SRC suit: 'BSI Bank seduced by fees, didn't report red flags'

The Singapore branch of now-defunct BSI Bank was “seduced” by the fee size of transactions involving US$864.5 million (RM4.09 billion) of funds from SRC International, the Kuala Lumpur High Court heard.

Kevin Swampillai, a former staff of the Singaporean branch of BSI Bank, said this in the tendered copy of his witness statement on behalf of SRC, which is suing former prime minister Najib Abdul Razak for US$1.18 billion.

The lawsuit is over alleged wrongful transactions involving RM4 billion of loans from Retirement Fund Incorporated (Kwap) to SRC between 2011 and 2012.

In the written testimony for the ongoing full hearing of the civil action before the Kuala Lumpur High Court, Swampillai said the eight-tranche transfers from SRC to an account bearing SRC’s name at the British Virgin Islands involved US$864.5 million between November 2011 and April 2012.

Swampillai, who was with BSI Bank of Singapore from 2010 to 2016, conceded in retrospect that the transactions (which went through BSI Bank) were shams and done in a way to provide an “optical illusion” of legitimacy to SRC and other relevant stakeholders in Malaysia.

The former banker said the sham transactions were done at the behest of fugitive businessperson Low Taek Jho, adding that the bank was obliged to lodge suspicious transaction reports with the Monetary Authority of Singapore (MAS) and the Commercial Affairs Department of the island republic’s police force.

No disclosure of funds’ final destination

Swampillai, who in his testimony said Low seemed to act with Najib’s knowledge, testified that the transactions were suspicious as the businessperson did not disclose information on the final destination of the funds.

The witness said BSI Bank did not comply with its legal obligations to disclose or report the transactions to MAS.

“To the best of my knowledge and understanding, BSI Bank failed to do so as it was likely ‘seduced’ by the size of the fees that it was earning in respect of these transactions.

“This caused BSI Bank Singapore to fall short of its regulatory standards,” Swampillai said.

Hearing before civil court judge Ahmad Fairuz Zainol Abidin resumes tomorrow.

Following a criminal conviction in the RM42 million SRC corruption case, Najib is serving a six-year jail sentence and was also fined RM50 million, courtesy of a partial royal pardon that reduced the initial sentence of 12 years in jail and RM210 million fine.

During the SRC criminal trial that took place between 2018 and 2020, witnesses testified that Najib chaired cabinet meetings that approved government guarantees for the RM4 billion loans from Kwap to SRC, in two tranches of RM2 billion each.

Witnesses testified that Najib chaired cabinet meetings in August 2011 and February 2012 that greenlit government guarantees for each of the two loan tranches, which later went through a monetary trail that left Malaysia via BSI Bank in Singapore. - Mkini