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Malaysia's 1MDB web and the 143-year-old Swiss bank it ensnared
[KUALA LUMPUR] Global probes related to a troubled Malaysian state fund have enmeshed the biggest casualty to date: a 143-year-old Swiss bank.
Singapore ordered BSI SA's unit in the city state to shut down as Swiss authorities began criminal proceedings against the bank. Here's the state of play.
How are 1MDB and BSI connected?
In September 2012, 1Malaysia Development Bhd sold its shares in a venture for US$2.32 billion and received units in a Cayman-registered fund managed by Bridge Partners, a Hong Kong- based fund manager.
1MDB said the units were owned by its subsidiary Brazen Sky, and held through BSI in Singapore as custodian. Former 1MDB Chief Executive Officer Shahrol Halmi said BSI had advised 1MDB on the structure of the funds and the fund manager, according to transcripts of a parliamentary investigation into the Malaysian company.
That transaction and those related to it are the subject of criminal probes, including those conducted in Singapore.
Are there any other links?
Aabar Investments PJSC
BSI Singapore did business with the Abu Dhabi company, according to Singapore court documents. 1MDB has also said it worked with individuals in the Middle Eastern entity and its parent.
Malaysian financier Low Taek Jho
BSI Singapore also had business with Mr Low, who has had ties to 1MDB. He has described his role in relation to the Malaysian fund as informal consulting work that didn't break any law.
Status of Investigations into 1MDB and BSI
The city state said in February it seized "a large number" of bank accounts in connection with possible money-laundering in the country amid investigations into 1MDB. In March, the central bank said it had been conducting a "thorough review of various transactions as well as fund flows" through its banking system.
The Monetary Authority of Singapore said on Tuesday it will withdraw BSI's status as a merchant bank for breaches of money laundering rules. The central bank said it was the "worst case of control lapses and gross misconduct that we have seen in the Singapore financial sector."
The Swiss Attorney-General's office said in January a probe they conducted into 1MDB revealed "serious indications" that about US$4 billion may have been misappropriated from state companies in Malaysia.
It said Tuesday the criminal proceedings on BSI are based on information gathered in the course of its investigation of 1MDB and from the Swiss Financial Market Supervisory Authority, or Finma, its financial regulator. EFG International AG, which had planned to take over BSI, was given approval by Finma to do so provided that BSI will be fully integrated before being dissolved.
The Malaysian police are still probing 1MDB after the conclusion of other investigations including those by the central bank. There has been no indication that BSI was being investigated in Malaysia.
BSI has exited its Malaysia business, then-Chief Executive Officer Stefano Coduri said during a March 31 call with investors, adding that the move was "in context" of 1MDB.
Note: 1MDB said Tuesday it hasn't been contacted by any international legal authority on matters relating to the company. BSI said Tuesday that it has cooperated fully with the investigations into 1MDB by the Singapore and Swiss authorities.
Yeo Jiawei, a former BSI wealth planner
The first banker to be charged in Singapore last month amid investigations into the Malaysian fund. Mr Yeo was said to have proposed investment products to 1MDB while at the bank. Prosecutors in Singapore have described Mr Yeo as having a key role in moving "staggering" amounts of money. Mr Yeo's lawyer has said that several BSI employees are in a similar position and can answer queries by the authorities.
Kevin Swampillai, suspended head of wealth-management services at BSI
Mr Swampillai, who was Mr Yeo's manager, was named by the Singapore central bank on Tuesday as one of six senior BSI employees it referred to the prosecutor to evaluate if they committed criminal offenses. Mr Swampillai was among those mentioned in obstruction-of-justice charges against Mr Yeo. Mr Swampillai's lawyer Kenneth Pereira declined to comment Tuesday.
Hanspeter Brunner, former head of Asia operations at BSI
BSI said in March that Brunner would be retiring. Mr Brunner joined BSI in 2009 after leaving RBS Coutts Bank Ltd, and his departure from RBS Coutts was followed by about 70 employees. Mr Brunner was also among the six referred to the prosecutor. He didn't return calls and a text message seeking comment.
Stefano Coduri, BSI's former Group CEO
Mr Coduri joined BSI in 1989 and had spent his entire career with the bank. He became CEO in 2012, and resigned Tuesday.