Standard Chartered faces $2.7bn lawsuit over 1MDB scandal
Claimants for the Malaysian sovereign wealth fund 1Malaysia Development Berhad have accused the Asia-focused banking giant of failing to conduct the necessary anti-money laundering checks.
They accuse StanChart of allowing 100 intrabank transfers between 2009 and 2013 that helped obscure the flow of stolen funds despite several red flags indicating the money might be connected to illegal activity.
Liquidators from financial services group Kroll filed the lawsuit in the High Court of Singapore on Monday.
Kroll says it has identified over $2.7billion of illicit money that flowed through StanChart, including transfers to a bank account belonging to former Malaysian Prime Minister Najib Razak.
It also stated that transfers involved business payments and Razak's wife and stepson receiving jewellery and luxury goods.
Accusation: Standard Chartered is facing a $2.7billion legal case over allegations of fraud related to the 1MDB financial scandal. It has strenuously denied the claims
Razak is currently serving a six-year prison term after being found guilty in 2020 of money laundering, criminal breach of trust, and abuse of power.
'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,' said the liquidators.
StanChart has strenuously denied the claims, telling Reuters they are 'without merit' and that they will 'vigorously defend any lawsuit commenced by the liquidators'.
The 1MDB scandal is often regarded as Malaysia's biggest ever political scandal and one of the worst global cases of financial kleptocracy.
US authorities estimate that $4.5billion was looted from 1MDB, which was ostensibly set up to promote the development of Malaysia, but ended up funding the purchase of luxury houses, artwork, a private jet and even the film 'The Wolf of Wall Street'.
They suspect businessman Low Taek Jho, also known as Jho Low, masterminded the massive embezzlement through several schemes. Low, who has been on the run since 2016, has denied all allegations.
StanChart said on Tuesday that liquidators had previously claimed the firms implicated in the fraud were shell companies with no legitimate business.
Another prominent figure in the 1MDB affair, ex-Goldman Sachs banker Tim Leissner, was sentenced to two years behind bars in late May after pleading guilty to federal bribery charges.
A 1MDB board spokesperson said: 'The Malaysian people were the true victims of this global fraud, and all parties are determined to hold every facilitator to account - including financial institutions that failed in their most basic duties of vigilance and responsibility.'
In 2016, StanChart was fined S$5.2million (US$4million) by Singapore's central bank - The Monetary Authority of Singapore (MAS) - for breaking anti-money laundering rules.
MAS said the company's breaches were 'serious,' but did not uncover 'pervasive control weaknesses or wilful misconduct'.
Standard Chartered shares were 2.9 per cent lower at 1,172.5p on Tuesday morning, making them one of the FTSE 100's biggest fallers.
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