A former OCBC Bank treasury adviser was sentenced to eight years and four months' jail yesterday for unauthorised foreign exchange trades that caused the bank losses of almost $3.1 million.
Lu Chor Sheng, 41, had pleaded guilty to 40 charges involving trades in the bank's system using client accounts, leading to profits of around $1.2 million to sole proprietorships set up by his friend, but whose bank accounts Lu controlled.
His acts went undetected for two years, and the prosecution said he had "grossly abused his position of trust" to benefit himself.
Lu's other offences involved two counts of cheating by personation, in which he instigated a friend of 25 years, Mr Tan Tiong Lin, to pretend to be someone else.
He also faced five charges related to acquiring, possessing, using, concealing or transferring the benefits of criminal conduct.
According to court documents, Lu had in 2012 a debt of about $200,000 to $300,000 from football betting and stock investment losses, and decided to place unauthorised trades in his customers' accounts to earn profits.
He approached Mr Tan to incorporate two sole proprietorships - D2D Exchange and Rubik-Cube Investment - and set up business accounts with OCBC for foreign exchange investments.
"At all material time, the accused had control of the bank accounts of Rubik and D2D, along with cheques pre-signed by Tan," said Deputy Public Prosecutors Nicholas Khoo and Foong Leong Parn.
Treasury advisers are allowed to enter foreign exchange trades only when they receive instructions from customers, and must check for existing market rates with bank traders before entering deals. But Lu did not do this.
He placed trades in D2D's and Rubik's accounts at rates lower than prevailing market rates to generate larger profits. This would not have been possible if he had settled the trades with traders as required.
After the profits were realised, Lu placed new trades in other customers' accounts to hide the earlier ones. He would then find ways to close customers' accounts with no profit or loss.
Lu left OCBC in June 2013, but court documents said there were occasions when he instigated Mr Tan to impersonate Lu's customers to close off fraudulent trades that Lu had placed in the customers' accounts without authorisation, or to place transactions.
On several occasions in 2012 and 2013, Lu also withdrew the proceeds of his unauthorised trades via cash cheques from the bank accounts of D2D and Rubik, and exchanged them for foreign currencies.
Lu was found out after a corporate client had trouble making foreign exchange trades in 2013, with its account hitting a limit even though it had no outstanding deals.
A check found three outstanding trades placed by Lu under the same client, without the client's knowledge, and an internal investigation found that he had executed many unauthorised trades. OCBC lodged a police report in August 2013.
Yesterday, Lu was offered bail of $100,000. He is expected to start serving his sentence on Nov 8.
This article was first published in The Straits Times. Permission required for reproduction.