World's Biggest Money Laundering Investigation Goes Up Another Gear

World's Biggest Money Laundering Investigation Goes Up Another Gear

Malaysia could find fame for triggering a new, more effective level of regulatory cooperation between the financial centres of the world – one positive development from landing at the centre of the world’s biggest money-laundering investigation.

Today’s events have been an indicator of how closely investigators are working to trace the US$7 billion, which Malaysia’s Auditor General now calculates to have gone missing from the 1MDB development fund into a network of obscure off-shore “treasure island” companies, before emerging once again in the bank accounts and asset portfolios of politically connected Malaysians.

First, the Singapore monetary authority (MAS) announced they were closing the Singapore branch of the Swiss BSI Bank, after launching criminal investigations against six of its senior managers for ‘serious breaches of anti-money laundering requirements':

“The Monetary Authority of Singapore (MAS) announced today that it has served BSI Bank Limited (BSI Bank) notice of intention to withdraw its status as a merchant bank in Singapore for serious breaches of anti-money laundering requirements, poor management oversight of the bank’s operations, and gross misconduct by some of the bank’s staff.

In addition, MAS has referred to the Public Prosecutor the names of six members of BSI Bank’s senior management and staff to evaluate whether they have committed criminal offences.” [MAS statement]

In addition, this statement articulated that “MAS is working closely with the Swiss Financial Market Supervisory Authority (FINMA), the home regulator of BSI SA, to oversee an orderly closure of BSI Bank in Singapore”.

So little surprise when media inboxes were then graced with further statements from the Swiss Attorney General’s Office to confirm that he also has launched a criminal investigation against BSI in its headquarters of Lugarno over the same offences:

“Bern. The Office of the Attorney General of Switzerland (OAG) has opened criminal proceedings against the BSI SA bank. The decision to open proceedings is based on information revealed by the criminal proceedings in the 1MDB case and on issues raised in the FINMA decision of 23 May 2016. The OAG suspects deficiencies in the internal organisation of the BSI SA bank. It is believed that due to these deficiencies, the bank was unable to prevent the commission of offences currently under investigation in the criminal proceedings relating to 1MDB.”

The AG's statement in full

The AG’s statement in full

To re-enforce the point the Swiss financial regulator FINMA released its own devastating statement:

BSI in serious breach of money laundering regulations

Through business relationships and transactions linked to the corruption scandals surrounding the Malaysian sovereign wealth fund 1MDB, BSI AG committed serious breaches of money laundering regulations and “fit and proper” requirements. This is the outcome of enforcement proceedings launched by the Swiss Financial Market Supervisory Authority FINMA. In the case of 1MDB, the bank executed numerous large transactions with unclear purpose over a period of several years and, despite clearly suspicious indications, did not clarify the background to these transactions. Among other measures, FINMA has ordered the disgorgement of profits amounting to CHF 95 million. FINMA has also launched enforcement proceedings against two of the bank’s former top managers” [see full statement]

The development has come at a nightmare time for the bank, just as its present owners are trying to sell on the scandal torn entity to another of Switzerland’s major banking institutions.  Negotiators have been frantically trying to ring fence this “dirty part” of the bank as the transfer takes place and both regulators have indicated a willingness to assist in the process.

HansPeter Brunner has resigned his post in charge of the BSI Singapore branch

HansPeter Brunner has resigned his post in charge of the BSI Singapore branch

However, it is clear that senior heads are now on the block after weeks of investigations by Singapore into the handling of huge sums of money that passed through a number of 1MDB/ Jho Low related accounts between 2009 and 2015.

Sarawak Report was, of course, the first to publicly pin-point the role of BSI Bank in the 1MDB affair and its role as a conduit for the missing billions last year.

We also raised questions over the role of the Swiss National HansPeter Brunner, who won the accolade of Asian Banker of the Year, shortly after taking over at BSI Singapore – bringing Jho Low’s billion dollar accounts with him from RBS Coutts, where he had previously worked.

Several Singapore bankers are now being questioned about BSI’s role, which has been described by MAS spokesmen as extremely complex, the largest money-laundering operation they have ever investigated and involving “staggering sums of money”.

One of these, Yeo Jiawei remains remanded in extended custody – it is now confirmed that Swiss national and former top banker Brunner, who resigned from his position last month, in amongst those to face criminal charges.

Malaysia continues to play down 1MDB

Meanwhile, the Government of Malaysia is continuing to act as if nothing has happened.  Yes, it has now finally admitted in a parliamentary answer to opposition member Tony Pua that some US$3.5 billion was transferred from 1MDB to a fake BVI entity – a matter denied for months.

The police have been instructed by the Parliamentary Accounts Committee and now Attorney General to launch a criminal investigation into the former CEO, Shahrol Halmi (long since identified as the perfect fall guy for Najib).  However, Halmi regards himself protected by the Prime Minister, for whom he still works, and no steps so far have been taken.

Jho Low right, with Leo Di Caprio - star of the 1MDB financed Wolf of Wall Street

Jho Low right, with Leo Di Caprio – star of the 1MDB financed Wolf of Wall Street

Likewise, Jho low and Nik Faisal Arif Kamil, the prime organisers of the operations to siphon money from 1MDB on behalf of Najib, remain at large with no warrants placed for their arrest by Malaysia.

Today Tony Pua issued another statement (see below) detailing how Najib’s hand-picked replacement for the Chairmanship of the Parliamentary Accounts Committee has been discovered to have manipulated not only the final report of the committee, but also withheld evidence in the form of a letter to the Committee from the Central Bank.

The subject of all this manipulation of the evidence, says Pua, was the issue of ownership of the company Good Star Limited, which the bank has verified as belonging to an entity unrelated to 1MDB’s joint venture with PetroSaudi, even though the vast majority of the US$1.8 billion paid in by 1MDB into the venture ended up in a Good Star bank account.

Sarawak Report has exposed the owner of Good Star to be Najib’s proxy, the businessman Jho Low, who was a major client of BSI Bank in Singapore.

Clearly, therefore, the executive in Malaysia has been impeding investigations by Parliament into the affair – the Attorney General has already likewise been replaced and MACC, police and Bank Negara investigations have been shut down on the orders of Najib’s government.

Not only has the Prime Minister cum Finance Minister cum sole decision-maker and signatory of 1MDB been hampering investigations at home.  The foreign regulators, in particular the Swiss, have also publicly complained at Malaysia’s lack of cooperation in the international investigation that is now moving into high gear into the laundering of these stolen monies.

Najib may still be regarded as ‘untouchable’ by some in Malaysia, not least owing to the billions now at his personal disposal, but worldwide, he is a smaller player – his political connections cannot save him from the independent justice departments of the various financial centres through which he passed 1MDB’s missing money.

Tony Pua’s statement:

Media Statement by Tony Pua, DAP National Publicity Secretary and Member of Parliament for Petaling Jaya Utara in Kuala Lumpur on Tuesday, 24 May 2016:

Was PAC Chairman Datuk Hasan Arifin hiding the letter from Bank Negara to PAC members because it exposed the ultimate beneficiary of Good Star Limited to be none other than Low Taek Jho?

Together with my opposition colleagues in the Public Accounts Committee (PAC), we have repeatedly requested that representatives from Bank Negara Malaysia (BNM) be summoned to testify with regards to the 1MDB scandal.

This is especially since BNM has openly indicted 1MDB for breaching the Financial Services and Exchange Controls Act. BNM has further demanded that 1MDB repatriate US$1.83 billion, the sum which was deemed to have been improperly transferred overseas.

It could not have been clearer that BNM was in possession of critical information which was integral to PAC’s investigation into 1MDB. However, the PAC Chairman repeatedly refused to summon BNM, claiming that the Attorney-General has already acquitted 1MDB and any information from BNM will be irrelevant.

However, the Chairman finally decided to write to BNM to seek written clarification in lieu of an official testimony.

The PAC has received the first letter from BNM dated 23 March 2016 which was presented to the members by the Chairman on 4 April 2016.

This letter had explained in detail the breaches by 1MDB and at the same time disclosed that the ultimate beneficiary of Good Star Limited, a company which received a whopping US$1.03 billion from 1MDB was “an individual unrelated to Petrosaudi International Limited”.

The members of the PAC then requested that the Chairman write to BNM again to seek further clarification with regards to this mysterious owner of Good Star Limited.

This crucial disclosure was also included in the final approved PAC Report on 1MDB in the meeting on the 4th, but was surreptitiously deleted by Datuk Hasan Arifin from the version tabled to the Parliament on the 7th.

When PAC members demanded to know why the Chairman unilaterally deleted the above information from the report without consulting the members of the committee at our next meeting on 18th May, we were shocked to discover that the Chairman has already received a response from BNM on 6th April.

Datuk Hasan Arifin claimed that the previously undisclosed second letter noted that the information provided by BNM was privileged, and hence he took the unilateral step to delete the relevant sentences from the finalised Report.

However, we were further shocked when the Chairman insisted that we take his word to be the Gospel truth when he refused to share the response of Bank Negara with the committee members. If the letter did, and merely substantiated his claims that the information was privileged, then why the unprecedented refusal to disclose the full contents of the letter to the PAC?

The incident became an absolute farce when the Chairman refused to even disclose the number of pages of the BNM letter, backed by PAC members from Barisan Nasional.

This has led the opposition members in the PAC to believe that the Chairman is blatantly hiding and obstructing the investigations into the shenanigans which took place in 1MDB. In fact, I will go further to suggest that Datuk Hasan Arifin is intentionally covering up for 1MDB and the Prime Minister because Bank Negara confirmed what the whole world already suspected, that Low Taek Jho or better known as Jho Low is the ultimate beneficiary of Good Star Limited.

We call upon Datuk Hasan Arifin to confirm or deny if Jho Low is indeed the sole shareholder ofI Good Star Limited. If Bank Negara did indeed name and confirm Jho Low, then the PAC Chairman must immediately resign from his position for failing to uphold the integrity of the Parliament and for clear cut obstruction of justice to thwart an independent and transparent investigation into the single largest scandal in the of Malaysia.

Tony Pua

 

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