Lawsuit worth $2.7 billion filed against Standard Chartered, alleging involvement in the 1MDB scandal
In a significant development, Standard Chartered is facing a civil lawsuit filed in the High Court of Singapore by court-appointed liquidators of three 1MDB subsidiaries in liquidation. The lawsuit accuses the bank of failing to conduct necessary anti-money laundering checks and ignoring obvious red flags, thereby violating Singapore’s anti-money laundering laws and due diligence obligations.
The allegations centre around more than 100 intrabank transfers that occurred between 2009 and 2013, which the claimants argue concealed the flow of billions of dollars stolen from 1MDB. This fraud reportedly misappropriated over US$2.7 billion and SGD20 million of public funds.
The 1MDB scandal, often regarded as Malaysia's biggest ever political scandal and one of the worst global cases of financial kleptocracy, has been making headlines since its exposure. Former Malaysian Prime Minister Najib Razak, who 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, is also linked to the transfers mentioned in the lawsuit.
Ex-Goldman Sachs banker Tim Leissner was sentenced to two years behind bars in late May after pleading guilty to federal bribery charges. Businessman Low Taek Jho, also known as Jho Low, is suspected of masterminding the massive embezzlement through several schemes. However, Jho Low has denied all allegations and is on the run since 2016.
Standard Chartered, however, strongly rejects these allegations. The bank stated it had not yet received the official claim documents and described the liquidators as "shell companies with no legitimate business." The bank emphasized it will vigorously defend any lawsuit and highlighted substantial investments made in its anti-money laundering controls and standards over time.
In 2016, Standard Chartered was fined S$5.2 million by Singapore's central bank - The Monetary Authority of Singapore (MAS) - for breaking anti-money laundering rules. The MAS stated that Standard Chartered's breaches were 'serious,' but did not uncover 'pervasive control weaknesses or wilful misconduct.'
The legal action forms part of a broader global effort to recover funds stolen from 1MDB and hold facilitators accountable. As the case progresses, Standard Chartered shares have seen a dip, with the shares being 2.9% lower at 1,172.5p on Tuesday morning, making them one of the FTSE 100's biggest fallers. The case is in its early stages, and Standard Chartered is preparing to contest the claim vigorously.
- The allegations against Standard Chartered in the civil lawsuit, involving investments and transfers hiding the flow of stolen 1MDB funds, are part of the expansive general-news surrounding the 1MDB scandal, considered Malaysia's biggest political scandal and a global example of financial kleptocracy.
- The banking industry is under scrutiny as the 1MDB scandal unfolds, with Standard Chartered facing accusations of violating Singapore’s anti-money laundering laws in their duty to conduct necessary checks, a situation that may impact the financial sector's business practices and investor confidence.
- As the legal proceedings continue, the crime-and-justice aspect is not only focused on individuals like Former Malaysian Prime Minister Najib Razak and Jho Low but also extends to financial institutions like Standard Chartered, reinforcing the importance of adhering to due diligence obligations and anti-money laundering regulations in the finance industry.
