BSI Bank Scandal – New Dirty Details

As already reported on our blog, authorities in Switzerland and Singapore took action against Swiss private bank BSI SA for allegedly failing to prevent suspected money laundering and bribery-related to its dealings with a Malaysian development fund.

Much of the money has was transferred to intermediaries before being spent on pursuits that had nothing to do with 1MDB’s stated purpose of developing the Malaysian economy. They include funding the blockbuster movie “The Wolf of Wall Street” and buying luxury real estate in New York and London.

Malaysian businessman Jho Low was a crucial behind-the-scenes operator for the fund and helped manage Malaysian Prime Minister and 1MDB founder Najib Razak’s accounts.

One day in late October 2014, Mr. Low opened 18 separate accounts at the Singapore subsidiary of BSI using names like JW Charisma Investment Limited, JW Turbocharged Investment Limited and JW Champion Investment Limited, according to Singapore police documents. He needed so many accounts, Mr. Low told the bank, because he had a lot of different business ventures, according to a person familiar with the events.

That would have raised a host of red flags for most banks—particularly because Mr. Low was connected to 1MDB, making him a PEP or “politically exposed person” whose transactions had to get special attention under Singapore’s guidelines to prevent money laundering, according to anti-money-laundering lawyers.

BSI accepted Mr. Low’s explanations and let the transactions proceed, as it frequently had over the past several years, the person familiar with the events said.

Mr. Low and his lawyers didn’t respond to requests for comment.

BSI Singapore opened more than 50 business and personal accounts for Mr. Low, as well as accounts for his parents, brother, and sister, according to a Singapore police report as well as Malaysian investigative documents viewed by the Journal. It opened accounts for 1MDB, the fund’s Abu Dhabi business partners and a company owned by the stepson of the Malaysian prime minister. It allowed hundreds of millions of dollars to be sent through those accounts in a web of transactions, according to bank-transaction and Malaysian investigation documents were seen by the Journal as well as a person familiar with the matter. A spokesman for the stepson said none of the funding received by his company was in any way irregular. The business partners weren’t available for comment.

Clients involved with 1MDB had around 100 accounts at BSI, Switzerland’s FINMA said.

One of the bank’s employees, wealth manager Yeo Jiawei, has been charged in Singapore with money laundering linked to a subsidiary of 1MDB. Mr. Yeo’s lawyer said he was fighting the charges. Among 1MDB’s first joint ventures was with Saudi oil company PetroSaudi International Ltd. About $1 billion in 1MDB money earmarked for that venture, however, went instead to an account of a shell company named Good Star, according to a Malaysian parliamentary committee report. PetroSaudi told 1MDB in a letter, provided to Malaysia’s parliamentary committee, that Good Star was its subsidiary. 1MDB’s management made the same statement to the committee.

Mr. Low set up an account using the Good Star name in 2009 at the Zurich branch of Coutts & Co., according to Singapore police documents and two people familiar with the matter. Soon the account was handling hundreds of millions of dollars worth of business. That raised eyebrows at Coutts, one person said, because it was considered unusual for an individual to be entrusted to handle so much money connected to a public entity.

As a person with ties to public officials and money, Mr. Low’s account drew scrutiny. Swiss banks were also under increasing pressure from U.S. and European authorities to crack down on activities like tax evasion.In response to queries from Coutts, Mr. Low was able to reassure them that he was authorized to manage the funds in the account, the person said.

A spokeswoman for Coutts declined to comment. By mid-2009, an executive at Coutts’s branch in Singapore, Hanspeter Brunner, was planning a move to BSI’s Singapore unit, according to Singapore court documents that prove a dispute between BSI and a local headhunting agency. Mr. Brunner left in early 2010, bringing with him many of Coutts’s local staff, according to the filings. One of those defectors was Singaporean private banker Yak Yew Chee, who had had a relationship with Mr. Low at Coutts and introduced the 1MDB business to BSI, said a person familiar with the events.

Mr. Yak became somewhat of a celebrity at BSI, according to several former employees of the bank. He was known for his discretion and was lauded by the bank for his ability to rake in huge amounts of new money for the bank to manage.

A lawyer for Mr. Yak said he declined to comment. Mr. Brunner couldn’t be reached for comment.

Much of the business Mr. Yak brought in was from 1MDB and Mr. Low, according to the person familiar. Hundreds of millions of dollars came from the Good Star account at Coutts in Zurich, which starting June 2011 sent around USD 529 million in seven transfers to an account at BSI Singapore that had been set up by Mr. Low, according to a 2015 letter from Singapore police to the Malaysian central bank.


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By | 2017-05-20T18:06:18+00:00 May 31st, 2016|Accounting and Financial Scandals and Frauds|