International Investment Firm Ordered Shut in Bermuda

The Supreme Court of Bermuda has ordered the Bermuda arm of the controversial empire of the Lebanese Saab brothers liquidated following an investigation by KRyS Global, an international fraud investigation and dispute resolution firm.

Ayoub-Farid and Fadi Saab are the beneficial owners of FBME Bank of Tanzania, whose Cyprus unit was in effect shut down by the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department in April after a two-and-a-half-year campaign that the Saabs are still battling. The provisional winding-up order for Saab Financial (Bermuda) Ltd. was issued in April but only recently came to light.

The Saabs have operated banking units in the shadowy corners of the global financial markets across the world, allegedly catering to a long string of less-than-reputable depositors and transferees. It has been alleged that millions of dollars stolen from the onetime Indonesian Bank Century, renamed Bank Mutiara, and now renamed again as Bank J Trust, ended up in FBME Bank Cyprus.

As Asia Sentinel reported on July 6, the Cyprus unit that was denied access to the US electronic banking system by FinCEN included depositors and transferees such as the Russian Mafia, allegedly backed by Russian President Vladimir Putin, as well as Indonesian, Japanese and Thai money launderers, Somali pirates, phishing scams, the Yakuza, international drug syndicates, manufacturers of sarin nerve gas for Syrian President Bashir Assad and African despots among its 6,500 accounts. According to one source familiar with FBME’s activities, as much as US$500 million was spirited out of Russia illegally and into the bank.

The activities of the Russians in connection with the Cyprus banking unit have achieved new notoriety over allegations that a major part of the money came from Hermitage Capital, an investment fund headed by an American named William Browder, once the biggest foreign investor in Russian stocks. US Justice Department investigators alleged the money was transferred to two major FBME depositors, Altem Investment Ltd and Zibar Management Ltd after tax payments were fraudulently stolen by three well-connected Russian businessmen with ties to the Russian government’s tax department.

In an interview with Asia Sentinel for an earlier story, Browder said some of the stolen money was traced by the Panama Papers to Sergei Roldugin, a cellist and godfather to the children of Russian President Vladimir Putin. Asked if Putin was the ultimate force behind the theft of Hermitage’s assets, Browder said the connections make it likely.

Browder recently testified before the US Congress on the theft of Hermitage Capital money as a part of the Congress’s investigation into undue influence by the Russian government in the 2016 US presidential election.

The Saabs’ activities were described in detail by money laundering expert Peter Barrie Brown in 2014 in a 67-page report obtained by Asia Sentinel, which said “the number of separate reasons for being suspicious are so many in total that I rate the whole arrangement and its operation to be the greatest collection of suspicious circumstances I have ever encountered in real life.”

The Barrie Brown report heavily criticized Saab Financial Ltd. on the Channel island of Jersey, which has been called “the richest offshore tax haven of them all” by Fortune Magazine.

It’s questionable if the Bermuda arm of the Saab empire exists as anything more than a post office box. According to Floris Alexander, whose firm Legal Floris LLC represents 1,300 of the more conventional depositors seeking to get their money back, “There is no public telephone number for Saab Financial in Bermuda and in correspondence from Saab Financial (Bermuda) Ltd” its only address is a post office box in Nicosia, Cyprus. All of its banking activities appear to have been routed through Account 050001 in FBME Cyprus, the unit shut down provisionally in April by FinCEN. The assistant vice president for business development and all of those in control of the Bermuda unit worked and lived in Cyprus.

“It is fair to conclude that effective management of Saab Financial was in Cyprus” although the Central Bank of Cyprus hadn’t granted it a license to engage in investment activities there, Alexander said in a letter to his clients.

In response to the Bermuda court’s winding-up order, the Saabs, the beneficial owners of a Cayman Islands unit – another FBME Ltd – offered holders of placement agreements collateral in the form of a future property development and a settlement trust for investors who hold more than US$500,000 or its equivalent in pounds sterling or euros.

“The proposal, without any information about the substance of the claim, is basically just an idea and is only available to those who agree not to file or pursue any claims in the liquidation of Saab Financial in Bermuda,” Alexander said.

Thus taking advantage of the FBME offer could mean investors would waive their rights to further prosecute Saab Financial and/or its beneficiaries when they agree to the terms and that the money appears to be targeted to Lebanon’s overheating property market.

Although the Cyprus Central Bank and Bank of Tanzania have taken to protect FBME’s depositors, FinCEN “has reason to believe that those measures do not fully address the money laundering and terrorist financing risks associated with FBME.”

Illicit activity is continuing at the bank’s Tanzanian headquarters even after the country’s central bank appointed a statutory manager in July 2014, according to authorities. For instance, an associate of Hezbollah, branded a terrorist organization by the United Nations, was able to open an FBME account for the Tanzanian company he owned.

It is uncertain that FBME Bank, Saab Financial, or even the Federal Bank of Lebanon or the owners themselves, will be able to get their hands on their accounts at FBME after the liquidation of the bank and would be unable to transact in US dollars at maturity of the new agreement offered in the Caymans unit where investors waive their rights to participate in the liquidation and future prosecution.