finews.com 26 June 2017 | Written by Katharina Bart
Singapore’s financial regulator has closed the door on a two-year investigation over 1MDB. But Swiss banks – and bankers – are by no means off the hook. finews.com looks at who is sweating more than usual this summer.
The Monetary Authority of Singapore, or MAS, head Ravi Menon called BSI «the worst case of control lapses and gross misconduct» he had ever seen in Singapore finance. Six people were referred to Singapore’s prosecutor.
Two years after beginning to probe how banks in the city-state catered to 1MDB’s financial machinations, MAS has shut the investigation, levying nearly S$30 million in fines against UBS, Credit Suisse, DBS, Standard Chartered, UOB, Coutts & Co as well as Falcon Private Bank and Banca della Svizzera Italiana.
Brunner Sweating it Out
Falcon and BSI were hardest hit, paying combined S$17.6 million in fines before being sent packing. Falcon has returned its bank licenses to MAS, which takes its entirely off the regular’s radar, while BSI has begun integrating into acquirer EFG International, which achieves the same aim.
Three former BSI bankers including wealth planner Yeo Jiawei have been convicted or pled guilty. Three more including Asia private banking veteran Hanspeter Brunner and his deputy, Raj Sriram, await the outcome of investigations.
A source familiar with the matter told finews.com that the prosecutor continues to investigate whether it can make a criminal case stick against either of the two. As finews.com previously reported, the Swiss-born Brunner, who was decorated as Asian Private Banker of the year in 2010, cannot leave Singapore until the matter is resolved.
Falcon Wound Down
By contrast, Falcon’s 1MDB mess is almost entirely cleaned up: its former branch manager in Singapore, Jens Sturzenegger, has returned to Switzerland, finews.com reported exclusively last week.
Sturzenegger, the only Swiss banker thus far to be charged over 1MDB, now faces the daunting task of restoring his reputation in Switzerland, where 1MDB rocked the banking sector nearly as much as in Singapore.
The few remaining staff that Falcon maintains in Singapore to wind down the branch have moved into a smaller, temporary office in Centennial Tower, and the firm is expected to deregister – effectively disappear – shortly.
Swiss Banker Sanctions
What else awaits the bankers as Brunner and Sriram sweat it out to hear whether they will face charges?
Switzerland has also started enforcement proceedings against four unnamed bankers: two each from BSI and Falcon. A lawyer for Brunner, formerly of BSI, confirmed the Swiss banker is the subject in one probe.
Personal Legacy in Tatters
Swiss regulator Finma wouldn’t say who the other three bankers are, but made clear last May when it helped Singapore shut the bank down that it wasn’t happy with BSI’s C-Suite.
«Right up to top management level there was a lack of critical attitude needed to identify, limit and oversee the substantial legal and reputational risks inherent in the relationships,» Finma wrote in criticism which left little doubt that it viewed BSI as rotting from the head down.
Finma was also unusually pointed in a summary against Falcon: The bank had effectively been hijacked by its Abu Dhabi owners, two of whom – Khadem al-Qubaisi and Mohamed Badawy al-Husseiny – used the bank for their own purposes.
Scores of people including former Falcon boss Eduardo Leemann, former BSI boss Stefano Coduri, star Asia banker Brunner or al-Qubaisi and al-Husseiny – have been wiped out by the scandal. Some, such as former Falcon operating chief Tobias Ungerer, who now works in business process outsourcing for Avaloq, left of their own accord.
Ex-BSI chairman Alfredo Gysi, who retired when the bank was bought by BTG Pactual, has disappeared into the obscurity of London’s art patronage, watching from afar as his legacy is dismantled by 1MDB.
The elder statesman of Swiss banking had, at Brunner’s urging, singled out Yak Yew Chee for praise for bringing in 1MDB business (see below); Yak later pled guilty to several charges and served jail time.
It is impossible to decipher which BSI or Falcon bankers or board members – besides BSI’s Brunner – Finma has opened fit and proper proceedings against, or what the findings might be.
Typically, enforcement proceedings against people – when lawyers become involved and individuals are less inclined to roll over and admit wrong-doing, take longer than those against firms.
Finma still has three investigations into firms over 1MDB left to conclude, from seven overall.