Monday, November 14, 2016

Bank Negara’s inaction and reticence, in stark contrast with Singaporean authorities' actions to protect the integrity of their banking system, abets the indictment of Malaysia as a global kleptocracy

I had on 31 October asked the Minister of Finance to state the actions taken by Bank Negara over the conduct of Ambank bankers, Joanne Yu and Cheah Tek Kuang for covering up money laundering transactions relating to the 1MDB.

The question was raised because The Wall Street Journal (WSJ) had on 6 September 2016 made very specific allegations against Ambank Malaysia and its officials of facilitating and abetting money-laundering when billions of ringgit was transferred into the bank accounts of Dato’ Seri Najib Razak.

In making the allegations, the prestigious financial paper substantiated the claims with private conversations between senior Ambank officials with Low Taek Jho, who was carrying out the transactions on behalf of the Prime Minister.

The Prime Minister had given Low access to his accounts, according to investigative documents sighted by WSJ. His primary contact at AmBank was Joanna Yu, the banker he had warned via BlackBerry to communicate discreetly. Cheah Tek Kuang, a senior AmBank executive and adviser to the bank’s chairman, handled the account personally, the BlackBerry messages indicate.

According to WSJ, Low sent hampers of food to Yu and lunched with her at noodle shops, according to the phone messages. He kept reinforcing the need for secrecy: “v v important no one should know in ambank besides u or cheah or get hold of statement,” one message said. “Cause if it gets on internet where funds were from then headache.”

Yu even made recommendations on which US correspondent bank – Wells Fargo or JP Morgan will raise less questions involving the transfers.

These messages clearly indicated a conspiracy by the above parties to at best, hide the transactions from scrutiny, and at worst, blatant masking of the illicit transactions as legitimate ones.

In his written reply, Dato’ Seri Najib Razak appeared to confirm the above allegations when he said that “Bank Negara has undertaken investigations on financial institutions relating to 1MDB under Financial Services Act 2013, Islamic Financial Services Act 2013, and Anti Money Laundering Act 2001… Based on the investigation results, enforcement actions have been duly executed by Bank Negara with the power provided to it under the law.”

However, we were never informed of what actions have been taken against Ambank or the bankers who have facilitated these illicit transactions.  In fact, as far as we are aware, both Joanne Yu and Cheah Tek Kuang are free men.

Cheah Tek Kuang who was the Group Managing Director of Ambank until his retirement in 2012 remains an advisor to the Chairman’s Office the Bank according to publicly available records.  He is also the Chairman of Berjaya Sports Toto and an Independent Director at IOI Group.

If Bank Negara has indeed taken action against him for abetting money laundering offences, can he still be Chairman and Director of publicly listed companies?

Bank Negara’s absence of any visible actions against Banks and its officers who were complicit in money laundering offences is in stark contrast with the actions taken by the Singapore authorities to defend the integrity of their banking system.

Former private banker Yak Yew Chee, who dealt with Jho Low and 1MDB has been jailed 18 weeks and fined S$24,000 for forging reference letters vouching for the Low family and for failing to report suspicious transactions involving tens of millions of dollars coursing through BSI bank in Singapore.  Yak will also surrender S$7.5 million to the State “to demonstrate his genuine contrition”.

Another former private banker with the Swiss BSI Bank, Yeo Jiawei is currently on trial over four charges for perverting the course of justice and another seven counts for money laundering, cheating and forgery over the same Jho Low and 1MDB-related scandal.

Unfortunately, the new Governor of Bank Negara Malaysia, Datuk Muhammad Ibrahim’s silence and reticence in tackling the above money laundering scandal will only serve to enhance Malaysia’s reputation as global kleptocracy.

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