SINGAPORE—A Singapore court Friday sentenced a key suspect in an
ongoing probe into alleged misappropriation at Malaysian state fund
1MDB, in the first conviction of a person linked to the alleged
multibillion-dollar fraud.
Yak Yew Chee, 57, the banker in charge of managing the
relationship with 1MDB at the Singapore branch of Swiss bank BSI
SA, on Friday pleaded guilty to two charges of forgery and two
charges of failing to report suspicious transactions related to
dealings with the fund. He was sentenced to 18 weeks imprisonment
and a fine of 24,000 Singapore dollars (US$17,105), and agreed to
surrender S$7.5 million in salary and bonuses previously frozen by
investigators.
The conviction marks a milestone in the investigation of what
happened at 1MDB, or 1Malaysia Development Bhd., a fund set up by
Malaysian Prime Minister Najib Razak in 2009 that raised as much as
US$13 billion—with a public mandate to promote the country's
economic development.
Investigators in at least five countries are probing 1MDB's
finances in response to allegations that billions of dollars have
gone missing. Swiss investigators say they believe that as much as
US$4 billion was misappropriated from the fund through several
banks, including BSI. The U.S. Department of Justice has launched a
civil case to seize assets connected to the case.
1MDB and Mr. Najib have denied any wrongdoing and pledged
cooperation with any lawful investigation. The Malaysian attorney
general has said the prime minister acted legally.
Malaysian authorities, however, have declined to cooperate with
Singapore's probe of 1MDB's finances, according to people familiar
with the matter. On Friday, Switzerland's Office of the Attorney
General also said that Malaysia has refused to help Swiss
investigators looking into the alleged misappropriation.
Mr. Yak's criminal conviction in Singapore stands in contrast to
Malaysia, which hasn't charged anyone as a result of its
investigations.
The sentencing is also a key step for Singapore, which is trying
to rebuild a reputation that the city-state's central bank managing
director has admitted was damaged by its association with 1MDB's
alleged fraud. Prosecutors in Singapore have said the fund's
transactions are part of the largest money-laundering probe they
have ever conducted.
"It is imperative that the public confidence in the integrity of
Singapore's banking and financial industry is zealously protected,"
Jennifer Marie, the judge presiding over Mr. Yak's sentencing, said
Friday.
Mr. Yak's role at BSI was to find new clients for the bank and
act as liaison between them and the bank's wealth-management staff,
which implemented instructions on a client's behalf—a job for which
Mr. Yak earned as much as S$27 million in salary and bonuses
between 2011 and 2014, according to Singapore court documents.
Mr. Yak was BSI's relationship manager for 1MDB and Malaysian
financier Low Taek Jho, prosecutors said. Singapore investigators
have called Mr. Low, known as Jho Low, a "key person of interest"
in their investigation into the alleged 1MDB misappropriation.
Mr. Low had pressured Mr. Yak to rush transactions through BSI
bank without full due diligence to verify their authenticity, Mr.
Yak's lawyer, Lee Teck Leng, said in submissions to the court.
Mr. Low had declined to provide further explanation for certain
transactions on the grounds that the deals were
government-to-government "and hence, state secret," the lawyer
said. He noted that Mr. Yak was motivated by a desire to please Mr.
Low, who Mr. Yak called the most important customer at BSI.
Mr. Yak's lawyer said in his submissions that his client had no
grounds to believe during his employment at BSI that Mr. Low was
involved in allegedly criminal conduct and that BSI's top
management "was always prepared to act on [Mr.] Low's
requests."
Mr. Low couldn't be reached for comment. He has previously
denied any wrongdoing in his dealings related to 1MDB. BSI has said
it is cooperating fully with authorities and has improved its
anti-money-laundering controls.
Mr. Yak is one of three former employees at BSI who have been
charged in Singapore with various offenses related to their
handling of 1MDB funds. In addition to the four charges he pleaded
guilty to on Friday, Mr. Yak is charged with one additional count
of forgery and two additional counts of failing to report
suspicious transactions between 2012 and 2014, during his
employment by BSI.
The judge agreed to consider the additional charges against him
in her sentencing. The prosecution won't pursue those charges
separately.
In a neighboring courtroom, Friday, the trial continued of Mr.
Yak's former colleague, wealth planner Yeo Jiawei, 33, who faces
four charges of attempting to pervert the course of justice. Mr.
Yeo is fighting all the charges against him in court.
In October, Mr. Yak and his former subordinate Yvonne Seah, 45,
were charged in Singapore's state courts with three counts each of
forgery and four counts each of failing to report suspicious
transactions. No pleas were entered at that time, and both were
released on bail.
The forgery charges, upon conviction, carry a maximum jail term
each of up to four years. Failing to report a suspicious
transaction is punishable upon conviction by a fine of not more
than 20,000 Singapore dollars (about $14,500).
At the time Ms. Seah was charged, her lawyer declined to
comment, saying he needed to review the charges. On Friday, he
declined further comment.
Write to Jake Maxwell Watts at jake.watts@wsj.com and P.R.
Venkat at venkat.pr@wsj.com
(END) Dow Jones Newswires
November 11, 2016 09:55 ET (14:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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