London Sleuths Face Trouble for Reporting Bank’s Criminal Activity

Two British private investigators have found themselves enmeshed in a bizarre case in a London courtroom in which the owners of the notorious, now-defunct FBME Bank are suing them for taking allegations of massive corruption to international authorities including facilitating terrorist financing, organized crime, internet child sex abuse and financing a Syrian nerve gas operation. US authorities used their own evidence to put the bank out of business in 2017.

The pair, Nigel Brown and Alec Leighton (above), former British police officers, are expected to be told this week whether they face substantial court costs for taking evidence of criminality to authorities and violating a confidentiality agreement with the bank’s owners and attorneys at the firm of Quinn Emanuel London and Washington.

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.

Rogue Bank Ordered Out of Business

FBME, one of the world’s most notorious banks, was permanently denied access to the US monetary system in 2017 by a US district court judge after a three-year fight in which the US Treasury Department called attention to at least 4,500 suspicious wire transfers suspected of laundering as much as US$875 million between 2006 and 2013.

According to the ruling, FinCEN found “shell company activities accounting for hundreds of millions of dollars between 2006 [and] 2014.”

As a result of the treasury department action, FBME Bank and the owners, Fadi and Ayoub-Farid Saab, were barred for life from US operations, blocking the bank from doing business in the US or using US dollars globally, and prohibiting domestic US financial institutions from opening or maintaining correspondent bank accounts on the bank’s behalf.

Since most of the world’s financial transactions flow through the US electronic system, that effectively ended FBME’s operations. Following the US ruling, the Central Bank of Tanzania, where FBME is headquartered, and Cyprus, where it was run, both took control and ordered FBME liquidated and expelled the Saab family from the bank.

FinCEN and the US Justice Department reviewed information partly amassed by Brown and Leighton to accuse FBME, formerly known as the Federal Bank of the Middle East, of maintaining accounts for the head of an international drug trafficking network as well as a Syrian proliferator of weapons of mass destruction, among other things.

Investigators Hired to Blunt Accusations

Brown and Leighton were actually hired in August 2014 by the Saabs through their lawyers, Quinn Emanuel, allegedly to help them whitewash money-laundering accusations lodged against FBME’s Cyprus unit by the Bank of Cyprus. The lawyers in turn introduced William Burck of Quinn Emanuel.

Instead, the investigators discovered evidence of massive criminality and took it to Quinn Emanuel and Hogan Lovells as well as their personal lawyer, Iannides Demetriou in Cyprus, who told them they had a binding fiduciary duty to give the information to the Cypriot authorities.

The Saabs charged that their contract with the two 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, although she has yet to rule, Judge Sarah Cockerill gave indications in the Commercial Court, a division of London’s High Court, that while the allegations of criminality might be valid, the case against Brown and Leighton is a civil matter involving contract law and that their contract contains confidentiality provisions that under UK law may have overridden anti-money laundering responsibilities.

Pair Could be Hit By Costs

The two could be liable for costs up to £200,000, London-based sources say, for adhering to global anti-money laundering law.

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.

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 Quinn Emanuel attorneys for Bank JTrust led by Marc Greenwald. Among other information uncovered by the defendants, the Saab brothers received bribes from Bank JTrust of £5 million sterling (US$8 million) for undisclosed purposes. The investigators found that these funds were ordered to be paid to Saab Financial (Bermuda) Ltd. through Quinn Emanuel, London’s client escrow account and documented by J Trust as “legal fees.”

In the London courtroom, lawyers for FBME in the case against Brown and Leighton accused the pair of leaking information on the bank to several news organizations including Asia Sentinel.

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 said 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 an a formal way.”

Farid’s Deposition a Mastery of Obfuscation

In testimony before the London court in the current case, Farid Saab repeatedly dodged questions by the defendants’ lawyer Steven Kay over questions of the legality of operations, saying for instance he had never reviewed the qualifications of compliance officer Lilit Khachatryan, saying she was appointed based on her experience, but said he didn’t know her degree from Harvard Business School was faked.

But having been told of the false degree by Nigel Brown, “we searched for a new [money laundering compliance officer] “but as we could not find anyone who would be suitable, we decided to keep her on.” He failed to inform the court she was a Politically Exposed Person (PEP) as well as the former wife of Trade Finance Bank’s major shareholder fronting for Fadi Saab and Alice Snaterse.

When FinCEN issued a notice framing FBME Bank as a “bank of primary money laundering concern,” and the Central Bank of Cyprus put the bank in administration, Farid Saab was asked whether he thought it was a matter of great concern. “The question is what a ‘matter of concern” is, he answered. “We did not find any evidence that allegations made against us by FinCEN were true.”

To a long list of questions over problems with hundreds of millions of dollars in suspicious transactions on MasterCard and Visa, he said he had little knowledge.

He was asked “Do you accept that proceeds of funds held in FBME account were used for terrorist financing, criminal activities, child pornography, weapons financing and funding of Hezbollah?”

“No, I do not accept this,” he answered. Similarly, asked about specific details of criminal activity, he answered: “FBME is one of the best banks ever. All money laundering stories are untrue and baseless.”

“In 2008 FBME received a deposit of hundreds of thousands of dollars that was linked to Hezbollah,” the interrogator asked him. Who was that customer?”

“It is absolute nonsense,” he said.

“So you say that FinCEN made this up? In September 2010 FBME facilitated the unauthorized transfer of over US$100,000, several FBME bank accounts were recipients of proceeds from cyber-criminal activity?”

“I don’t know anything about it,” Saab said. The rest of the deposition proceeded with a litany of similar denials.