Controversy swirling around BSI due to its links to a Malaysian state-run fund took another turn when the former CEO of the bank in Asia sued it over a frozen bonus, a report said.

Problems for BSI stemming from its involvement with embattled Malaysian state-run fund 1MDB continued as the bank’s former Asia chief sued the Swiss bank over a frozen bonus, media reports said.

The case is being launched by Hanspeter Brunner. The lawsuit claims BSI’s business in Singapore broke bonus agreements and a separation term, according to documents filed in the Singapore High Court on 4 July, reported Bloomberg. Brunner says there is no legal basis for BSI to suspend the payment for deferred bonuses due last month.

BSI, which is headquartered in Lugano, Switzerland, declined to comment to WealthBriefing on the matter today. This publication has also contacted the High Court in the Asian city-state for a copy of the filing and may update in due course.

Brunner is among six BSI bankers referred to prosecutors in Singapore after the Monetary Authority of Singapore stated that the Singapore business will lose its merchant banking licence because of the “the worst case of control lapses and gross misconduct” in Singapore’s financial sector. This was the first time the MAS had taken such action against a bank since 1984. BSI recently appealed against what it said was harsh commentary about the matter by the Swiss regulator (see that story here). BSI is in the process of being acquired by fellow Swiss private bank EFG International from Brazil’s BTG Pactual, and one of a number of banks going through, or having completed, M&A transactions. (See a story on the matter here.)

One of BSI’s clients in Asia was 1Malaysia Development, or 1MDB, and which is being probed in a number of jurisdictions, such as Switzerland, Singapore and Luxembourg, around claims of money laundering and other financial offences. 1MDB has consistently denied wrongdoing.

The news report said lawyers acting for Brunner declined to comment.

Reports said the bank and Brunner “mutually agreed” in September last year that he would retire from the bank. In March, a separation agreement laying out his entitled payments, including deferred bonuses for 2012-2014, was inked and the bank announced his retirement. Brunner sued after BSI wrote to the 64 year-old on 24 June, the news service said, saying it would freeze a payment of S$722,800 ($536,400). 

Brunner joined BSI in 2009 from RBS Coutts with about 70 colleagues. Coutts and Brunner became embroiled in lawsuits after he left the UK-based bank. A settlement was eventually reached, Singapore court records were quoted as showing.