involved in the tax evasion and that neither the bank, nor its president personally had any interest in these actions.”
It added that it would make provisions against the fine and so the penalty would not affect the stability of the bank’s operational activity.
Rietumu, the third largest bank in Latvia, specialises in corporate banking and affluent individuals. Dermot Desmond, the biggest shareholder of Celtic football club, has reportedly owned under a third of Rietumu for more than a decade, paying an estimated EUR100 million for the holding.
There has been no suggestion the Irish-born billionaire had any knowledge of or involvement in any wrongdoing.
Rietumu has traditionally operated in Russia and a number of the CIS states. But earlier this year, it signalled it was looking to expand in the UK and Ireland.
“The group will focus on lending development in trade finance as well as developing new lending markets such as Ireland and the United Kingdom” as it pulled back on lending in the CIS bloc, the bank said, in its last annual report.