KUALA LUMPUR (July 1): Standard Chartered is now the target of a civil lawsuit in Singapore linked to the 1Malaysia Development Bhd (1MDB) scandal. 

The lawsuit, filed by Angela Barkhouse and Toni Shukla of Kroll on behalf of the three 1MDB subsidiaries in liquidation, targets the bank’s alleged failure to identify and act on red flags in more than 100 intrabank transfers between 2009 and 2013, according to a statement.

The claimants said they lost over US$2.7 billion and S$20 million in public funds from the transactions that they say violated Singapore’s anti-money laundering rules and due diligence obligations.

“We are pleased to see the court-appointed liquidators taking action which will benefit the victims of the fraud, including 1MDB,” a spokesperson for the Board of 1MDB said in the statement.

The bank had not yet received the claim documents, according to a statement from Standard Chartered to the Financial Times. Standard Chartered “emphatically rejects any claims” made by the 1MDB companies, noting that the liquidators were “shell companies with no legitimate business”.

“Any claims by these companies are without merit and Standard Chartered will vigorously defend any lawsuit commenced by the liquidators,” the bank was quoted as saying. Standard Chartered added that it had made “significant investments” in its anti-money laundering controls and standards.

1MDB, created by former prime minister Datuk Seri Najib Razak in 2009, has been embroiled in graft and money-laundering investigations spanning more than a dozen jurisdictions from the US to Switzerland and from the United Arab Emirates to Singapore.

Najib himself has since been found guilty in a case involving 1MDB’s former subsidiary and was sentenced to 12 years' jail and fined RM210 million. He has been granted a partial pardon, which reduces his prison term to six years and fine to RM50 million.

In 2016, Standard Chartered was fined S$5.2 million for breaches of anti-money laundering requirements linked to 1MDB-related fund flows through the bank.

The civil action against Standard Chartered is the latest in 1MDB's ongoing global asset recovery efforts to reclaim billions of dollars of misappropriated funds.

Funds moved through the bank were allegedly used to finance personal expenses of Najib, his wife Rosmah Mansor, and his stepson Riza Aziz, including luxury goods purchases and film production costs.

The claims in the latest lawsuit include specific disbursements such as US$150 million into Najib’s personal account and more than US$130 million in payments to vendors of jewellery, watches and handbags on behalf of Rosmah.

The plaintiffs argue that the nature, volume and beneficiaries of the transfers point to serious compliance failures by Standard Chartered.

Legal counsels in the case are LVM Law Chambers LLC in Singapore and Lim Chee Wee Partnership in Malaysia.