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Former Falcon branch manager Sturzenegger charged for 1MDB crimes; plans to plead guilty

The Edge logoThe Edge 5/1/2017 Chan Chao Peh
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SINGAPORE (Jan 5): Jens Fred Sturzenegger, the former branch manager of the now-defunct Falcon Private Bank Singapore, has been slapped with 16 charges related to the on-going probe on money laundering activities linked to Malaysian sovereign wealth fund 1 Malaysia Development Bhd (1MDB).

Sturzenegger, a 42 year-old Swiss national, is the fifth individual – and first non-Singaporean – to face charges related to 1MDB.

Sturzenegger’s lawyer, Tan Hee Jeok of Tan Swee Swan & Co, said at a hearing on Thursday that his client plans to plead guilty to some of the charges.

The plea hearing will be on Jan 11.

Sturzenegger was arrested on Oct 5, 2016, but has been out on bail for S$80,000.

Of the total of 16 charges he faces, six are related to his failure to report suspicious financial transactions as required by law of bankers, accountants and even precious stones dealers.

Between March 21 and 25, 2013, Sturzenegger did not report an inflow of US$1.265 billion (S$1.8 billion) into two accounts with Falcon.

Also around March 2013, a sum of U$9,191,040 from the account of Midhurst Trading Limited with Falcon was transferred to Helly Nahmad Gallery, Inc. According to earlier reports, Helly Nahmad, the owner of the New York-based gallery, was in 2014 sentenced to a year and a day in jail for gambling.

In addition, around March 2013, there were four other sums of money from Granton Property Holding Limited’s account with Falcon that were transferred to the following four entities: US$378 million to Dragon Market Limited; US$20 million to Silver Coast Construction & Boring LLC.; US$30 million to Densmore Investment Limited; and US$12 million to River Dee International SA.

Sturzenegger is also charged with instigating his colleague, Cindy Widjaja, head of compliance at Falcon bank’s Singapore branch, to lie to Monetary Authority of Singapore (MAS) official Cheong C L.

On July 13, 2015, Sturzenegger told Widjaja to tell Cheong that four Falcon accounts that were being investigated have the same beneficial owner: “Mr Tan”.

Prosecutors allege that Sturzenegger knew that this was not true.

The client, in fact, was 1MDB mastermind Low Taek Jho, who was giving instructions to Falcon using the email account erickimloong.tan@gmail.com.

Sturzenegger was also found to have lied to another MAS official, Karen Lim.

Lim had asked for supporting documentation for four accounts under Tan’s name. The documents were instead provided by Low, which Sturzenegger duly forwarded when asked by Lim.

Sturzenegger’s other charges are mainly related to his lies and denial when questioned by the Commercial Affairs Department (CAD) on various occasions between September and October last year.

He had said that his client was Tan, and that he had not met Low before but only knew about Low through news reports.

Specifically, on Sept 27 last year, Sturzenegger told CAD officer Oh: “I confirm that I have not met Jho Low”.

According to the charge sheet, Sturzenegger had actually met Low at least twice.

Sturzenegger is the latest in a string of individuals that have been brought to task in relation to the 1MDB affair.

Two former private bankers from BSI, Yak Yew Chee, and his subordinate Yvonne Seah, have already pleaded guilty and sentenced.

(SeeJho Low’s former private banker Yak Yew Chee jailed, fined)

(SeeEx-BSI banker Yvonne Seah jailed, fined after pleading guilty to three charges)

Yeo Jiawei, a former wealth planner with BSI, in December 2016 was found guilty of tampering with witnesses. He is said to have played a central role in a web of cross-border illicit fund flows.

Yeo will be appealing his conviction and 30-month jail sentence. He faces a second trial in April, where he faces an additional seven charges of money laundering.

(SeeEx-BSI banker Yeo Jiawei sentenced to 30 months’ jail; mulls appeal)

(SeeEx-BSI banker Yeo Jiawei to appeal conviction)

The fifth person facing charges is one Kelvin Ang, believed to be with Maybank Kim Eng.

Ang is alleged to have paid a research analyst S$3,000 to hasten the production of a favourable valuation report of assets. Currently out on bail, there has been no word yet on when Ang will stand trial.

Prosecutors thus far have laid out that all these former private bankers worked for Low Taek Jho, the alleged mastermind behind 1MDB’s money laundering activities.

This is despite the 34-year-old Penangite, better known as Jho Low, having no formal role in the Malaysian sovereign wealth fund.

Both BSI and Falcon’s Singapore branches were shut down last year by state regulator MAS for serious control lapses, and for not dealing properly with the illegal fund flows.

BSI and Falcon were ordered shut in May 24 and Oct 11, respectively.

Falcon was also slapped with a fine of S$4.3 million.

Falcon had been on MAS’ radar for quite some time. Back in 2013, Falcon was fined S$300,000 for breaches in anti-money laundering requirements.

Falcon’s misdeeds, according to MAS, were not limited to the local branch.

Its head office had failed to guard against conflicts of interest when managing the account of an unnamed customer associated with Falcon’s former chairman Mohamed Ahmed Badawy Al-Husseiny.

“The former chairman misled and influenced the Singapore Branch into processing the customer’s unusually large transactions despite multiple red flags,” stated MAS in October 2016.

That customer is believed to be Low.

According to CAD officer Oh Yong Yang’s testimony during the trial of Yeo, Al-Husseiny, Low, and Low’s close associate Eric Tan Kim Loong, are all individuals of “interest”.

These individuals, according to prosecutors, had worked closely together, travelled together, did deals, and had fun.

Besides his role at Falcon, Al-Husseiny was also CEO of Aabar Investments PJS, a subsidiary of Abu Dhabi sovereign wealth fund International Petroleum Investment Co (IPIC).

Al-Husseiny is also registered as the director of at least four other similar-sounding entities incorporated in tax havens like British Virgin Island and Seychelles.

Besides the five individuals already charged, three other BSI former employees have been referred by MAS to the prosecutors.

They are former CEO Hans Peter Brunner, former Deputy CEO Raj Sriram, and former head of wealth management services Kevin Michael Swampillai.

Swampillai had last year testified against Yeo.

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