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British Sleuths Must Reveal Info on Cyprus Bank Scandal
News organizations including Asia Sentinel believed to have been supplied
Two British private investigators have been told they must divulge when and to whom they passed confidential information among law enforcement officials and others in a bizarre case which the owners of a crime-ridden bank were put out of business by US authorities on charges of massive corruption. They must also pay costs of £72,500 (US$94,358).
Investigators for the US Department of Treasury’s Financial Crimes Enforcement Network found that the bank, the Cyprus unit of FBME Bank, was allegedly facilitating terrorist financing, organized crime, internet child sex abuse and financing a Syrian nerve gas operation. The US used their own evidence to put the bank out of business in 2017 after a long fight.
Judge Sarah Cockerill on January 15 found the two, former Scotland Yard police detectives Nigel Brown and Alec Leighton, were in contempt of London’s Commercial Court for failing to deliver up all confidential documents they obtained during the course of an internal investigation of the Cyprus-based FBME Bank, and for failing to provide sufficiently detailed affidavits explaining the circumstances of what the court describes as the unlawful dissemination of confidential bank information. The pair have 28 days from the 15th to comply.
The order to divulge the names of individuals or institutions to which the two passed on allegations of wrongdoing has a number of unknown individuals scrambling for cover including several news organizations. In the London courtroom, lawyers for FBME accused the pair of leaking information on the bank to news organizations including Asia Sentinel.
FBME featured prominently in a series of Asia Sentinel stories that began on April 10, 2017 regarding the laundering of hundreds millions of dollars out of Indonesia from what was first known as Bank Century, then was later renamed Bank Mutiara, then, in turn, was sold to J Trust Co., Ltd and renamed Bank JTrust and recapitalized. None of the information, however, came from Brown or Leighton
As Asia Sentinel reported on April 10, 2018, the money laundering and FBME Bank embezzlement were documented in a report known as the Peter Barrie-Brown Report (August 2014) which was commissioned by the US-based Quinn Emanuel Urquhart & Sullivan, attorneys for Bank JTrust, led by Marc Greenwald and Andrew Marks. Among other information uncovered by the defendants, the Saab brothers received bribes from Bank JTrust of £5 million (US$8 million) for undisclosed purposes. The investigators found that these funds were ordered by the bank’s head, Nobuyoshi Fujisawa, to be paid to Saab Financial (Bermuda) Ltd. through Quinn Emanuel, London’s client escrow account and documented by J Trust as “legal fees.”
The charges are reminiscent of multiple cases of gagging whistleblowers that the UK courts are famous for and, authorities say, could become the newest weapon in gagging anti-money laundering whistleblowing in the UK and the EU to protect Russian funds holding up the UK banking sector pre-Brexit.
Brown and Leighton were actually hired in August 2014 by Ayoub-Farid M Saab and his brother, Fadi, the joint owners of the bank through Quinn Emanuel, allegedly to help them whitewash money-laundering accusations lodged against FBME’s Cyprus unit by the Bank of Cyprus.
Instead, the investigators discovered evidence of massive criminality and took it to Quinn Emanuel and Hogan Lovells as well as their personal lawyer, Ioannides Demetriou in Cyprus, who told them they had a binding fiduciary duty to give the information to the Cypriot authorities.
The Bank’s lawyer, however, charged that the two had gone to the authorities in anger over not having been paid. They charged that the Saabs’ contract contained confidentiality provisions under civil law that overrode their public interest responsibilities. Quinn Emanuel lawyers charged that a civil contract dispute, in which Brown and Leighton alleged they were defrauded out of the equivalent of US$200,000, led them to take the allegations of criminality to authorities.
In early April, Cockerill gave indications while the allegations of criminality might be valid, the case against Brown and Leighton was a civil matter involving contract law and that their contract contains confidentiality provisions that under UK law may have overridden anti-money laundering responsibilities.
Brown and Leighton’s lawyers told the court that they had been legally and ethically “compelled” by the law to disclose their evidence. “They were advised by the lawyer that he had to report to the authorities in Cyprus [what they had told him],” the defendants’ lawyer was quoted as saying in British media. “[The claimants] would rather this court was tied up in contract law, but this case is about something else. It’s about human beings who were victims of crime as well as the defendants. It doesn’t matter whether [Brown and Leighton’s] motivation was with an unpaid bill. They don’t have to be angels. It’s whether what they reported was in the public interest or not.”
In testimony before the UK court, Ayoub Farid Saab “vehemently denied all allegations of criminality,” the court heard. FBME Bank, he said, was a “family bank” which did “not attract criminals and crooks,” and had strong processes to deter money laundering through their money-laundering compliance officer Lilit Khachatryan, the former wife of the Armenian prime minister, a nominee on ultimate business owner certificates for Fadi Saab’s Trade Finance Bank Moscow, now in liquidation in Russia.
“Neither FBME nor the claimants have been charged with any criminal activity or behavior anywhere in the world, and no law enforcement agencies have ever felt the need to levy any criminal charges against the claimants,” the Saabs’ lawyer told the court, although that isn’t true.
Saab Bank Charged in Russia
In fact, on Oct. 15, 2018, the Internal Affairs Directorate for the Central Administrative Department of the State in Moscow ordered the closure of Trade Finance Bank Moscow, also known as the Commercial Bank of Trading of Financing, registered by the Saabs, and declared it insolvent. The administrative department filed criminal charges “upon detection of signs of theft of money from depositors’ accounts” by the bank’s shareholders, which included Fadi Saab, according to the order, which was obtained by Asia Sentinel.
The administration filed 28 claims for 310,917,426.06 Russian rubles and a separate claim for recovery of US160,563.74 in December 2018. Four other claims were being prepared for 188,747,601 rubles and an additional two claims were being prepared for €2,356,653.83. Taken together at current exchange rates, that meant 35 claims amounting to US$10.57 million against the bank and its directors and shelf companies which include Alice Snaterse, Fadi Saab’s common-law Dutch wife.
On Nov. 14, 2018, a “statement was sent to the Investigation Department of the Ministry of Internal Affairs of the Russian Federation for “systematic embezzlement of funds from the accounts of bank depositors,” according to the investigation department’s public statement. The business model of the bank, according to a separate release by the Bank of Russia, “was designed to serve the interests of its shareholders and affiliated persons.”
Moreover, the statement said, “the bank conducted opaque operations on a regular basis to conceal the actual amount of risks assumed and comply with prudential requirements in a formal way.”