1MDB execs approved fund transfer to Jho Low associate

Key executives of scandal-hit 1Malaysia Development Bhd and a linked entity - SRC International (Malaysia) Limited - had authorised a transfer of US$11.95 million (S$16.4 million) to a firm beneficially owned by Tan Kim Loong or better known as Eric Tan, a close business associate of Malaysian tycoon Low Taek Jho, according to documents submitted in Singapore's state court on Thursday.

The transfer of funds to Affinity Equity International Partners Ltd (a firm beneficially owned by Mr Tan) was done through Pacific Harbour Global Growth Fund AA4 - a fund that SRC International Malaysia had subscribed to - which was overseen by 1MDB's executive director of finance Terence Geh and authorised by Nik Faisal Ariff Kamil, managing director of SRC International Sdn Bhd (SRC International) and 1MDB's former chief investment officer, documents submitted by Singapore prosecutors revealed.

Mr Tan and Mr Low, who is better known as Jho Low, had been mentioned in an earlier case related to the 1MDB probe involving Swiss bank BSI's senior private banker Yak Yew Chee. Yak, who was private banker to Mr Low and several 1MDB entities, had in his affidavit said that he believed Singapore's white collar crime buster had frozen nearly S$10 million in his bank accounts due to ongoing investigations into both men. Mr Yak has not been charged but he had filed a motion which was heard in February to unfreeze his assets which was later withdrawn.

These intriguing details which underscored the "massive complexities" of the 1MDB case being probed by Singapore investigators who have been "working round the clock without any breaks" over the past eight weeks emerged during a mention of the case against BSI's former wealth manager Yeo Jiawei during which Singapore's Second Solicitor-General Kwek Mean Luck slapped the seventh charge against Yeo, this time for forgery in order to facilitate the funds transferred into Mr Tan's firm.

Yeo was alleged to have fraudulenty signed a reference letter addressed to Citigroup Inc's Europe, Middle-east and Africa (EMEA) head of anti-money laundering operations with the intention to mislead that the letter was signed by the authority of BSI Bank Ltd, Singapore.

The latest charge is related to an earlier one filed against Yeo for dishonestly concealing from BSI in 2013 that he would receive through Bridgerock Investment (a firm beneficially owned by Yeo) a portion of fees paid to Pacific Harbor Holdings Ltd (PHHL) - the investment manager of Pacific Harbor Global Growth Ltd - and dishonestly inducing BSI to enter into an agreement with PHHL.

Court documents revealed an email forwarded by Mr Geh to Yeo which was copied to Nik Faisal, Yak and several other senior executives of BSI including managing director Yvonne Seah in which Yeo had requested Nik Faisal to sign off and revert on the documents to proceed with the subscriptions into the funds managed by PHHL involving some US$12.2 million.

The documents also included a letter signed by Nik Faisal on behalf of SRC International Malaysia acknowledging that Pacific Harbor Global Growth Fund has advanced US$11.95 million to borrower Affinity Equity. (It was reported last year that Malaysian authorities probing business deals and monies transferred from 1MDB and its related units including SRC International were unable to determine the whereabouts of Nik Faisal who has been barred from leaving the country.)

In a letter to Citigroup's EMEA head of anti-money laundering operations, BSI's Seah and ex-director Yeo had signed a letter declaring that SRC International Malaysia has been the bank's client since 2011 and that the beneficial owner of the company is the Malaysian Government.

This company's name SRC International Malaysia, a British Virgin Islands registered firm, is almost identical to a firm set up by 1MDB in 2010 called SRC International which had borrowed RM4 billion from a government pension fund and a year later was transferred to MoF.

Mr Tan's firm Affinity Equity International Partners also has a similar name as but is unrelated to Affinity Equity Partners, a Hong Kong-headquartered firm deemed one of the largest dedicated Asian private equity firms.

SRC International was at the centre of investigations last year by Malaysia's anti-graft agency following allegations that funds were funnelled from the company into the bank account of Malaysian Prime Minister Najib Razak.

In January this year, the country's Attorney-General Mohamed Apandi Ali cleared Mr Najib of any wrongdoing on the premise of insufficient evidence.

SRC International is also one of several 1MDB-linked entitites being probed by Swiss regulators for possible misappropriation of funds totalling US$4 billion.

The new details that emerged in the court on Singapore's probe into 1MDB show that apart from the troubled firm's controversial Cayman Islands investments which investigators here appear to have zeroed in on as can be inferred through earlier court sessions, regulators here are also scrutinising the 1MDB money trail of SRC International.

"The new charge is significant as it opens up an entirely new front in the investigations," Mr Kwek said.

"It reveals that the investigations have reached a critical stage, with a higher level of urgency and sensitivity...(and) are moving closer to the centre of a complex web of cross-jurisdictional criminal transactions, moving closer to the origins of the money flows and the principals that the accused (Yeo) has been interacting with," he said.

Mr Kwek sought - and was granted by District Judge Christopher Goh - to further remand Yeo who has already been in custody for 26 days.

Over the course of the last eight weeks, 18 witnesses have been interviewed, some on several occasions.

"International money laundering is often hard to detect and even more difficult to prove as those involved take extraordinary measures to conceal their involvement. Singapore as a leading financial centre takes its responsibilities to stamp out and deter money laundering very seriously," Kwek submitted in his argument to further remand Yeo.

This article was first published on May 13, 2016.
Get The Business Times for more stories.