Disgruntled investors who lost money on a land speculation scheme in Romania, whose deals involved Swedbank Estonia, picketed the bank's Tallinn headquarters Thursday. On Friday, leader of the Biodiversity Party Artur Talvik and his supporters protested the Persson-Ratas meeting outside the Stenbock House, seat of the Estonian government, on the same issue.

Persson was accompanied in his meeting by outgoing Swedbank CEO Anders Karlsson and his replacement Jens Henriksson. The visit also coincided with the confirmation in their posts of Swedbank Estonia's CEO Olavi Lepp and CFO Anna Kõuts, who had been in an acting role since their predecessors were suspended in June, following revelations including a Swedish public broadcaster report that billions in potentially laundered money had flowed via Swedbank in Tallinn.

The protest on Thursday had its origins in controversy which dated back much earlier, to 2007, when over 200 investers clubbed together to invest a totla of around €8.7 million in land speculation deals in Romania. Returns have turned out to be only around a tenth of those promised.

Swedbank mediated in many of the deals, but has reportedly denied responsibility for the poor returns, a stance which first the Harju County Court and then the second-tier Tallinn Circuit Court agreed with, in judgments from June and November last year. The Supreme Court declined to take on the case altogether.

Background to Romanian land deal scheme

Peeter Sepper, bankruptcy trustee of Nord Hill Land Portfolio OÜ (NHLP) had applied to Swedbank AS for damages to a total of €8,831,932.87, in a suit which stated that on May 9, 2006, NHLP's parent company Nord Hill Real Estate AS (NHRE, formerly AS IPC Real Estate) and Swedbank concluded an investment brokerage and disclosure agreement.

The agreement was aimed at informing Swedbank's personal wealth management clients on the issue of bonds conducted by NHRE.

Under the terms of the agreement, Swedbank would get a commission for providing the service, related to the amount paid for the bonds, which the bank mediated.

In October 2006, NHRE's board launched a real estate investment program in various regions of Romania, which included land used for viticulture and which was when the NHLP subsidiary was founded.

Romania was not an EU member state at the time.

NHLP conducted the bond issue in 2007, to a total of €8,467,000, slated for the various land acquisition and speculation purposes.

According to preliminary subscription results, a large number of the bonds were subscribed to by the bank, some under a portfolio management service and some under its private banking clients.

These were acquired by NHLP's Romanian subsidiary, SC Jaagupi SRL (Jaagupi SRL), for which NHLP provided an unsecured loan for the land acquisition of €8,465,000 at an interest rate of 7 percent per annum.

The bonds' maturation date was Jan. 14, 2011, extended by the NHLP board to March 31, 2015. However, none of the land acquired has been sold, and the bonds have not been redeemed to investors.

In the application, the NHLP found that the bank was liable for the damages caused because it was involved in arranging the issue of the bond and in taking harmful decisions, but the courts did not agree.

As picture above, protesters parked a van outside Swedbank's Tallinn headquarters emblazoned (in Swedish and Estonian) with a slogan which read: "Hey Göran, where did Swedbank's Estonian investors' money go?", together with a web address for the protest group.

Biodiversity Party protest

Meanwhile on Friday, Biodiversity Party leader Artur Talvik and supporters picketed the Stenbock House, seat of the government, where Swedbank CEO Göran Persson is to meet Jüri Ratas today.

According to ERR's online news in Estonian, and looking at the slogans on protestors' placards, the picket was based on the same complaint as Thursday's investors' protest.

Persson, incoming Swedbank CEO Jens Henriksson and current CEO Anders Karlsson arrived in Estonia on Thursday, meeting Bank of Estonia chief Madis Müller, finance minister Martin Helme (EKRE) and Head of the Financial Supervisory Authority Kilvar Kessler.

This is the first visit to Estonia of the new Chairman of the Supervisory Board of Swedbank Group, as well as the first visit of the new CEO.

Swedbank announced Monday it had terminated the employment contracts it had with former Swedbank Estonia CEO Robert Kitt and former CFO Vaiko Tammevälja, who had been suspended since June.

The bank also terminated its employment contract with Kaie Metsla, who had been head of retail banking up to then. 

The decision was based on an internal investigation by the bank, which highlighted shortcomings in previous work on money laundering.

The Swedbank supervisory board also appointed Olavi Lepp full-time CEO and Anna Kõuts as CFO. The pair had been in an acting role since Robert Kitt's suspension in June.

Swedbank was the second Scandinavian-owned bank to come under scrutiny over potential money laundering activities over the past year. In February, a report by Swedish public broadcaster SVT stated that around €3.8 billion in potentially illicit funds and passed between accounts at Swedbank Estonia and Danske Estonia.

The figure in potentially laundering funds to have passed through the portals of Danish-owned Danske Bank in Tallinn between 2007-2015 has been put as high as €230 billion. Danske's Tallinn branch was ordered by the FSA to close its doors for good earlier this year, which became a reality at the beginning of this week.

The Biodiversity Party was formed in late 2018 and contested its first election in March, though failed to pick up any Riigikogu seats.

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