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Singapore issues prohibition over 1MDB, with more to come

Chris Hamblin, Editor, London, 13 March 2017

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The Monetary Authority of Singapore has issued a 10-year prohibition order against Tim Leissner, a former director of Goldman Sachs (Singapore) Pte, and is about to ban three more bankers from financial services permanently for their involvement with 1Malaysia Development Berhad, the scandal-struck fund.

Kompass.com describes the bank's activities as independent financial advice, investment banking, trading and principal investments and asset management and securities services.

The people who knew Jho Low

The MAS intends to issue more prohibition orders against three people who were investigated by the Commercial Affairs Department (CAD) on 1MDB-related matters, and who were consequently convicted in Singapore's courts. These people dealt with Jho Low, a billionaire businessman-philanthropist, and friend of the Malaysian prime minister's stepson Riza Aziz, who had S$120 million (US$85 milllion) of his assets confiscated in Singapore last summer because of allegations by the attorney general's office and by the US Department of Justice that he was part of an international conspiracy to launder monies related to the Malaysan state fund.

The three individuals to be banned are Mr Jens Fred Sturzenegger, a former branch manager at Falcon Private Bank Ltd, Singapore branch, and Mr Yak Yew Chee and Ms Yvonne Seah Yew Foong, both of whom were former employees of BSI Bank Ltd. Given the gravity of their misconduct, the regulator intends to issue lifetime prohibition orders against Messrs Sturzenegger and Yak and a 15-year one against Ms Seah.

Leissner's ban in more detail

In December 2016, the MAS served notice of its intention to issue a prohibition order against Leissner and invited him to reply in writing. It said that in June 2015 he wrote an unauthorised letter to a financial institution based in Luxembourg and made false statements on behalf of Goldman Sachs (Asia) LLC "without the firm’s knowledge." The ten-year prohibition order takes effect today. Leissner has been prohibited from performing any regulated activity under the Securities and Futures Act and also from taking part, directly or indirectly, in the management of any capital market services firm in Singapore.

Leissner was a representative of Goldman Sachs Singapore between June 2002 and February 2016, and a director of the same between June 2007 and September 2011. From November 2011 onwards, he lived and worked in Hong Kong.

Termination for Sturzenegger

Sturzenegger was the branch manager of Falcon Bank between August 2011 and October 2016. In this capacity he was responsible for the sound management of the bank and its compliance with regulations, notices and directives issued by the regulator, along with all other relevant laws and regulations.

On 11 January 2017, Sturzenegger was convicted on several charges which included:

  • consenting to Falcon Bank’s failure to make any suspicious transaction report on the inflows into Falcon Bank;
  • failing to disclose information about suspicious outflows from Falcon Bank; and
  • furnishing false information to MAS and the Commercial Affairs Department, the better to cover up his relationship with Mr Low Taek Jho as well as his knowledge of Mr Low’s involvement in bank accounts maintained by Falcon Bank.

Yak Yew Chee and Ms Yvonne Seah

The MAS also intends to issue prohibition orders against Mr Yak and Ms Seah, the former representatives of BSI Bank. Yak was a senior private banker there between 2010 and 2016 and held the job of managing director. He was the relationship manager for Low and Low’s father. As the second most senior private banker after Yak in the latter’s team, Ms Seah assisted Yak 'closely' in managing the relationship with Mr Low and his father.

On 11 November 2016, Yak was convicted on charges of forging reference letters to entities based in Switzerland, using the letterhead of BSI Bank. On 16 December, Ms Seah was convicted for intentionally helping Yak to forge the letters with the intention of misrepresenting Low’s net worth and/or concealing the source of Low’s fund transfers. Yak and Ms Seah had also failed to report the suspicious movement of funds by Low.

The proposed orders will prohibit Sturzenegger and Yak for life, and Ms Seah for a period of 15 years, from:

  • performing any regulated activity or acting as a representative in respect of any regulated activity as stipulated under the Securities and Futures Act;
  • taking part, directly or indirectly, in the management of, acting as a director of, or becoming a substantial shareholder of, any holder of a capital market services licence or any exempt person under the Securities and Futures Act;
  • providing any financial advisory service as stipulated under the Financial Advisors Act; and
  • taking part, directly or indirectly, in the management of, acting as a director of, or becoming a substantial shareholder of, a licensed financial adviser or exempt financial adviser under the Financial Advisors Act.

Razak and Low

Terengganu state in Malaysia obtained federal government approval to set up the Terengganu Investment Authority as a sovereign wealth fund in December. Malaysian premier Dato' Sri Haji Mohammad Najib bin Tun Haji Abdul Razak, 64, was sworn in to his current job on 3 April 2009 and ensured that the federal government took the fund over and that he became the chairman of its advisory board in July, renaming it 1Malaysia Development Berhad.

In September of that year, 1MDB joined forces with PetroSaudi International, a private Saudi Arabian oil extraction company, to embark on a $2½ billion joint venture. Years later, Bruno Manser Fonds, an organisation campaigning to protect the Malaysian rainforest and its people, lodged criminal complaints against the Swiss subsidiaries of RBS Coutts, JP Morgan (Suisse) and the Geneva branch of PetroSaudi International for alleged money-laundering and other criminal offences when dealing with 1MDB. Swiss public prosecutors, however, decided in 2015 not to pursue this line of enquiry. By 2016, however, the US DoJ was claiming officially that the joint venture was a 'pretence' and that "between 2009 and 2011, officials of 1MDB and others arranged for the fraudulent transfer of more than $1 billion from 1MDB to a Swiss bank account held in the name of Good Star Limited...beneficially owned not by PetroSaudi or the joint venture but by Low Taek Jho, aka Jho Low, a Malaysian who had no formal position with 1MDB but was involved in its creation."

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