Standard Chartered hit with US$2.7b lawsuit over its role in 1MDB scandal
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The news: Liquidators are seeking more than USD2.7 billion ($4.1 billion) from Standard Chartered as they try to recoup billions of dollars that had been siphoned off from Malaysia’s sovereign wealth fund (1MDB) in one of the biggest financial crimes in history.
The numbers: The lawsuit filed in Singapore against the UK-based bank is the latest effort to recover what US investigators claim was a theft of around USD4.5 billion carried out between 2009 and 2014 in a complex international money-laundering scheme.
The context: Liquidators from financial services firm Kroll filed the matter in Singapore’s High Court, saying they seek to hold Standard Chartered accountable for its role in enable the fraud to be committed against 1MDB.
Three companies which collapsed over the 1MDB scandal argue that the bank allowed over 100 interbank transfers which helped to conceal the flow of misappropriated funds. They also allege that Standard Chartered looked the other way when obvious red flags emerged.
"According to this lawsuit, the transfers demonstrate serious breaches and control failings which ultimately enabled the theft of public funds by people operating at the highest levels of the Malaysian government during that period," the liquidators said.
Responding to the filing, Standard Chartered told the FT that it had not yet received the claim documents. The bank said it “emphatically rejects any claims” made by the 1MDB companies and that the liquidators had publicly stated they were “shell companies with no legitimate business”.
“Any claims by these companies are without merit and Standard Chartered will vigorously defend any lawsuit commenced by the liquidators,” the bank told the masthead.
Standard Chartered added that it had made “significant investments” in its anti-money laundering controls and standards.
Last month, former Goldman Sachs banker Tim Leissner was sentenced to two years in prison for his role in the looting of billions of dollars from Malaysian sovereign wealth fund 1MDB. The sentence is far more lenient than the potential 25 years he faced. He admitted Goldman earned USD600 million ($930.1 million) in revenue and fees from 1MDB bonds and he personally pocketed USD73.4 million in kickbacks. Leissner’s prison term begins on 15 September.
