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Wednesday, November 2, 2016

1MDB Trial : "The story fell apart when Swampillai sold Yeo out and told the CAD the truth"

http://www.straitstimes.com/business/companies-markets/ex-bsi-banker-trial-yeo-jiawei-recognised-potential-of-setting-up-fund





 


SINGAPORE - The former supervisor of ex-BSI banker Yeo Jiawei acknowledged that it was his idea to leave the Swiss private bank and make lucrative referral fees from setting up a company that would manage the proceeds from a deal with Brazen Sky, a wholly-owned unit of scandal-hit state fund 1Malaysia Development Berhad (1MDB).

"The idea may have come from me, but Yeo was (an) enthusiastic supporter of the idea and had participated actively with me in that discussion," Mr Kevin Swampillai said on Day 3 of the trial on Wednesday (Nov 2).

In cross examining prosecution witness Mr Swampillai, BSI's former head of wealth management services, lawyer Philip Fong, who represents Yeo, asked if he had put the idea in Yeo's head for the fund management business.

"The fund company would be managing a portfolio value of more than US$2.3 billion (S$3.2 billion). Did you tell Yeo this?" Mr Fong asked.

Mr Swampillai denied this, saying Yeo "recognised the potential of that business" without him having to say so.

Yeo, 33, is on trial on four charges for perverting the course of justice by allegedly urging witnesses to lie to police and destroy evidence. Other charges of money laundering, cheating and forgery will be dealt with in a separate trial next year.

In Day 2 of the trial on Tuesday, prosecutors revealed that Yeo quit his job at BSI to work for Malaysian tycoon Low Taek Jho, who is accused of siphoning billions from 1MDB.

Mr Swampillai, a 52-year-old Malaysian who was suspended from BSI and is now unemployed, testified that he and Yeo made millions in "secret profits" from their 1MDB dealings.

The pair set up shell companies Bridge Partners International Management (BPIM) and Bridge Global Managers to receive the "secret profits", which were then channelled to companies owned by Yeo and Mr Swampillai - Bridgerock Investment and GTB Investment respectively.



In September 2012, 1MDB sold its shares in a venture for US$2.32 billion and received units in BPIM. 1MDB earlier said the units were owned by Brazen Sky, and held through Swiss bank BSI in Singapore as custodian.

This "referral fees" arrangement, according to Mr Swampillai, came about as a result of a joint collaboration, and stemmed from a portion of the management fees paid by Brazen Sky to BPIM, and then to Bridge Global Managers (BGM), and ultimately to Bridgerock Investment and GTB Investment.

But he said BGM was "not my idea".

"It was Yeo's idea that there should be an intermediary company between our companies and BPIM, which I fully supported" to afford an added layer of security, he said.

When it came to establishing fees to be paid to the fund manager, that decision was almost always determined by Yak Yew Chee, former BSI private banker to controversial Malaysian tycoon Low Taek Jho or Jho Low.

"When it came to fees, Yeo and myself had more responsibility to establish the cost of transaction rather than the fees to pay the fund manager. After establishing the costs, then everyone could decide what fee goes to the bank, subject to Yak agreeing to the numbers too," Mr Swampillai said.



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SINGAPORE: Further details were revealed in court on Wednesday (Nov 2) about the complex web of relationships involving former employees of Swiss bank BSI who allegedly had a hand in the money laundering operation linked to 1MDB, and how the illicit dealings went on at the expense of the bank.

BSI entered into an agreement with fund manager Bridge Partners International Management in 2012, involving US$2.3 billion from 1MDB-owned Brazen Sky.
BSI banker Yak Yew Chee brokered this deal. He also personally handled account of Jho Low and entities related to 1MDB.

These details were revealed by Kevin Michael Swampillai, 2nd day on the stand.

Swampillai, who helped negotiate deal, is prosecution’s key witness in the world's first trial linked to the 1MDB probe. 

His colleague, Yeo Jiawei, also had a hand in the deal.

Yeo, 33 on trial for urging witnesses to lie to police and destroy evidence. 

Other charges for money laundering, cheating, forgery will be dealt with in separate trial in April next year.

Yeo and Swampillai had vested interest – they brokered second, secret deal which saw them net millions in profits from ‘Brazen Sky deal’ behind their employer’s back.

The men set up shell companies Bridgerock Investment and GTB Investment, into which secret profits were funneled with the help of an intermediary and a third shell company – Bridge Global Managers set up by Samuel Goh Sze-Wei.

Goh was given a cut of the men’s ill-gotten gains for his help, Swampillai said.

POOR MANAGEMENT AT BSI: SWAMPILLAI
 
Swampillai just as candid as first day on stand. He admitted BSI bankers were given “free rein” in their dealings with clients. “There was a lack of central control over functions … for better or for worse”, Swampillai said. He called BSI’s management “a lame duck committee”.

“They did not have any powers whatsoever. It was only later, in 2016, after this entire affair … when all of the issues were coming out, BSI made a belated attempt to strengthen its management. But that was really late in the day.”

Decisions were taken by individual bankers involved in a particular transaction, sometimes in consultation with their bosses, Swampillai said.

Subsequently, the Brazen Sky deal was inked.

YEO WAS AN ACTIVE PARTICIPANT: WITNESS

“(Yeo) ..was an active participant.”

Yeo told them to “play poker” with the CAD, and fed them a “cover story” for why monies had been channeled from Goh’s firm Bridge Global Managers into their own firms, Bridgerock Investment and GTB Investment.

The story fell apart when Swampillai sold Yeo out and told CAD the truth.

The trial continues.

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