Malaysia - UBS Says No Comment to Sabah Money Laundering Report

But says its policy is to cooperate fully with authorities

The Swiss bank UBS, at the center of allegations of money laundering by Sabah’s chief minister Musa Aman, said it couldn’t comment on the claims although a spokesman for the bank said UBS is fully committed to assisting in the fight against money laundering.

“UBS does not comment on market speculation or rumor,” Mark Panday, a spokesman for the bank’s operations in Hong Kong, told Asia Sentinel. “However, in all markets in which it operates, UBS’s policy is to cooperate fully with regulators. Indeed, it is committed to assisting in the fight against money-laundering, including corruption and terrorist financing.”

The Sarawak Report, an NGO based in Kuching and London, alleged in a report made public Sunday that more than US$90 million was passed circuitously in 2007 by Sabah lawyer Richard Christopher Barnes from Musa into Barnes’ UBS Hong Kong account before it was forwarded in turn to a UBS Zurich account in the chief minister's own name.

The money transfers allegedly were shepherded by a UBS client manager named Denis Chua, who originally worked at the Singapore branch for HSBC Hong Kong until 2006. According to the report, Chua moved to UBS, taking the accounts with him.

The Sarawak Report said Hong Kong’s Independent Commission Against Corruption discovered the transactions in an investigation into alleged money-laundering by a Musa associate, Michael Chia Tien Foh, and compiled a detailed list of the transactions between Barnes, Chia and the UBS accounts.

Denis Chua is believed to have left UBS. A call to the UBS Hong Kong office elicited no response. Panday declined any further comment on the matter.

Hong Kong’s money-laundering law, which appears to be focused mainly on drug trafficking, nonetheless make it an offense for bankers, lawyers or accountants to deal with property they know or have reasonable grounds to believe represents the proceeds of drug trafficking or other serious crimes. Offenders are subject to a maximum of 14 years in prison. Records must be kept on any transaction over HK$8,000, the rough equivalent of US$1,000.

The Hong Kong Monetary Authority’s voluminous guidelines put the onus on banks and other financial institutions and their professional employees to ensure that companies follow legal guidelines on deposits. As required by the guidelines, banks make it a common practice to subject all employees dealing with the transfer of funds to regular, detailed briefings on money-laundering statutes and the penalties involved.

The need to guard against money laundering received new impetus in 2004 when the Hong Kong Monetary Authority urged banks to be especially alert to the possibility of money laundering as the territory prepared to become an outlet for yuan-denominated deposits. In June of that year, the HKMA issued a supplement to the territory's anti-money laundering guidelines, setting out "Know-Your-Customer" principles, taking account of the requirements of a paper on "Customer Due Diligence for Banks" issued by the Basel Committee on Banking Supervision.

However, it is believed that despite the voluminous allegations and documents presented by Sarawak Report into Denis Chua’s activities, no further investigation into the bank’s activities will be carried out in Hong Kong.

The files and documents amassed by Sarawak Report, which can be found here, are regarded by authorities to be genuine although Cecily Chik, senior press information officer at the ICAC in Hong Kong, simply said "We would not comment on questions on operational matters." According to Sarawak Report, the documents were forwarded by the ICAC to the Malaysian Anti-Corruption Commission, known as the MACC.

The NGO alleged that Abdul Gani Patail, the Malaysia Attorney General, blocked an investigation into the case. The Sarawak Report told Asia Sentinel that Gani's wife is connected both to the key associate of Musa Aman at Yayasan Sabah, which controls the state's wood supply and the brother of Anifah Aman's wife. Apparently frustrated MACC officials passed the file to the NGO.

In any case, the Sarawak Report alleged that the money in the Hong Kong accounts was ordered frozen when ICAC investigators moved in, but when the three-year statute of limitations lapsed in Malaysia, the funds are believed to have been passed on to the Zurich account and to Musa. The Hong Kong Monetary Authority guidelines, however, established a six-year statute of limitations.

“Those involved blame Malaysia’s refusal to sign a cooperation agreement on the investigation for the collapse of the case and the subsequent release of all the money back to Musa and his collaborators,” Sarawak Report alleged.

A May 25, 2007 letter obtained by the ICAC stated that the UBS account no. 231117 should “hold [the money] on trust for Aman,” the NGO said. Investigators noted that on May 31 2008 the account contained US$29.6 million. The NGO alleged that Musa was paid the money for illegal timber sales.

A flow chart said to have been created by the ICAC in Hong Kong shows money coming in from certain companies into accounts managed by Michael Chia and his nominees in Hong Kong, then being passed to a number of British Virgin Island companies including CTF International, Zenique Investment and Blisstop Corp. then back to the UBS Hong Kong account managed by Barnes.

The chart demonstrates that the accumulated money was then passed from Barnes into UBS Account No. 230-75069201 in Zurich in the name of Musa Aman.

Investigators noted that on 31st May 2008 the Barnes accounts contained US$29.6 million for account 231117, US$37 million for account 280777 and SG$9.5 million for account 280666. The Hong Kong Account 231117, which had been in existence since 2006, received a US$22.4 million injection of money from another Barnes account, between April 28th and May 31st.

According to the report, much of the money coming into the Chia accounts was linked to Sabah timber traders connected to listed companies in Kuala Lumpur and Hong Kong, with Musa directly authorizing the concessions. Some of the transactions obtained by Sarawak Report name the reason for telegraphic transfers “Deposit For Concession.”

In return, loggers are said to have illegally denuded two large areas of forest supposedly protected by a Heart of Borneo Treaty between the Sabah government and the World Wildlife Fund -- before Musa signed the Heart of Borneo Treaty with the WWF.

Asian Sentinel

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