A Singaporean private banker was jailed yesterday on fraud charges relating to Malaysia’s 1MDB financial scandal, becoming the first figure to be convicted in the international multi-billion-dollar saga.
Allegations that huge sums were misappropriated from the Malaysian state fund through money-laundering have triggered a massive corruption scandal which has embroiled Prime Minister Najib Abdul Razak.
Prosecutors said that Yak Yew Chee, a former managing director at the Singapore branch of Swiss bank BSI, helped manage funds linked to 1MDB, which was set up by Najib with the help of a close family friend, Malaysian financier Low Taek Jho.
Yak, 57, who was also a private banker to Low, forged reference letters to Swiss banks and funds, and failed to report suspicious money transfers involving accounts belonging to his client, the prosecutors said.
He was sentenced to 18 weeks in jail after pleading guilty to four charges of forgery and failure to report suspicious transactions related to the investment fund.
He was also fined S$24,000 ($17,000) by a Singapore district court.
One of these transactions saw a 1MDB subsidiary transfer $110mn, channelled through six banks and nine accounts, to the Swiss bank account of Selune Limited, a company that US investigators said is owned by Low.
The banker for the subsidiary, 1MDB Energy, was Falcon Private Bank, whose Singapore branch was shut down by regulators this year.
The complex web of transactions cut across international borders as the money passed through accounts controlled by Low and his father.
The transactions were flagged as suspicious by BSI compliance officers but dismissed by the bank’s senior management who said that “intra-family transfers are not always going to be logical”, according to court documents.
Yak was paid a bonus of S$7.5mn ($5.32mn) for his dealings with Low that has now been forfeited to the state.
Najib, Low and 1MDB have all strongly denied any wrongdoing.
Before handing down the sentence, judge Jennifer Marie said she hoped “to send a strong signal to the public and errant bankers in particular that the courts will not tolerate such conduct that harms the standing and reputation of the financial institutions of Singapore”.
Singapore, a regional financial hub, last year launched a probe into alleged illicit fund flows linked to 1MDB and closed down the local branches of two Swiss banks – BSI and Falcon Private Bank – involved in the scheme.
Singapore authorities also seized nearly $180mn in assets during their investigation.
Half of the assets were linked to Low.
Another private banker, Singaporean Yeo Jia Wei, 33, is also on trial in the city-state on charges of obstructing the investigation into the financial scandal.
The scandal is also being investigated by Switzerland – because Swiss banks were allegedly used to transfer illicit funds – and the United States, where assets were purchased using allegedly laundered 1MDB money.
In July the US Justice Department filed lawsuits in the United States alleging a massive international conspiracy by Najib’s relatives and associates to steal billions from 1MDB.
Swiss Financial Market Supervisory Authority FINMA said in October that during its investigation from 2012 to 2015, it found that “assets amounting to approximately $3.8bn were transferred to accounts at Falcon and associated with the 1MDB Group”.