Former banker convicted in Singapore over 1MDB scandal

Jeevan Vasagar in Singapore
Financial Times
NOVEMBER 11, 2016

Yak Yew Chew ‘motivated by a desire to please’ Malaysian businessman Jho Low

A private banker in Singapore convicted on Friday of forging documents and failing to disclose suspicious transactions was “motivated by a desire to please” Jho Low, the Malaysian businessman linked by US prosecutors to the 1MDB scandal, a court has been told.

Yak Yew Chew, 57, a managing director of BSI, a Swiss private bank, was convicted of four charges relating to forgery and failure to disclose information.

The case, the first criminal conviction linked to the multibillion-dollar 1MDB affair, has highlighted the risks posed by the rapid growth of the private banking industry in Singapore, and the influence exerted by powerful clients on their wealth managers.

The court was told Mr Low had informed BSI he was helping 1MDB, the Malaysian state investment fund, to invest.

Mr Yak’s lawyer, Lee Teck Leng, said in a plea in mitigation: “Our client was motivated by a desire to please Low as Low was his most important customer at BSI. Low had brought in a lot of business, not just for our client but for BSI as a whole.”

One of the charges on which Mr Yak was convicted was forging a reference letter to the chief executive of Rothschild Trust in Switzerland, after queries were raised about an earlier transfer of $110m from Mr Low’s BSI account to the Rothschild bank.

The prosecution said in a statement that Mr Yak knew the contents of this letter were “misleading” as they were designed to give the impression that the source of the funds was Low Hock Peng, Mr Low’s father.

In fact, the prosecution said, the source was an account held in the name of Good Star Limited. US prosecutors have alleged that more than $1bn was fraudulently diverted from 1MDB to an account held at Coutts in Zurich in the name of Good Star.

“As Low was BSI’s biggest and most important customer, our client’s immediate supervisors had instructed him to keep Low happy and leave the back-office work to them,” Mr Yak’s lawyer said.

Mr Yak was jailed for 18 weeks, fined S$24,000 (US$17,000) and will forfeit S$7.5m in bonuses to the state.

Passing sentence, Jennifer Marie, deputy presiding judge, said: “It is imperative that the public confidence in the integrity of Singapore’s banking and financial industry is zealously protected.”

Mr Low also gave instructions to BSI to transfer millions of dollars to his father’s account at the same bank, most of which was transferred back days later, according to the prosecution in Singapore.

The prosecution said a BSI compliance officer found that the flow of funds from Mr Low to his father was “nebulous to say the least and not acceptable in compliance’s view.”

However, the funds were later processed after Mr Low said in an email that he had given his father the funds as a “matter of cultural respect”.

Mr Yak’s lawyer told the court that, as private banking has expanded rapidly in Singapore, banks have set high targets for their staff.

“Bankers have tried their best to achieve those targets by, inter alia, pandering to their clients,” Mr Lee said. “In the process, the line between impeccable financial integrity and revenue growth unfortunately became blurred.”

In May, the Monetary Authority of Singapore ordered the closure BSI in Singapore for serious breaches of requirements against money-laundering.

Singapore is the world’s sixth-biggest wealth management centre, with $500bn in assets and 5 per cent of global market share, according to a Deloitte report published last year.

Mr Yak and Yvonne Seah Yew Foong, his former subordinate, were charged last month for their roles in forging bank reference letters and not reporting suspicious banking activities involving Mr Low. Ms Seah is due in court later this month.

Yeo Jiawei, another of Mr Yak’s former colleagues at BSI, is on trial in Singapore on charges of obstructing justice by attempting to tamper with witnesses.

Mr Low has previously denied wrongdoing. 1MDB has denied any wrongdoing.

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