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Friday
Nov042016

Ex-BSI bankers allegedly set up $2.3 billion deal with 1MDB

Prosecutors in the Singapore trial of a former BSI banker said this week the defendant and other former employees of the Swiss bank helped launder up to $2.3 billion looted from the Malaysia sovereign wealth fund 1MDB.

Former BSI banker Yeo Jiawei is the first person to be tried in Singapore in what prosecutors there have described as the biggest money laundering case in Singapore's history.

Yeo, 33, is on trial for allegedly urging witnesses to lie to police and destroy evidence related to 1MDB or 1 Malaysia Development Berhad.

He'll face other charges with at last four other former bankers for money laundering and forgery in a separate trial scheduled to start in April next year.

Prosecutors this week said BSI entered into an agreement with fund management company Bridge Partners International Management in 2012 involving $2.3 billion from 1MDB-owned Brazen Sky.

Yeo and another banker allegedly each pocketed $5 million in a private side deal as compensation for handling the 1MDB funds in the "Brazen Sky" deal, prosecutors said.

Yeo earned nearly $19 million "from several other illicit transactions he carried out using other schemes and shell companies," according to trial coverage from Channel News Asia.

In May, the Monetary Authority of Singapore (MAS) shut down the local operations of BSI Bank. MAS gave prosecutors the names of six bankers suspected of possible criminal conduct in connection with the handling of the Malaysian government fund.

BSI is a private bank based in Switzerland that maintained a branch in Singapore.

MAS named four other banks in July for anti-money laundering lapses linked to 1MDB. They were DBS Bank Ltd, and the Singapore branches of Standard Chartered Bank, UBS AG, and Falcon Private Bank Limited.

Last month, MAS shut down Falcon Private Bank for "serious failures in anti-money laundering controls and improper conduct" linked to 1MDB.

On October 5, police in Singapore arrested the local manager of Falcon Private Bank, Jens Sturzenegger.

Zurich-based Falcon Bank is owned by a subsidiary of Abu Dhabi's sovereign fund, International Petroleum Investment Company.

Evidence from Singapore played a key role in the 144-page civil forfeiture complaint the U.S. Justice Department filed in July against about $1 billion in assets allegedly bought with money looted from 1MDB.

The DOJ complaint described how BSI accounts were used to move some of the $3.5 billion allegedly misappropriated from the Malaysia sovereign wealth fund.

In July, Singapore seized property and bank accounts worth about $177 million linked to money allegedly diverted from 1MDB.

About $88 million was in accounts controlled by Malaysian businessman Low Taek Jho, Singapore authorities said.

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Richard L. Cassin is the publisher and editor of the FCPA Blog.