KUALA LUMPUR, March 5 — A former Singapore-based banker said today the now-shuttered BSI Bank Singapore had failed to comply with their legal obligations to disclose sham transactions from SRC International (Malaysia) Limited to Singaporean authorities, attributing their oversight to being “seduced” by the fees it was earning.
Kevin Swampillai was testifying as the first witness in SRC International Sdn Bhd’s US$1.18 billion civil suit against former prime minister Datuk Seri Najib Razak.
He was previously an employee of the now-defunct BSI Bank Singapore as the bank’s head of Wealth Management Services prior to his resignation in 2016.
He said “to the best of his knowledge and understanding”, the bank had indeed failed to report to the Commercial Affairs Department of the Singapore Police Force and Monetary Authority of Singapore (MAS) at the material time pertaining to said sham transactions totalling US$864.5 million between November 2011 and April 2012.
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“Given the red flags inherent with these transactions, BSI Bank Singapore was under a regulatory obligation to lodge suspicious transaction reports (STR) with the MAS and CAD in respect of the fiduciary fund transactions,” he said in his witness statement tendered in court earlier.
In 2016, the MAS announced it had served BSI Bank Limited (BSI Bank) notice of intention to withdraw its status as a merchant bank in Singapore for serious breaches of anti-money laundering requirements, poor management oversight of the bank’s operations and gross misconduct by some of the bank’s staff.
Swampillai further testified that he had neither knowledge nor visibility as to the purpose of the fund transfers from SRC International (Malaysia) Limited BSI’s account to the Fiduciary Funds since no information was provided by the company and Malaysian businessman-turned-fugitive Jho Low as to the final destination of the funds.
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According to Swampillai, Fiduciary Funds refer to monies belonging to offshore entities which are managed by third-party fund managers and not BSI, whose main objective was to facilitate the flow of funds to a particular destination of the client’s choosing and to hide the identity of their investors.
“There is no exception or qualification to BSI Bank’s Know-Your-Client (KYC) and Anti Money Laundering (AML) obligations in respect of “confidential information”.
“Meaning, there is no such thing as information being “too confidential” to share or disclose as such non-disclosure prevents a bank from carrying out meaningful KYC and AML checks.
“If a client refuses to disclose such information, then BSI Bank Singapore should reject such transactions and file STRs with the relevant regulatory and investigation agencies in Singapore,” he said.
In retrospect, Swampillai agreed that the fiduciary structures in place were abused and used to obscure the final destination of these funds, while simultaneously employed to provide the optical illusion of legitimacy to the relevant stakeholders in Malaysia.
“When pressed by BSI, Jho Low would only state that these transactions were government-to-government transactions and were subject to strict confidentiality requirements,” he said.
Faced with the threat of the loss of significant revenue, Swampillai said BSI eventually stopped pressing Low for this information after the latter conveyed displeasure to the financial institution.
The hearing before Commercial High Court judge Datuk Ahmad Fairuz Zainol Abidin resumes tomorrow.
Imprisoned since August 23, 2022, Najib is serving his 12-year jail sentence and RM210 million fine for his conviction over the misappropriation of SRC International’s RM42 million funds, which has recently been reduced to six years of jail and RM50 million fine by the Pardons Board.
SRC, under its new management, had filed legal action against Najib and its former directors Datuk Suboh Md Yassin, Datuk Mohammed Azhar Osman Khairuddin, Nik Faisal Ariff Kamil, Datuk Che Abdullah @ Rashidi Che Omar, Datuk Shahrol Azral Ibrahim Halmi and Tan Sri Ismee Ismail in May 2021.
However, later, it removed six names from the suit and retained Najib as defendant.
Additionally, Najib has brought the former named SRC International directors as third-party respondents.
SRC as a plaintiff in the writ of summons had alleged that Najib had abused his power and obtained personal benefits from SRC International’s funds as well as misappropriated the funds. Najib was SRC’s Emeritus Advisor from May 1, 2012, until March 4, 2019.
SRC International, which is now wholly owned by the Ministry of Finance Incorporated (MoF Inc) is seeking general damages, exemplary, additional and interest, costs and other appropriate relief provided by the court.
SRC International is currently seeking a declaration from the court that Naijib is liable to account for the company’s losses due to his breach of duties and trust.
The company is also seeking an order that Najib pay the US$1.18 billion in losses it suffered, and damages for breach of duties and trust; including an order that Najib compensate the sum of US$120 million as well.
