Latvian bank Rietumu Banka, in which Dermot Desmond owns a 33 per cent stake, has said it will appeal a French court ruling from last week in which it was fined €80 million for being involved in a tax avoidance and money laundering scheme.
The Riga-based bank has been barred from operating in France for five years and Alexandre Pankov, chairman and president of the board, was handed a suspended four-year prison sentence.
The Paris court ruled that Rietumu Banka had enabled French clients to avoid paying taxes and to launder more than €200 million.
The bank said that it “strongly” disagreed with the decision and that it would appeal.
“We have never been involved in the tax evasion and that neither the bank, nor its president personally had any interest in these actions,” the company said in a statement published on its website last week. “Therefore, the imposed fine of €80 million and sanctions against the president of the bank appear widely ungrounded.”
Obligation
The bank said that its obligation to pay the fine - almost the equivalent of its net profit for 2016, as per its annual report – does not arise until the French court’s decision is entered into force. The bank’s profit rose by 17.5 per cent in 2016.
The appeals process could take between two to three years, or potentially longer, the bank said, adding that it would enter a provision into its accounts in the meantime that would take the fine into account.
“The creation of provisions will allow the payment of the fine if that would be necessary,” it said, adding that this will “not affect the stability of the bank’s operational activity.”
The bank, in which Mr Desmond has been an investor since 2005, said that it would not be making any further comment until the legal process was complete.
Mr Desmond and an official at his IIU investment vehicle didn't immediately respond to requests for comment from The Irish Times on Sunday.
There is no suggestion that the businessman, whose stake in the bank is held through a company called Boswell (International) Consulting Ltd, had any knowledge of the transactions in the French case.
