Impact of Panama Papers Leak Widens--Update

By Kjetil Malkenes Hovland

OSLO -- The latest fallout from the leak of the so-called Panama Papers this week are the resignation of the chairman of a state-owned Austrian bank and revelation of more details of a corruption scandal at Norway's 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 documents allegedly leaked from Panama-based law firm Mossack Fonseca, which have been dubbed the Panama Papers.

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

Meanwhile, Norwegian chemical company Yara International said it had made "unacceptable payments" to two officials 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 shuffle at Hypo Landesbank show the repercussions of the leak of millions of documents allegedly showing offshore holdings of scores of public figures and commercial entities across the world.

The prime minister of Iceland stepped down 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 Assets 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 the two officials at Eurochem Mineral & Chemical Co., a 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 payments to the two Eurochem officials for years. "This information has been investigated by the Norwegian police," a Yara spokeswoman said.

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 in addition to alerting the police about the payments to the two Eurochem officials in 2011, it had commissioned an external investigation by a Norwegian law firm that 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 officials were included in those $15 million, Yara said Thursday, adding that it had refrained from using Eurochem's name at the time because of the police investigation.

Eurochem said Thursday that the company dismissed both officials and sued them over the bribes.

Norwegian police confirmed that it had been aware of Yara's payments to the two officials 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.

Aftenposten in its report said the company had declined to comment. The Zug, Switzerland-based 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 20:56 ET (00:56 GMT)

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