Legal
Standard Chartered Says 1MDB Lawsuit "Without Merit"

A legal case in Singapore has been brought against the UK banking group over a case linked to the scandal-hit 1MDB fund of Malaysia.
Standard Chartered has dismissed as without merit a $2.7 billion
lawsuit in Singapore from liquidators alleging it enabled money
laundering siphoned from Malaysian sovereign wealth fund
1MDB.
The claimants allege that Standard
Chartered permitted more than 100 intrabank transfers between
2009 and 2013 that helped conceal the flow of stolen funds,
leading to a loss of more than $2.7 billion.
The UK-listed bank said the claims were “without merit,” and that
it had not yet received legal documents about the matter,
according to a statement the bank sent to this
publication.
“The transactions at issue date back to 2010. We reported the
transaction activities of these companies, both before and at the
time we shut their accounts in early 2013 and fully cooperated
with the investigating authorities,” the bank said. It was fined
S$5.2 million ($4.08 billion) by Singapore authorities in 2016
for anti-money laundering breaches.
The 1MDB scandal was one
of the largest of its kind, affecting financial centres such as
Singapore and the US. It is estimated that more than $4 billion
in funds were stolen. The case prompted calls for tighter AML
controls in Singapore and around the world. The scandal
played a part in defeating former Malaysia prime minister Najib
Razak in 2018. In 2016, Singapore’s financial regulator kicked
out banks for serious AML lapses (Falcon Private Bank, BSI). The
affair prompted renewed soul searching about the extent of
illicit financial flows around the world. In a bizarre twist
melding fiction and fact, money from 1MDB was used to finance the
hit film about a financial crook - The Wolf of Wall
Street.
Singapore authorities imposed a S$5.2 million fine against
Standard Chartered in 2016 for anti-money laundering breaches
connected to the case, and other banks have been fined.
Shells
“The liquidators who are making these claims have publicly stated
that these companies were shell companies with no legitimate
business and were linked to fugitives Low Taek Jho and his
associate Eric Tan. They operated under false pretences and acted
as a conduit for funds misappropriated from 1MDB to launder
monies,” Standard Chartered said in its statement. “Any claims by
these companies are without merit and Standard Chartered will
vigorously defend any lawsuit commenced by the liquidators.”
The bank said that as set out by the Monetary Authority of
Singapore in December 2016, relating to penalties on Standard
Chartered for the AML breaches, MAS concluded that while there
were regulatory breaches, the inspection “did not find pervasive
control weaknesses or wilful misconduct at Standard Chartered.”
“Standard Chartered takes our responsibility to fight financial
crime extremely seriously. We have made significant investments
in strengthening our controls and uplifting our AML standards,
and will continue to do so,” it added.
Claims
Three companies: Alsen Chance Holdings Ltd – in liquidation;
Blackstone Asia Real Estate Partners Ltd – in liquidation; and
Brightstone Jewellery Ltd – in liquidation related to 1MDB; said
in a statement that they have started legal proceedings in the
High Court of the Republic of Singapore against Standard
Chartered Bank (Singapore).
The lawsuit has been brought by court-appointed liquidators
Angela Barkhouse and Toni Shukla. The lawsuit seeks to hold
Standard Chartered Bank accountable for its role in allegedly
enabling fraud to be committed against 1MDB and the systematic
theft of funds which ultimately belonged to ordinary
Malaysians.
“According to this lawsuit, the transfers demonstrate serious
breaches and control failings which ultimately enabled the theft
of public funds by people operating at the highest levels of the
Malaysian government during that period,” the statement said.
Examples of fund transfers, the lawsuit statement said, are as
follows:
-- The account held by Blackstone Asia Real Estate Partners
Ltd disbursed (a) $150 million directly to the personal bank
account of Najib Razak, the former Prime Minister of Malaysia who
has since been jailed for corruption and money laundering; (b)
$4.7 million to jewellery, watch, and bag vendors to pay for the
luxury goods purchases of Rosmah Mansor, the wife of Najib Razak;
and (c) $1 million to Red Granite Pictures Ltd (“Red Granite
Pictures”), a movie production and distribution company
controlled by Riza Aziz, to pay for among other things movie
development expenses. Riza Aziz is the stepson of Najib Razak and
the biological son of Rosmah Mansor;
-- An account held by Alsen Chance Holdings Ltd disbursed
(a) $53.4 million to jewellery, watch and bag vendors to pay for
the luxury goods purchases of Rosmah Mansor; (b) $38.75 million
to Red Granite Capital Ltd, a company that is also controlled by
Riza Aziz and involved in the business of movie production and
distribution; and
-- The account held by Brightstone Jewellery Limited
disbursed $77.2 million to jewellery, watch, and bag vendors to
pay for the luxury goods purchases of Rosmah Mansor.