The Supreme Court has declined to hear a complaint surrounding Scandinavian-owned Swedbank, relating to a long-running land investment scheme in Romania in which around 200 investors lost money over allegedly inflated land prices, compounded by a collapse in the real estate market in that country 10 years ago. The case has bounced up and down all three tiers of Estonia's court system.
The ruling means the case will be heard again in the first-tier county court, which, in the opinion of yet another level of court – the second-tier circuit court – the county court has to reconsider the timing of investors' claims against the bank and when they, the investors, became aware of the terms of the investment scheme.
Protestors also picketed Swedbank's headquarters in Tallinn last year, to draw attention to the case.
Facts of the case:
- Six issues of what turned out to be junk bonds organized with the active participation of Swedbank – then Hansa Bank – in 2007.
- Total of €8,467,000 was amassed from close to 200 investors.
- A total of 46.3 hectares of agricultural land was acquired in Romania for €7,712,000, (average price per hectare nearly €167,000, at a time when the average price of land in Romania stood at around €1,000 per hectare).
- Swedbank subscribed for over 53 percent of all bonds, which it later carried over to its customers.
- Over 755,000 charged in management and service fees.
- As of October 17, 2011, Swedbank owned 100 percent of companies involved in the organization of the issue, with no annual financial report providing adequate information having been filed since.
Investors had filed a lawsuit against Swedbank in 2018, but no substantive discussion was reached, since the bank considered those claims had expired, a line Harju County Court agreed with.
The case dates back to 2007 when Swedbank was known as Hansabank – while Swedish-owned by then, the bank had been founded in Estonia in the early 1990s and was rebranded as Swedbank in 2009 – offered an investment scheme which allegedly gave the impression that initial losses were the result of the boom-bust cycle, a phenomenon which the police also based its decision on in not pursuing an investigation.
However, it later became clear that the land scheme, which saw over €7 million in investments for over 40 hectares of land in Romania, was in fact a junk bond scheme.
The alleged fraud saw the purchased land being sold at around 167 times the average price per hectare of land in Romania at the time.
Swedbank says that since the scheme has now expired, there is no documentation left to provide in the case.
Close to 200 investors say the money was invested in average agricultural land which had no development perspective.
The Romanian real estate market collapsed in 2010 and has not since then recovered, ERR reports.
The reset at the county court may resolve unanswered questions, ERR reports.
Editor: Andrew Whyte