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.