A decade after billions of dollars were wired to Swiss banks, the country is holding its first trial into whether a local banker failed to stop a US$700 million (RM3.054 billion) transfer into an account controlled by Low Taek Jho, the alleged mastermind behind the 1Malaysia Development Berhad (1MDB) scandal.
The compliance officer, who can only be identified as A., was an employee of Coutts & Co, where Low, the fugitive financier commonly known as Jho Low, had an account. A., 52, was the designated money laundering reporting officer for Coutts, according to the indictment.
The 1MDB scandal, which led to the fall of former Prime Minister Datuk Seri Najib Razak, was breathtaking for the audacity with which little-known financier Low built an US$8 billion fund intended to develop the Malaysian economy. Instead, Low allegedly pilfered the money to fuel a spending spree on parties, sports cars, luxury properties priceless art, and even a film studio that financed the hit film "Wolf of Wall Street."
Low established a Seychelles-registered company Good Star in May 2009 and opened an account at Coutts' Singapore branch less than a month later, prosecutors said in the indictment.
By September of that year, Low was asking to cease all communication with Coutts in Singapore and to receive updates only from Coutts' Swiss unit to a gmail address he had created: chairman.goodstar@gmail.com.
That unusual request prompted internal inquiries, prosecutors said. Low's request to transfer US$700 million from 1MDB to his Good Star account at Coutts raised further eyebrows, prompting Low to fly to Zurich to reassure officials at the lender.
Despite being an unknown Seychelles-registered company with a limited track record, Good Star was an investment firm that 1MDB was choosing to invest with, Low explained. Besides, Low added, he had close relationships with the king and prime minister of Malaysia. The deposit was eventually approved.
Swiss prosecutors pursued A. at least in part because he approved the US$700 million transfer. In the indictment, they cite an Oct 2, 2009, email in which he wrote "Please unblock the account 11116073 Good Star Ltd. The due diligence is so far good and we have sufficient evidence that the payment is true and valid."
For this and other compliance lapses, the prosecutors write, "the culpability of the accused A. weighs heavily." Monika Roth, A's lawyer, declined to comment.
'Very Uncomfortable'
By 2010, Coutts employees had begun to feel nervous about having Good Star and Low as a client.
"I feel very uncomfortable with this guy and the transactions that are going through the account," a Coutts client adviser in Singapore wrote in an email cited in the indictment. "I think the management has to make a decision whether to keep this relationship."
Coutts & Co. was sold by Royal Bank of Scotland Group Plc in 2016 to Union Bancaire Privee. It was fined US$6.5 million in 2017 for allowing US$2.4 billion worth of assets related to the Malaysian development fund to flow through its accounts at a number of Swiss banks.
A spokeswoman for Coutts declined to comment. UBP said in a statement that it's not involved in the case because the acquisition was an asset deal and as a result UBP didn't inherit Coutts' legal issues.
Coutts wasn't the only bank embroiled in the 1MDB scandal that would come under investigation from Swiss prosecutors.
Lugano-based BSI SA was ordered to pay a 95 million Swiss franc (US$98 million) fine that is now under appeal, while the Singapore unit of Zurich-based Falcon Private Bank was closed by regulators in late 2016 for failing to adequately flag US$1.27 billion in suspicious deposits linked to the sprawling 1MDB scandal.
It wasn't until 2018, however, that Jho Low was indicted by US prosecutors. He is currently a fugitive, thought to be in China. Malaysia is seeking his arrest after issuing new charges against him in February. – Bloomberg