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BSI Singapore shutdown a wake-up call for private banks in Asia

BY LISA JUCCA AND SAEED AZHAR
Reuters
May 25, 2016

HONG KONG/SINGAPORE – Singapore’s drastic move to shut Swiss bank BSI’s operations in the city-state over its dealings with scandal-hit Malaysian fund 1MDB is a wake-up call for wealth managers in Asia, which had been spared the large fines and sanctions seen in the West.

The private bank is the first casualty of money-laundering probes in at least six jurisdictions into state investor 1Malaysia Development Bhd, whose advisory board was chaired by Malaysian Prime Minister Najib Razak.

The Monetary Authority of Singapore (MAS) did not name 1MDB in a statement on Tuesday announcing it was shutting down of BSI’s business for “serious breaches of anti-money laundering requirements” and “gross misconduct” by some staff.

But details from a Swiss probe into 1MDB accuse BSI of routinely failing to carry out required background checks on large sums deposited. Continue reading “BSI Singapore shutdown a wake-up call for private banks in Asia”

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The greater winner for the unprecedented hudud motion in Parliament yesterday was Najib and not Hadi

It is generally thought that the winner for the unprecedented hudud motion in Parliament yesterday was the PAS President, Datuk Seri Hadi Awang when in fact the greater winner was the Prime Minister, Datuk Seri Najib Razak, who never appeared in Parliament House for the past two weeks.
When the Minister in the Prime Minister’s Department, Datuk Azalina Othman Said stood up in Parliament after lunch to move a Minister’s motion to give priority to Hadi’s private member bill motion on hudud, she was not doing Hadi’s bidding but carrying out Najib’s directive.

Although PAS leaders are gloating at their political “coup” to get Hadi’s hudud motion presented to the House, it came to nought, for Hadi backed off from a debate and a vote, and the result is that Parliament had not given leave to Hadi to present a private member’s bill to amend Act 355 to amend the syariah court’s jurisdiction.

This means that Hadi’s private member’s bill motion lapses unless two things happen in the October meeting of Parliament: firstly, Hadi resubmits his private member’s bill motion; and secondly, Parliament again vote to give priority to Hadi’s private member’s bill as against official government business.

Let us see whether the Barisan Nasional MPs will in October again vote in support of a Minister’s motion to allow Hadi’s private member’s bill motion to get leave from Parliament to amend Act 355 to be debated and voted upon.

Why is Najib the greater winner in the unprecedented hudud motion in Parliament yesterday? Continue reading “The greater winner for the unprecedented hudud motion in Parliament yesterday was Najib and not Hadi”

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Bank Negara Governor Muhammad Ibrahim should convene emergency meeting of Bank Negara Board of Directors on whether BNM should remain above the fray of world crackdown on 1MDB money-laundering or should take proactive steps to contact its counterparts in other countries to secure information/intelligence about 1MDB money laundering

Bank Negara Malaysia (BNM) Governor Muhammad Ibrahim should convene an emergency meeting of Bank Negara Board of Directors under Clause 4 of the Central Bank of Malaysia Act 2009 on whether BNM should remain above the fray of world crackdown on 1MDB money-laundering or should take proactive steps to contact its counterparts in other countries to secure information/intelligence about 1MDB money-laundering.

As 1MDB is the Malaysian sovereign wealth fund, BNM will be exposed to the height of international ridicule and even odium if monetary authorities like the Swiss Financial Market Supervisory Authority (FINMA) and the Monetary Authority of Singapore (MAS) are taking actions to close down banks and initiate criminal prosecutions against bank officers for money-laundering and other financial offences connected with 1MDB but Bank Negara Malaysia is blissfully are unaware and unconcerned about these developments swirling around the financial world.

Even worse, when there are also investigations into the multibillion ringgit 1MDB financial scandal by regulators in other countries including the United States, Hong Kong and Luxembourg!

It would appear that although Malaysia has an Anti-Money Laundering and Anti-Terrorism Financing Act 2013 (“AMLA”), even top Bank Negara Malaysia officials do not understand the meaning of money-laundering, which is defined in Section 4 of the Act as any person deemed to have committed an offence if he or she: Continue reading “Bank Negara Governor Muhammad Ibrahim should convene emergency meeting of Bank Negara Board of Directors on whether BNM should remain above the fray of world crackdown on 1MDB money-laundering or should take proactive steps to contact its counterparts in other countries to secure information/intelligence about 1MDB money laundering”

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Has Bank Negara given a new deadline for 1MDB to repatriate RM7.76 billion of its funds remitted abroad or can 1MDB now illegally keep them overseas?

The announcement by the Bank Negara governor Datuk Muhammad Ibrahim that Bank Negara has closed its case against 1MDB, at a time when global monetary watch-dogs as in Singapore and Switzerland have just started to take action against money-laundering and other corruption offences related to 1MDB, is the first black mark for the new Bank Negara chief.

Where is Bank Negara’s much touted transparency and accountability when it refuses to reveal what was the compound fine which had been paid in full by 1MDB for failing to comply with Bank Negara directives issued under the Financial Services Act 2013 which, among others, include a requirement for 1MDB to repatriate US$1.8 billion (about RM7.76 billion) of its funds remitted abroad following the revocation of the three permissions granted by Bank Negara to 1MDB in 2009, 2010 and 2011.

Why is Bank Negara keeping its compound fines on 1MDB secret, when everybody knows that the Monetary Authority of Singapore (MAS) had imposed a fine of S$13.3 million on the Singapore branch of BSI for 41 breaches of its requirements while the Swiss Financial Market Supervisory Authority (FINMA) had ordered the “disgorgement” of “illegally generated profits” of US$95.6 million from BSI, apart from the separate orders of the Singapore and Swiss financial authorities for the closure of the Singapore branch of BSI and the 143-year-old mother bank in Switzerland?

Was the compound fine imposed by Bank Negara on 1MDB RM10,000, RM100,000, RM1 million, RM10 million, RM100 million or more? Continue reading “Has Bank Negara given a new deadline for 1MDB to repatriate RM7.76 billion of its funds remitted abroad or can 1MDB now illegally keep them overseas?”

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Malaysian PM Najib Razak strengthens hold on power

Greg Lopez
The Interpreter
26 May 2016

Najib Razak’s term as prime minister of Malaysia is now in its seventh year and there is every reason to believe he will continue to lead Malaysia for a long while yet.

Given his scandal-ridden tenure, this is a remarkable outlook, one enabled by the sidelining of opponents, an illiberal electoral system, a divided opposition, and civil leadership that took a wrong turn.

As unlikely as it seemed when the The Wall Street Journal reported investigations of corruption and malfeasance on a massive scale related to investment fund 1MDB, Najib, through the power of incumbency, has gone from strength to strength while his detractors have lost momentum.

Even if Najib wanted to resign he could not. Unlike former prime ministers, Abdullah Ahmad Badawi and Mahathir Mohamed, who were forced to quit by their party, the United Malays National Organisation (UMNO), the corruption allegations and supporting evidence against Najib are too serious, substantive and too public (everyone knows about them). A face-saving exit strategy could not be designed without compromising its designers. Continue reading “Malaysian PM Najib Razak strengthens hold on power”

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Singapore shows spine in bank shutdown

Andy Mukherjee
Blooomberg
Singapore Today
May 26, 2016

The adjectives marshalled most often by bankers to describe Singapore’s regulator used to be “pragmatic” and “business-friendly”. To those, a third probably just got added: “No-nonsense”.

By asking BSI Bank to shut its operations in the city-state, the Monetary Authority of Singapore (MAS) has scored at least two goals and created one group of winners.

Take the achievements. First, the MAS has given itself a leg up over regulators in the United States, Switzerland, Hong Kong, Luxembourg and Malaysia, which are also investigating a multibillion-dollar financial scandal surrounding 1Malaysia Development Berhad (1MDB), the troubled Malaysian state fund whose advisory board has been headed by Malaysian Prime Minister Najib Razak. (Mr Najib has rejected allegations that he profited from state funds, and 1MDB has denied any wrongdoing.)

While the Swiss Attorney General’s office is just getting around to starting criminal proceedings against BSI, Singapore has sent the bank packing. Continue reading “Singapore shows spine in bank shutdown”

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Malaysia Whispers Sow Doubts on Najib’s Ability to Win Votes

Shamim Adam
Bloomberg
May 26, 2016

At the 70th anniversary gala for Malaysia’s ruling party this month, Prime Minister Najib Razak raised the party flag on stage as senior leaders cheered him and sang the group’s anthem of unity and loyalty. In the halls outside the venue, the chatter was less upbeat.

Even as party leaders publicly pledge support, some have privately expressed frustration over the scandal-hit premier — and concern that if they say too much they could be ostracized. In the past year, Najib has removed his most vocal opponents from the party and government machinery. While that means he is unlikely to face a challenge soon, the risk may grow as the next election, due by end-2018, draws near.

At stake is the unbroken rule since independence in 1957 of the United Malays National Organisation, the biggest actor in one of the longest-ruling coalitions in the world. Ethnic Malays are the bulwark of that coalition, and Najib needs to keep them onside. UMNO leaders are also keeping a close eye on rank and file supporters for signs of disquiet, even as opposition parties remain weak and in some cases fractured. Continue reading “Malaysia Whispers Sow Doubts on Najib’s Ability to Win Votes”

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Special Task Force on 1MDB should be resurrected and representatives from Bank Negara, MACC, Police, AG’s Chambers as well as PAC should be sent to Singapore and Switzerland to learn how they could detect 1MDB money-laundering and corrupt practices running into billions of ringgit but which had escaped Malaysian authorities

The end game of Malaysia’s first global financial scandal, the RM50-55 billion 1MDB scandal (which incorporates the RM4.2 billion “donation” scandal) has started with the two-pronged crackdown in Singapore and Switzerland – the closure of the Singapore branch of BSI and the reference of the “top six” of BSI Singapore to the Singapore prosecutor for possible criminal offences and in Switzerland, the commencement of criminal proceedings against the bank by the Swiss authorities over “money laundering and corruption” offences relating to suspected embezzlement of US$4 billion from 1MDB and the liquidation of the 143-year-old Swiss bank.

In Malaysia, the Special Task Force into 1MDB, which had comprised the Bank Negara, the MACC, the Police and the Attorney-General’s Chambers should be resurrected and send representatives, together with representatives from the Public Accounts Committee (PAC), to Singapore and Switzerland to learn how the investigative and enforcement authorities in these two countries could detect 1MDB money-laundering and corruption running into billions of ringgit but which had escaped multiple and intensive investigations by Malaysian authorities?

It is a supreme insult and blow to the credibility, capability, professionalism, integrity and authority of the Malaysian investigative and enforcement authorities that the Swiss Financial Market Supervisory Authority (FINMA) could order the closure of the private Swiss Bank BSI for failing to adequately monitor 1MDB funds to prevent money laundering and corrupt practices but its Malaysian counterparts are blissfully ignorant of such serious money-laundering malpractices. Continue reading “Special Task Force on 1MDB should be resurrected and representatives from Bank Negara, MACC, Police, AG’s Chambers as well as PAC should be sent to Singapore and Switzerland to learn how they could detect 1MDB money-laundering and corrupt practices running into billions of ringgit but which had escaped Malaysian authorities”

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Why is Tunisia’s Ennahda ditching political Islam?

Larbi Sadiki
Aljazeera
25th May 2016

Several months of internal debates have come to full fruition for the reformists within the party.

Tunis – Is Tunisia’s Ennahda party renouncing ‘Islamism’, its doctrinaire sine qua non and the basis of its foundational identity?

Over a three-day congress, the party’s first since 2012, members discussed the question through heated but pluralist debates. Ennahda, a movement that emerged in the late 1970s as a national political party with an Islamic frame of reference, is now committing to separate the religious (al-da’awi ) from the political (al-siyasi).

A vision that was upheld for more than three decades has ceded to a new brand of civic Islamism. That is, by analogy, a neo-Ennahda has not only edged closer to the notion of a civil state, but also to Turkey’s ruling AK Party and further from Egypt’s standard Muslim Brotherhood or “Ikhwani” model: The former operates politics with minimum ideology, the latter has historically harboured ambitions of Islamising polity. Continue reading “Why is Tunisia’s Ennahda ditching political Islam?”

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Did Puad Zakarshi tell a lie to Malay students in Canberra about the RM2.6 billion “donation” in Najib’s personal banking accounts?

Did the Director-General of Department of Special Affairs (Jasa), Datuk Mohd Puad Zarkashi tell a lie to Malay students in Canberra during his “ Veracity Tour” in Australia about the RM2.6 billion “donation” in Prime Minister Datuk Seri Najib Razak’s personal banking account?

This question immediately comes to mind after the Tourism Minister Datuk Seri Nazri Abdul Aziz made a revealing admission today that the UMNO Supreme Council was never informed about the RM2.6 billion “donation” deposited into Najib’s personal banking accounts, which tallied with what the UMNO Deputy President Tan Sri Muhyiddin Yassin had been saying since his removal as Deputy Prime Minister in July last year.

This is what Nazri said today:

“He (Najib) never told us (UMNO supreme council). He didn’t have to tell us. He just have to get approval from Bank Negara, that’s all.” (Malaysiakini)

What Puad said in Canberra clearly contradicted what Nazri said today. Continue reading “Did Puad Zakarshi tell a lie to Malay students in Canberra about the RM2.6 billion “donation” in Najib’s personal banking accounts?”

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Has the end-game however protracted of the nation’s first global financial scandal – RM50-55 billion 1MDB scandal – begun with the two-pronged crackdown by the Swiss and Singapore authorities?

Has the end-game, however protracted, of the nation’s first global financial scandal – the RM50-55 billion 1MDB scandal – begun with the two-pronged crackdown by the
Swiss and Singapore authorities yesterday?

The two-pronged crackdown involved the closure of the Singapore branch of BSI, the commencement of criminal proceedings against the bank by the Swiss authorities over “money laundering and corruption” offences relating to suspected embezzlement of US$4 billion from 1MDB and the liquidation of the 143-year-old Swiss bank.

In Malaysia, however, all that the government investment arm 1MDB could say in a statement is that “it had not been contacted by any foreign lawful authority on matters relating to the company”.

Nothing could be more surreal than this response from 1MDB – suggesting that while over half a dozen countries are not only investigating, but beginning to commence criminal proceedings, against institutions and individuals for money laundering and embezzlement of 1MDB funds of at least US$4 billion, 1MDB as the company directly involved, is claiming that there had been no such embezzlement at all!

1MDB is creating world history as a company which is the subject of investigation by half a dozen foreign countries involving multi-billion ringgit money-laundering and global corruption but which is strenuously denied by both the company and its government.

Has there been any such a case, where a company is being investigated for multi-billion ringgit money laundering and global corruption by half a dozen foreign countries, but which is strenuously denied by the company affected and its government?

On this score, we must be the first in the world. Continue reading “Has the end-game however protracted of the nation’s first global financial scandal – RM50-55 billion 1MDB scandal – begun with the two-pronged crackdown by the Swiss and Singapore authorities?”

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Singapore kicks out Swiss bank linked to Malaysia’s 1MDB

The Nation
Thailand
May 25, 2016

SINGAPORE – Singapore’s central bank on Tuesday said it was kicking out Switzerland’s BSI Bank, which has been linked to a global money-laundering scandal that has embroiled neighbouring Malaysia’s Prime Minister Najib Razak.

In the toughest legal action so far in the crisis rocking Malaysian state fund 1MDB, Switzerland also disclosed it had launched criminal proceedings against the parent firm BSI SA for “deficiencies” in its internal organisation.

“BSI Bank is the worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector,” Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), said in a statement.

MAS said it had asked state prosecutors to investigate six senior executives of BSI Bank for possible criminal offences and fined it Sg$ 13.3 million ($9.6 million) for 41 breaches of Singapore’s laws against money laundering. Continue reading “Singapore kicks out Swiss bank linked to Malaysia’s 1MDB”

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Malaysia’s 1MDB Web And The 143-Year-Old Swiss Bank It Ensnared

Shamim Adam and Andrea Tan
Bloomberg
May 24, 2016

Global probes related to a troubled Malaysian state fund have enmeshed the biggest casualty to date: a 143-year-old Swiss bank.

Singapore ordered BSI SA’s unit in the city state to shut down as Swiss authorities began criminal proceedings against the bank. Here’s the state of play.

How are 1MDB and BSI connected?
 Continue reading “Malaysia’s 1MDB Web And The 143-Year-Old Swiss Bank It Ensnared”

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Malaysia 1MDB scandal: Swiss regulator approves BSI takeover by EFG but imposes conditions

By Rachel Middleton
International Business Times
May 25, 2016

Private Swiss bank BSI, which has been ordered to close its operations in Singapore, has been slammed by its own regulator for failing to adequately monitor its relationship with Malaysian sovereign fund 1Malaysia Development Berhad. Swiss Financial Market Supervisory Authority, FINMA, accused the bank of committing “serious breaches of money laundering regulations” and “fit and proper” requirements.

In a statement dated 24 May, FINMA said 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.”

Following its investigations, FINMA has now approved the takeover of BSI by EFG International with the condition that BSI will be “integrated and thereafter dissolved with 12 months”. As part of its conditions, none of the BSI top management “responsible for the misconduct” will be allowed to take up leadership positions at EFG, the statement said. Continue reading “Malaysia 1MDB scandal: Swiss regulator approves BSI takeover by EFG but imposes conditions”

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Q&A: How scandal in Malaysia hit a Swiss private bank

Michael Peel, Bangkok regional correspondent
Financial Times
May 24, 2016

Regulators in Europe and Asia have cracked down on BSI, the Swiss private bank, over alleged money-laundering failings related to the scandal over Malaysia’s 1MDB state investment fund. Claims that billions of dollars have been misappropriated from Malaysian state companies have spawned probes on several continents. BSI is now under criminal investigation in its home country and has been ordered to shut down in Singapore. It has been fined S$13.3m in Singapore and forced to disgorge profits of SFr95m in Switzerland. Here are a few questions raised by Tuesday’s events.

1. What was BSI’s relationship with 1MDB? Continue reading “Q&A: How scandal in Malaysia hit a Swiss private bank”

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Swiss bank to be shut over Malaysia scandal

Geir Moulson and Jamey Keaten
Associated Press
USA Today
May 24, 2016

GENEVA – A Swiss private bank will face criminal proceedings and be liquidated after allegedly committing serious breaches of anti-money laundering regulations in connection with the suspected embezzlement of a Malaysian state investment fund.

Switzerland’s market supervisor indicated Tuesday that BSI SA helped transfer money to the Alpine country connected to the Malaysian fund called 1MDB. Investigations so far into 1MDB have indicated that $4 billion earmarked for development projects in Malaysia may have been misappropriated from state-owned companies.

The Swiss market supervisor, FINMA, said that in the 1MDB case, BSI “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.” Continue reading “Swiss bank to be shut over Malaysia scandal”

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Swiss Open Criminal Proceedings Against BSI Over Malaysia Fund Allegations

By NICK CUMMING-BRUCE
New York Times
MAY 24, 2016

GENEVA — The authorities in Switzerland said on Tuesday that they had begun criminal proceedings against one of the country’s oldest banks, BSI, after allegations that it had laundered huge sums for “politically exposed” individuals linked to a scandal-plagued Malaysian state investment fund.

The Swiss attorney general’s office said in a statement that it suspected “deficiencies in the internal organization of the BSI S.A. bank” and believed “that due to these deficiencies, the bank was unable to prevent the commission of offenses currently under investigation in the criminal proceedings relating to” the investment fund, 1Malaysia Development Berhad.

The prosecution arose from an investigation that Switzerland started last year into suspected misappropriation of billions of dollars from the Malaysian fund, also known as 1MDB, and that it has pursued in cooperation with the authorities in Luxembourg, Singapore and the United States. Continue reading “Swiss Open Criminal Proceedings Against BSI Over Malaysia Fund Allegations”

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1MDB financial scandal – the global noose is closing in while at home the Ministers are in sixes and sevens trying to defend the indefensible

Three international developments today are harbingers of the global noose of the 1MDB scandal that is closing in, viz:

• The withdrawal of the BSI Bank’s status as a merchant bank in the city state by the Monetary Authority of 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” and the reference of six members of the BSI Bank’s senior management and staff to the public prosecutor – after investigations into the 1MDB scandal in Singapore.

• Commencement of criminal proceedings by Switzerland’s Office of the Attorney General (OAG) against BSI SA Bank for allegedly failing to prevent offences linked to 1MDB, including offences of money laundering and bribery of foreign public officials. Swiss authorities believe at least RM4 billion in Malaysian state fund had been misappropriated as part of their investigations into 1MDB scandal.

• Resignation with immediate effect of Swiss Bank BSI’s Group CEO Stefano Coduri following the announcement by the Money Authority of Singapore on the closure of its Singapore branch and criminal proceedings by the Swiss OAG in connection with their 1MDB investigations.

At home in Malaysia, however, Prime Minister Datuk Seri Najib Razak’s Ministers and minions are in sixes and sevens, indulging in sophistry, prevarication, obfuscation and downright evasion defending the indefensible instead of being true and frank about the RM50-55 billion 1MDB and RM4.2 billion global financial scandals. Continue reading “1MDB financial scandal – the global noose is closing in while at home the Ministers are in sixes and sevens trying to defend the indefensible”

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Confidence wanes in Malaysia govt-backed 1MDB bonds

Straits Times
24th May 2016

SINGAPORE • The fortunes of bonds in Malaysia’s troubled investment fund 1MDB are diverging this month: Those guaranteed by Abu Dhabi’s sovereign wealth fund have rallied, while notes with support from Malaysia’s own government have dropped.

Its 4.4 per cent 2023 notes, backed by a letter of support from Malaysia’s government, slumped 6.4 per cent in May, set for the worst slide in 16 months. The fund’s 5.99 per cent 2022 bonds, on which Abu Dhabi’s International Petroleum Investment Co (IPIC) paid interest earlier this month in its role as guarantor, gained 1.9 per cent, the most since at least September 2014.

The contrast reflects growing investor concern about the Malaysian government’s backing as it grapples with an economy forecast to expand at its slowest pace in seven years amid a collapse in oil prices. 1MDB is at the centre of multiple investigations from Switzerland to the US amid allegations of money laundering and embezzlement.

Even as the firm has consistently denied wrongdoing, it has brought negative attention to the government. Continue reading “Confidence wanes in Malaysia govt-backed 1MDB bonds”

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Malaysia’s Prime Minister Resurrected And Hitting Back?

Greg Lopez
Forbes
MAY 23, 2016

Malaysia’s embattled prime minister seems to be weathering the corruption allegations – and by some signs may even be going back on the offensive.

On Jul. 2, 2015, the Wall Street Journal “alleged” that $700 million had gone into the personal bank accounts of Malaysian Prime Minister Najib Abdul Razak.

On Aug. 3, 2015, the Malaysian Anti-Corruption Commission (MACC) reported that the alleged $700 million deposited into Razak’s accounts came from donations, and not from the debt-laden 1MDB.

Many opined that he could not possibly survive this disclosure; with several suggesting that he was a “dead man walking”.

If Razak is likened to a pharaoh – a term given to Malaysia’s longest serving prime minister, Mahathir Mohamed, who is now the main protagonist in attempting to bring down Razak – one could say that the period between Jul. 2, 2015 and May 8, 2016 was a period where Razak was “mummified,” safe within the pyramid. Several defensive measures were later followed with the election triumph of the Barisan Nasional (the ruling coalition that the prime minister leads) in the Sarawak state election, suggesting that the “mummy” is now fully resurrected. Continue reading “Malaysia’s Prime Minister Resurrected And Hitting Back?”