Singapore Charges Ex-Falcon Bank Manager in 1MDB-Linked Case

By January 10, 2017Current Affairs

Singapore Charges Ex-Falcon Bank Manager in 1MDB-Linked Case

By Andrea Tan – Bloomberg

  • Jens Sturzenegger is fifth person charged in city’s probes
  • Falcon Private Bank ordered to close in Singapore in October

Singapore prosecutors charged a former branch manager of Falcon Private Bank Ltd., the fifth person to be indicted in the city-state’s probe linked to a scandal-hit Malaysian state investment fund.

Jens Sturzenegger, a Swiss, faces 16 charges including failing to report to the authorities that $1.27 billion of inflows into two bank accounts were suspicious, according to papers filed Thursday in a state court. He intends to plead guilty, his lawyer Tan Hee Joek said in court.

Singapore has sanctioned banks over money laundering breaches, seized assets and charged bankers as it investigates fund flows linked to 1Malaysia Development Bhd. The city has promised tougher action to help repair the damage to its image as a financial hub. The Malaysian fund, which has consistently denied any wrongdoing, is at the center of multiple probes across the globe.

The Monetary Authority of Singapore in October ordered Falcon Private Bank to shut in the city and Sturzenegger, 42, was arrested. Mohamed Ahmed Badawy Al-Husseiny, the bank’s former chairman, has been named as a person of interest in Singapore’s probe. Sturzenegger and unidentified senior managers at the Swiss bank had impaired the effectiveness of its compliance arm, the regulator said at the time.

Sturzenegger, who’s out on bail, is also accused of providing false information to the authorities, including that he didn’t know Low Taek Jho, a Malaysian financier. Low has previously described his role with 1MDB as informal consulting that didn’t break any laws.

The criminal case is Public Prosecutor v Jens Fred Sturzenegger, Singapore State Courts.

5 January 2017, 9:35 AM MYT 5 January 2017, 11:27 AM MYT

The Charismatic Banker Who Led Singapore’s BSI Into the Abyss

By Andrea Tan and Chanyaporn Chanjaroen – Bloomberg

  • More than 100 staff followed Brunner to BSI from Coutts
  • ‘Pattern of non-compliance’ doomed Singapore private bank
  • He was the leader of one of the largest mass defections in private banking history, with more than 100 staff following him from RBS Coutts Bank Ltd. in the thick of the global credit crisis to create a financial phenomenon in Singapore at a little-known Swiss bank.
  • Hanspeter Brunner, together with former deputy Raj Sriram and chief operating officer Gary Tucker, were the kernel of a plan by BSI SA, founded in 1873 in Lugano, to build up a $10 billion wealth-management business serving the burgeoning ranks of Asia’s millionaires.
  • Brunner, a veteran Swiss private banker who has spent more than two decades in Asia, offered his Coutts colleagues an extraordinary lifeboat. Then-parent Royal Bank of Scotland Group Plc was being bailed out by the U.K. government, while all around the financial industry was culling tens of thousands of jobs.
  • Brunner knew every banker, analyst, back-office worker and client at Coutts, according to people familiar with the move. When he went to BSI, even the pantry lady followed, three of the people said. This wasn’t just a chance for BSI to grab a few star talents in the cutthroat world of private banking in Asia, this was a wholesale exodus. Brunner’s lawyer Ng Lip Chih of NLC Law Asia LLC declined to comment.
  • The mass move to BSI Bank Ltd., the Singapore unit, forged a sense of camaraderie among the defectors and cemented a bond with Brunner, who managed to negotiate pay increases of as much as 40 percent, according to the people, who didn’t want to be named because of the sensitivity of the matter. BSI’s payroll swelled from 30 employees to 200 within a year, according to a company report.
  • They little knew that Brunner was bringing them from one crash to another. In May, Singapore’s financial watchdog ordered the bank to shut its operations in the city-state, blasting BSI as the nation’s worst case of banking misconduct.
  • The reason was BSI’s links with 1Malaysia Development Bhd., the Malaysian state investment fund at the center of a series of international fraud investigations, and wealthy Malaysian financier Low Taek Jho, known as Jho Low.
  • Read here how 1MDB and BSI Bank were connected
  • A laissez-faire attitude meant deals were done with insufficient oversight, according to documents filed in a Singapore state court by Yak Yew Chee, 1MDB’s and Low’s former wealth manager. With BSI determined to grow fast, there were cases of deals happening against the advice of a bank compliance officer, the documents show.
  • Brunner had put in place compliance rules when he built up BSI Bank, but some of those involved in handling the accounts of Low and 1MDB didn’t follow the rules, a person with knowledge of Brunner’s actions said.
  • “There’s pressure within banks and industry to get the deal done, but the reality is that if you get the deal done without compliance checks that’s going to come back and bite you,” said Andre Jumabhoy, a former prosecutor and an enforcement lawyer at K&L Gates LLP in Singapore. “Certainly that would appear to be the case with BSI.”
  • As business rolled in from 1MDB and Low, BSI became the custodian bank of $2.3 billion of investments from the Malaysian fund, according to a report from a Malaysian parliamentary hearing. Yak and team members were lauded by Brunner and his bosses in Lugano, who handed out bonuses as big as S$5.5 million ($3.8 million), according to court papers filed by Yak.
  • Brunner, voted “Outstanding Private Banker Asia Pacific” in 2008 by Private Banker International, promoted a collegial environment and built strong personal relationships, according to people who worked with him. He made a point of walking the floors of the bank at least once a week to meet and chat with people. He would take groups of colleagues out for lunch or drinks and invite senior ones to dinner at his S$8.7 million conservation home near the city’s main shopping district.

·         Straits Chinese

  • The house in Cairnhill Road, an old Straits Chinese home, was described by the real-estate vendor as “like living in the royal palace.” Brunner filled it with Asian artifacts from his trips around the region, Persian carpets and fine red wines, according to people who have been to the house and pictures posted on an architectural firm’s website. He had traditional Chinese doors installed and hunted down tiles made in Vietnam.
  • Former coworkers described Brunner as a man who celebrated success, often opening his home to staff for an annual party. Along with the wine, he collected contemporary Asian art, some of which adorned his office.
  • But as the success mounted, so did the investigations.

·         ‘Biggest Customer’

  • 1MDB became the subject of probes stretching from the U.S. to Switzerland over money laundering and corruption allegations where billions of dollars may have been drained from the fund. Prosecutors began to raise questions about the millions flowing through BSI and accounts controlled by Low.
  • Low was BSI’s “biggest and most important customer,” Yak said in a mitigation plea in November after being charged in Singapore with offenses related to transactions allegedly involving Low. U.S. prosecutors characterized Low as the controller of an illicit payments scheme that drained billions from 1MDB. Low has described his role with 1MDB as informal consulting that didn’t break any laws.
  • Calls to Low’s Jynwel Capital Ltd. in Hong Kong weren’t answered. He has not been charged with any offense and 1MDB has consistently denied any wrongdoing.
  • Read the QuickTake Q&A on the 1MDB Scandal
  • In his mitigation plea, Yak, Low’s former private wealth manager, said “BSI’s management was always prepared to act on Low’s requests and give Low the benefit of the doubt.”
  • A BSI compliance officer on Nov. 6, 2012, flagged Low’s circular flow of funds to his father and back to him as “nebulous to say the least and not acceptable in compliance’s view,” according to court records filed in Yak’s case. Despite this warning, the transactions were eventually processed, according to the filing. BSI spokesman Luciano Crobu declined to comment for this story. Attempts to contact Low’s father were unsuccessful.

·         ‘Dereliction of Duty’

  • That breach was among 41 lapses at BSI uncovered by the Monetary Authority of Singapore. The regulator slammed BSI for having a “pervasive pattern of non-compliance” and found “considerable evidence of gross dereliction of duty.”
  • Heads soon began to roll from Brunner’s team. Yak, 58, was given an 18-week jail term and fined S$24,000 after being convicted in November of forging documents and failing to disclose suspicious transactions allegedly related to Low. Yvonne Seah Yew Foong was jailed for two weeks and fined S$10,000 on Dec. 16 for similar offenses. Lawyers for Yak and Seah said they didn’t appeal.
  • Then on Dec. 22, Yeo Jiawei, 34, a former wealth planner at BSI, was sentenced to 30 months in prison, the longest term yet handed down by the courts in Singapore’s probes linked to 1MDB. Yeo’s lawyer said he’s appealing.
  • aaaaaaaaaaaaaaaaaaaaaaaa
  • Giving testimony in Yeo’s trial, former head of wealth management services Kevin Swampillai said BSI’s management in Singapore was a “lame duck committee.” Bankers were allowed free rein in dealing with clients with a lack of central control, he said.
  • Brunner himself may face charges after the Swiss regulator began proceedings against him and he, Sriram and Swampillai were referred to Singapore prosecutors by MAS. Tucker has not been accused of wrongdoing. Efforts to reach Tucker through social media and via Singapore telephone listings weren’t successful. Sriram’s lawyer said he declined to comment.
  • “It is unprecedented for MAS to name individuals publicly that they have referred” for investigation, said Sandy Baggett, a Singapore-based lawyer at Freshfields Bruckhaus Deringer, and former deputy director for financial securities offenses at the Singapore attorney general’s office. “That tells you something about the level of evidence they must have.”

·         Tarnished Image

  • The lapses at BSI tarnished Singapore’s image as a financial center, MAS chief Ravi Menon said, and the government has vowed tough action to repair the damage to its reputation. The 1MDB scandal has also resulted in fines for banks including UBS Group AG and Standard Chartered Plc, and a former Goldman Sachs Group Inc. banker may be banned. On Jan. 5, Singapore prosecutors charged Jens Sturzenegger, a former branch manager of Falcon Private Bank Ltd., with 16 offenses related to the scandal. MAS ordered Falcon Bank to shut in Singapore in October.
  • BSI was acquired by EFG International AG last year. The Zurich-based lender has said the deal contains indemnities for BSI’s legal issues. Daniela Haesler, an EFG spokeswoman, declined to comment on the matter.
  • The 1MDB case and revelations leaked in the Panama Papers “demonstrated that everyone in Singapore needs to be a lot more vigilant about systems and controls to prevent transnational money laundering,” said Baggett at Freshfields.
  • Two months before MAS ordered BSI to shut in Singapore, the bank announced Brunner, 64, would retire. Brunner and the bank in August settled a lawsuit after he sued over deferred bonuses. The private banker saw himself as instrumental in building up BSI’s business in Asia, according to a person close to Brunner.
  • The legal spat had echoes of Brunner’s departure from Coutts, bankers to the British royal family. In 2010, Brunner sued for wrongful dismissal from Coutts while the bank sought the return of an advance on his bonus. That complaint was also settled, according to court records.


6 January 2017, 5:00 AM MYT