KUALA LUMPUR (March 1): Former BSI Singapore banker Kevin Swampillai testified on Wednesday (March 1) that fugitive financier Low Taek Jho (Jho Low) suspected him of leaking information about the dubious transactions linked to 1Malaysia Development Bhd (1MDB) that went through BSI Bank.
He said Jho Low had stressed the need for confidentiality with regards to the "highly sensitive and time-bound transactions" and that any complacency on the part of the bank would not be tolerated by him.
Testifying in the 1MDB-Tanore trial at the High Court, Kevin said his colleague Yeo Jiawei had started taking a more prominent role in dealing with 1MDB as Jho Low gradually kept Kevin out of the loop.
"Effectively, I had been sidelined and removed from the information flow as Jho Low had started to develop concerns over leaks given the extent of information that started to appear in the media at that time. I was suspected of being a potential source of these leaks and therefore sidelined," he said.
Kevin, 58, who served as BSI Singapore's head of wealth management services, earlier outlined how Jho Low had used BSI’s fiduciary fund accounts to move around and transfer 1MDB money into his offshore accounts and shell companies.
Fiduciary funds are funds incorporated in one of many offshore jurisdictions and are managed by third party fund managers. Unlike traditional investment funds where the underlying investments are decided and managed by the fund managers on a discretionary basis, the investments in fiduciary funds are always directed by the investor (client) in the fund.
Fiduciary funds have virtually limitless flexibility to decide on the structure of transactions placed through fiduciary funds. For example, they choose the target destinations where the money will eventually end up. They will decide on the instruments (such as equity shares or loans in the form of lending agreements such as promissory notes) used to optically legalise the flow of money from the fund to target companies or assets intended to be acquired. The clients are also in control of the timing and amounts channelled through such fiduciary structures.
Kevin also told the court that on one occasion when he had met the 1MDB management and Jho Low for dinner, he had the impression that the financier was indeed the 1MDB boss despite claiming to have nothing to do with the fund.
He said Jho Low “held court” and did most of the talking while everyone else listened.
"So he was the go-to person to discuss anything to do with these accounts," the witness said.
Kevin added that if his memory served him right, Jho Low was explicitly put forth as an adviser or the go-to person in relation to these clients.
However, he added later that as time passed, it became more evident that Jho Low wasn't the "apex decision maker".
He said that the entities were government-owned so he made the assumption that there was someone above Jho Low.
Kevin said Brazen Sky Ltd maintained an account with BSI which was opened in 2012. For the account, the bank implemented the transaction to transfer the ownership of certain drilling assets held under the 1MDB-PetroSaudi joint venture to the Bridge Partners fiduciary fund.
He testified that the Brazen Sky transaction through Bridge was a different fiduciary fund transaction "in both form and substance compared" to the transactions by SRC International Sdn Bhd, 1MDB Global Investment Ltd and Aabar Investments PJS.
Highlighting some of the differences, Kevin said there was no cash involved. This was because "the intention was to transfer the ownership of certain assets from the PetroSaudi JV to Bridge at what turned out to be a vastly overinflated valuation".
Elaborating further, he said the promissory notes involving Bridge funds were used as IOUs that were exchanged between Brazen Sky and Bridge to satisfy consideration for the transfer of the PetroSaudi assets to Bridge, and the issue of shares in the Bridge funds to Brazen Sky.
He added that the key parties in this transaction were Yeo and himself acting on behalf of BSI, Lobo Lee acting on behalf of Bridge, and Jasmine Loo and Terence Geh on behalf of 1MDB.
Kevin then said that he had word that the prime minister Datuk Seri Najib Razak wanted to have a call with him, Yeo and Lee about certain valuations of the Bridge funds.
Kevin said he and Yeo organised the call with Lee. He added that he and Yeo attended the call "simply to introduce Lee to Najib".
"The call connection was bad as Najib was calling from somewhere overseas and Lobo was on a ferry to Macau. There was constant static interference during the call so both parties did not hear each other too well," he said.
Najib is on trial on four counts of abuse of power and 21 counts of money laundering involving RM2.28 billion of 1MDB funds.
The trial before judge Datuk Collin Lawrence Sequerah continues on Thursday.
The Edge is covering the trial live here.
Users of The Edge Markets app may tap here to access the live report.
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