A WEALTHY Indonesian-Chinese woman has lost her High Court bid to get back US$17.5 million (S$26.5 million) from the American Express Bank (Amex).

The bank had deducted this sum from Madam Susilawati's account in March last year because she signed a document pledging her money as collateral to offset her son-in-law's debts from foreign exchange trading losses.

But the 58-year-old widow of prominent Indonesian businessman Gustimego sued the bank to recover the money, contending that Amex cannot rely on the document.

In a written judgment last week, Justice Lai Siu Chiu dismissed Madam Susilawati's lawsuit, but at the same time, criticised the bank for its lack of vigilance and failure to update the plaintiff on the extent of her son-in-law's staggering debt.

The judge called for changes to banking secrecy laws, so that a balance can be struck between the duty of banks to safeguard their customers' confidentiality and the protection of guarantors by ensuring they have access to necessary information.

In the current case, Madam Susilawati, represented by lawyers from Tan Kok Quan Partnership, claimed that she had signed the pledge document under the 'undue influence' of her son-in-law, Mr Tommy Lim Thian Long, and that the bank had not explained the consequences to her.

The bank, represented by Rajah & Tann, asserted that Madam Susilawati was a savvy investor who held sway over her son-in-law and had understood the significance of the document.

In her judgment, Justice Lai was not persuaded by Madam Susilawati's claims that Mr Lim held dominance over her.

Neither was the judge convinced by the picture Madam Susilawati had painted in court of herself as an ignorant and dependent housewife.

Justice Lai said it was clear that Madam Susilawati made independent financial decisions - she may not be as savvy as Amex made her out to be, but she was no 'babe in the woods' either.

The judge noted that Madam Susilawati only challenged the document around the time her daughter's relationship with Mr Lim soured.

She was perturbed by Madam Susilawati's failure to call Mr Lim, the person at the heart of the dispute, to testify, which left many questions unanswered.

Justice Lai said that, from the start, the bank was aware of the potential conflict of interest between Mr Lim and Madam Susilawati.

From an economic perspective, she said, the bank was clearly keen to continue providing trading facilities to Mr Lim to earn interest, fees and commissions.

But it would have been prudent for the bank to update Madam Susilawati on the extent of her liabilities, considering the surge in Mr Lim's borrowings right after she pledged her money, said Justice Lai.

That the bank justified its failure to update Madam Susilawati by arguing that it was obliged by law to keep Mr Lim's information confidential, prompted Justice Lai to call for changes in the law.

Madam Susilawati is in Indonesia and could not be reached for comment. She has a month to decide if she wants to appeal.