Agriculture, Estonia, Financial Services, Investments, Legislation, Real Estate

The investors allege a continued fraud is being committed by Swedbank against them with the bank having presented misleading information to investors with the purpose of buying time.

"These investors, who were customers of the bank and whose money the bank decided to invest in junk bonds, are accusing the bank of continued abuse of trust. It is the complainants' opinion that the bank's objective for misleading them is to await the expiration of claims for the compensation of damage leveled against it. A year ago, a court decision indeed took effect establishing that the claim submitted in the interest of the investors through a trustee in bankruptcy has expired," the investors said, adding that the total damages to them amount to 8.4 mln euros.

"Swedbank as the expert must have been aware from the get-go that selling low-value pieces of agricultural land at a price that is anywhere near the purchasing price is not possible. [The bank] should have above all been honest with its clients instead of pretending that things are only getting better by repeatedly extending maturity dates," sworn advocate Maria Magi-Rohtmets said. "If I buy an apartment in a Khrushchyovka in the Mustamae district for one million euros, I can't ever expect to sell it for a million."

The investors said that Swedbank refuses to make its method of analysis public and has continued to claim it has done everything right -- that the land in Romania was bought at market price and the bond issue was managed in accordance with requirements. The bank has said in previous court procedure that it cannot present any relevant documentation as it no longer exists.

The Central Criminal Police will decide whether or not it will launch procedure on the basis of the criminal report within 10 days, Central Criminal Police spokesperson Leana Loide told.

Six issues of what turned out to be junk bonds were organized with active participation of Swedbank in 2007. Swedbank subscribed for over 53% of all bonds, which it later carried over to its customers. Altogether 8,467,000 euros were collected with the issues from a total of close to 200 investors.

A total of 46.3 hectares of agricultural land was acquired in Romania for 7,712,000 euros, which brings the average price per hectare close to 167,000 euros. Meanwhile, one hectare of agricultural land in Romania at the time cost on average 1,000 euros. Over 755,000 euros was charged in management and service fees. As of Oct. 17, 2011, Swedbank owned 100% of the companies involved in the organization of the issue with no annual financial report providing adequate information having been filed since.