In early May, the Financial Times of London carried an in-depth feature on the City of London as a global money laundering hub, which included an expose of the Swiss private bank BSI in the UK.
The paper revealed that a former employee of BSI in the UK had warned regulatory watchdogs that BSI bankers were providing services that could facilitate money laundering and tax evasion. The story described the tricks of the trade used to provide a cover for such activities, including the use of shell companies registered in a tax haven “such as the British Virgin Islands, where its ownership can be kept secret”.
From around the time Swiss financial services regulator Finma raised the alarm, BSI in Singapore has been in the crosshairs of investigations. And inevitability the link to 1MDB, BSI Singapore’s largest client, was on the minds of many.
How was 1MDB involved? Let’s look specifically at the case of what happened after 1MDB wound up its controversial US$1.8bn investment in Petrosaudi International Ltd. 1MDB claimed it had somehow made a profit of US$0.4bn. This meant it had about US$2.2bn (RM7-8bn) – though a few doubters harboured scepticism about whether the amount existed in full, given all the controversial transfers that had taken place at Petrosaudi.
What bewildered many observers was that instead of bringing these ‘funds’ back to Malaysia, 1MDB then brazenly(!) used a subsidiary, Brazen Sky Ltd (registered in the British Virgin Islands, of course), to park the ‘US$2.2bn’ in an outfit called Bridge Global Absolute Return Fund Segregated Poftfolio Company. (What a mouthful; let’s just call it Bridge Global).