YARIY Yara International ASA (PK)

By Kjetil Malkenes Hovland 

OSLO--The latest dramas initiated by the leaking of the so-called Panama Papers this week: the resignation of the chairman of a state-owned Austrian bank and more details of a corruption scandal at Norwegian chemical company Yara International.

Michael Grahammer, chairman of Hypo Landesbank Voralberg, stepped down from his post suddenly late Wednesday, citing pressure from the media over the bank's alleged ties to offshore financial accounts.

The bank on Monday confirmed media reports that showed it had ties to offshore entities, including in Liechtenstein. Those reports were based on a flurry of d ocuments leaked by Panamanian law firm Mossack Fonseca, which have been dubbed the Panama Papers.

Mr. Grahammer, who had served as chairman since 2012, denied any wrongdoing.

His resignation came as Norway's Yara International said it had made "unacceptable payments" to two executives at a Russian-owned phosphate producer, confirming a report partly based on the Panama Papers.

Yara, 36.21%-owned by the Norwegian state, confirmed on Thursday a report by Norway's Aftenposten newspaper, based partly on the Panama Papers.

The acknowledgment by Yara and the management reshuffle at Hypo Landesbank show how the repercussions of the leak of millions of documents allegedly showing offshore holdings of scores of public and commercial figures across the world are reverberating in Europe.

The prime minister of Iceland stepped aside from his post earlier this week after the leak showed his family had holdings in an offshore company.

In Austria, the Hypo Landesbank said its financial dealings were subject to requirements from the country's financial market watchdog, FMA, as well as the Austrian central bank. In addition, the bank said it took into consideration the sanctions list of the U.S. Office of Foreign Asset Control, although it isn't directly applicable in Austria.

The bank also pledged to review and present a summary of its activities, but declined to say when the review would be made public.

In Norway, Yara said it had made "unacceptable payments" to executives at Eurochem Mineral & Chemical Co., a big producer of phosphates, without stating how much.

The Norwegian company, which was engulfed in a wider corruption investigation in 2011, said police have known about the Eurochem payments for years. "This information has been investigated by the Norwegian police," said a Yara spokeswoman.

The broader police investigation concluded in 2014 when Yara agreed to pay Norway's biggest-ever corporate fine of 295 million Norwegian kroner ($35.6 million) after admitting to paying bribes in Libya, India and Russia. In a related case, a group of former Yara executives were last year sentenced to prison for corruption, but have appealed.

Yara said that in addition to alerting the police about the payments to Eurochem in 2011, it had commissioned an external investigation by a Norwegian law firm which uncovered more than $15 million in payments from a Yara subsidiary in Switzerland to people connected with suppliers mainly in former Soviet Union countries, between 2006 and 2010. The payments to the Eurochem executives were included in those $15 million, Yara said on Thursday, adding that it had refrained from using Eurochem's name at the time because of the police investigation.

Norwegian police confirmed that it had been aware of Yara's payments to Eurochem executives for years, but said further investigation would be required to establish whether the transactions amounted to bribery. The payments hadn't been thoroughly investigated by the police because they went from Switzerland to Russia and lacked clear links to Norway, a police spokeswoman said.

Eurochem wasn't immediately available to comment. Aftenposten in its report said the company had declined to comment. The Zug, Switzerland-headquartered fertilizer company is controlled by Russian businessman Andrey Melnichenko.

Write to Kjetil Malkenes Hovland at kjetilmalkenes.hovland@wsj.com and Monica Houston-Waesch at nikki.houston@wsj.com

(END) Dow Jones Newswires

April 07, 2016 10:58 ET (14:58 GMT)

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