The guilty plea of a former BSI private banker has brought to light the close-knit network of Swiss banks working hand-in-hand to launder millions pilfered from 1MDB, the scandal-engulfed Malaysian state fund.
The details of former BSI banker Yeo Jiawei's million-dollar paycheck from the Swiss private bank, a lavish lifestyle financed by millions in kickbacks from 1MDB's business, his rude treatment of colleagues after he appeared to advance in Jho Low's orbit, and his attempts to silence former colleagues as investigators stepped up their probe of the scandal have dominated headlines in recent weeks.
Yeo's trial also revealed how bankers enjoyed relatively free rein from BSI for their illicit dealings with little intervention from the Swiss bank's «lame duck» higher-ups.
What hasn't been revealed until now is the intricate web of mainly Swiss banks which appears to have been the preferred providers by 1MDB financial mastermind Low, and how they worked hand-in-hand as millions were allegedly siphoned from the Malaysian state fund.
From Son to Father $153 Million – And Back
The guilty plea of Yeo's former BSI boss, private banker Yak Yew Chee, has revealed how unfailing the banks were in his service, prosecution documents published by «The Edge» show.
Banks including Coutts International – which has since been bought by Union Bancaire Privee – BSI, Rothschild Trust, and Falcon Private Bank processed millions in so-called pass-through transactions, or money transfers designed mainly to hide the criminal origins of funds. All are located within a stone's throw of each other in Zurich's tony banking district, and all have moved into Singapore in recent years in a bid to capture share in the burgeoning Asian wealth market.
In one example, Low transferred $153 million from his BSI account to one at the same bank held by his father, who subsequently transferred nearly the same amount back to his son. From there, Low sent $110 million of the funds to an account held at Rothschild Trust in Zurich (depicted below by Attorney General's Chambers, Singapore).
Instead of questioning the irregularity of the fund transfers, Yak doubled down, drafting a letter to Rothschild Trust head Stefan Liniger which effectively vouched for Low and argued that the funds originated from Low's father, who is a wealthy Malaysian businessman. Not only was this untrue and illegal, it violated BSI's own rules for referring business to outside firms.
The banker went ahead and sent the letter to Rothschild, «as he was eager to gain an advantage by pleasing Jho Low, who through his connections, was [Yak's] most important client at BSI,» Singapore's attorney general said.
Brunner, Sturzenegger Await Fate
A spokesman for Rothschild said the bank had no comment on 1MDB or discussions with regulators over potential dealings with the fund.
«Rothschild is a highly regulated business and we adhere to the legal, regulatory and tax rules wherever we operate. We have stringent processes and procedures in place designed to ensure that our client's tax affairs are in order as well as the legitimacy of the source of their funds.
Yak sent a similar letter to Olivier Blanchet, who is head of yacht and shipping finance at the Swiss unit of BNP Paribas in Geneva. It is unclear to what extent, if any, the French bank did business with 1MDB or Low.
While Yak's guilty plea has revealed much of the goings-on at BSI and dealings with other banks, prosecutors have thus far kept quiet what they know about the role of Hanspeter Brunner, one of the best-known private bankers in Asia who retired hastily as BSI's Asia wealth management head as the probe hotted up. Brunner, who caused a splash when he moved from Coutts to BSI in 2009 with dozens of his private bankers in tow, is one of several former BSI bankers being probed in Singapore, and also faces an enforcement proceeding in Switzerland by industry regulator Finma.
The fate of Jens Sturzenegger, the former Falcon Private Bank branch manager in Singapore, is also unclear. Sturzenegger was arrested last month after the Swiss-based private bank was shut down in the city-state for its 1MDB dealings.
The verdict in trial of Yeo Jiawei is still outstanding. Low's whereabouts are unknown.
