Two former BSI bankers were given free rein by the Swiss bank for illicit dealings with Malaysian state fund 1MDB as well as to take their share of the spoils, a high-profile Singapore court case revealed.

The third day of former BSI banker Yeo Jiawei's trial in Singapore brought embarrassing revelations for BSI, according to local media reports. The Swiss private bank was shut down in Singapore in May for allegedly helping to launder 1MDB money.

Kevin Swampillai, formerly Yeo's supervisor told a court that he, Yeo and other bankers had «free rein» in moving what authorities have termed «staggering» sums of money for clients like 1MDB.

«There was a lack of central control over functions ... for better or for worse,» Mr Swampillai said, dubbing BSI’s management «a lame duck committee».

The testimony is likely to cause a few sleepless nights in Switzerland, where financial regulator Finma has initiated enforcement proceedings against two unnamed former BSI executives.

«Brazen Sky» Deal

The charges against Yeo are serious: he faces up to 10 years in prison if found guilty of money laundering in a separate trial, while witness-tampering could get him another up to seven years jail time.

Swampillai has admitted criminal wrong-doing – taking kickbacks for arranging structures for 1MDB – and is testifying against Yeo.

The two brokered a clandestine deal dubbed, perhaps ironically, «Brazen Sky», earning roughly S$6.95 million each behind BSI's back by funnelling 1MDB money.

Yeo's defence lawyer sought to undermine the incriminating testimony by asserting that Swampillai, and not Yeo, came up with the idea to funnel funds. He also accused Swampillai of shifting blame from himself to Yeo in order to avoid prosecution.

Swampillai conceded that it had been his idea for Yeo to quit BSI for the employ of Jho Low, an 1MDB linchpin and former BSI client who U.S. prosecutors believe pilfered billions from the state fund. Swampillai maintained that both men had been equal participants in the criminal plan.

Elaborate 1MDB Kickback Scheme

The two concocted an elaborate scheme of fund management which paid millions in kickbacks to the private bankers, with the involvement of Yak Yew Chee, another former BSI banker who is facing charges. Yak is believed to have been Low's private banker at BSI and before that, at Coutts. 

Yeo didn't have to be told how lucrative such a scheme would be, Swampillai said, saying his former employee had «recognised the potential of that business» on his own.

Yeo, who is 33, is believed to have earned as much as S$26 million from such illicit transactions involving shell companies and kickback schemes.

Cross-questioning by Yeo's lawyer on Wednesday make it clear that the defense intends to undermine Swampillai's credibility as a witness by highlighting his guilt. Swampillai was suspended by BSI and is now unemployed. He is not among several former BSI bankers to have been criminally charged.

BSI has just been sold to EFG International, in a deal which closed earlier this week.

Previously, the court had heard how Yeo had reveled in Low's lavish lifestyle and how Yeo and Swampillai had conspired to cover up their illicit dealings with Singapore authorities had closed in, including using coded communications and fictitious names.