Two British private investigators have been found in a London court to have breached confidentiality agreements by taking evidence of corruption so extensive on the part of the Lebanese owners of the now-defunct FBME Bank to international authorities that the authorities put the bank out of business.
The pair, Nigel Brown and Alec Leighton, escaped court costs but are under court order to provide details of alleged leaks of the corruption to the press. Asia Sentinel is named as one of three press organizations accused by the owners of the Tanzania-based bank to which information was allegedly leaked. Asia Sentinel has published a long list of stories since April 2017 detailing allegations of the bank’s wrongdoing. Following long-established journalism custom, Asia Sentinel does not divulge the sources of its information. The others named are the US-based digital news organization Buzzfeed and the UK-based satirical publication Private Eye.
Brown and Leighton were hired in August 2014 by FBME’s owners, Ayoub Farid and Fadi Saab through their lawyers, the UK-based Quinn Emanuel Urquhart & Sullivan, allegedly to help 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 another law firm, Hogan Lovells, as well as to 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 Saabs have staged a ferocious campaign in courtrooms from London to New York to Lebanon and elsewhere in their struggle to maintain the defunct bank’s reputation, so far with few successes. In the current suit, they charged that their contract with the two detectives contained confidentiality provisions under civil law that overrode their public interest responsibilities.
Quinn Emanuel also charged that it was actually contract dispute, in which Brown and Leighton alleged they were defrauded out of the equivalent of US$200,000, that led them to take the allegations of criminality to authorities.
Justice Sarah Cockerill, who adjudicated the case, wrote that the question over the contract dispute would be decided later after further deliberation.
One of the world’s most notorious banks, FBME 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 money laundering and other abuses between 2006 and 2013.
The judgment delivered by Justice Cockerill delivers painful details – for the Saabs -- from a July 15, 2014 Notice of Finding by the Treasury Department’s Financial Claims Enforcement Network, or FinCEN – of the criminality that the bank’s Cyprus unit is alleged to have been involved with. They include:
“FBME is used by its customers to facilitate money laundering, terrorist financing, transnational organized crime, fraud, sanctions evasion and other illicit activity internationally and through the U.S financial system. FBME performs a significant volume of transactions and activities that have little or no transparency and often no apparent legitimate business purpose.
“Through relationships developed by FBME’s management since at least 2006, as well its large shell company customer base, FBME facilitates the activities of international terrorist financiers, organized crime figures and money launderers. For example, since at least early 2011, the head of an international narcotics trafficking and money laundering network has used shell companies’ accounts at FBME to engage in financial activity.
"In late 2012, the head of the same international narcotics trafficking and money laundering network continued to express interest in conducting financial transactions through accounts with FBME in Cyprus. Separately, in 2008, an FBME customer received a deposit of hundreds of thousands of dollars from a financier for Lebanese Hezbollah.
“FBME also facilitates financial activity for transnational organized crime. As of 2008, a financial adviser for a major transnational organized crime figure who banked entirely at FBME in Cyprus maintained a relationship with the owner of FBME.
“FBME facilitated transactions for entities that perpetrate fraud and cybercrime against victims from around the world, including in the United States. For example, in 2009, FMBE facilitated the transfer of over $100,000 to an FBME account involved in a High Yield Investment Program (“HYIP”) fraud against a US person.
“In July 2012, the FBME customer operating the alleged HYIP was indicated in the United States District Court for the Northern District of Ohio for wire fraud and money laundering related to HYIP fraud.
“FMBE has processed payments for cyber-crime networks. In September 2010, FBME facilitated the unauthorized transfer of over $100,000 to an FBME account from a Michigan-based company that was the victim of a phishing attack.
“Several FBME accounts have been the recipients of the proceeds of cyber-criminal activity against US victims. For example, in October 2012, an FBME account holder operating a shell company was the intended beneficiary of over $600,00 in wire transfers generated from a fraud scheme, the majority of which came from a victim in California.
“FBME’s weak AML controls encourage use of the Bank by Shell Companies and allow its Customers to perform a significant volume of Obscured Transactions and Activities through the U.S Financial System. In just the year from April 2013 through April 2014, FBME conducted at least $387 million in wire transfers through the US financial system that exhibited indicators of high-risk money laundering typologies, including widespread shell company activity, short-term “surge” wire activity, structuring and high-risk business customers.
“FBME has a significant number of shell company customers nominally based in Cyprus and in other high-risk jurisdictions. Wire transfers related to suspected shell company activities accounted for hundreds of millions of dollars of FBME’s financial activity between 2006 and 2014. For example, FBME was involved in at least 4,500 suspicious wire transfers through U.S correspondent accounts that totaled at least $875 million between November 2006 and March 2013. The FBME customers involved in these wire transfers exhibited shell company attributes, and other financial institutions involved in the transfers reported that they were unable to verify the identities of FBME’s customers.
“FBME’s customers, including its many shell company customers, have frequently used FBME’s Cyprus address to conduct collectively tens of millions of dollars of transactions … Although there may be rare occasions when use of the bank’s address as a bank customer’s address of record is legitimate, such a practice is highly unusual and indicative of the bank’s potential complicity in its customers’ illicit activities. Obscuring the true address of the customer inhibits compliance checks by counterparty or intermediary financial institutions.”