Testifying in a civil suit brought by SRC against Najib Razak and several others, Kevin Swampillai, who worked at the bank from 2010 to 2016, said this was in violation of requirements imposed by the Singapore government.
He said the SRC subsidiary based in the British Virgin Islands opened its bank account sometime in 2011.
Prior to that, Swampillai said he was asked by his then colleague, Yak Yew Chee, to attend a meeting with Low Taek Jho (Jho Low), who wanted to know about BSI’s fiduciary funds service.
According to the witness, fiduciary funds refer to monies belonging to offshore entities which are managed by third party fund managers, not BSI.
“The main objective of clients choosing fiduciary funds is to facilitate the flow of money to a particular destination of their choice, and to hide the identity of their investors,” said Swampillai.
SRC is suing Najib, its former CEO Nik Faisal Ariff Kamil and several other former directors for various alleged breaches of trust and duty, wrongful receipt of company property and dishonestly and wrongfully conspiring to convert company property to their use.
Swampillai said Low had represented himself as Najib’s adviser at the meeting.
The witness also told the court that SRC was classified as a “politically exposed person or party” (PEP).
“As SRC is deemed a PEP, there were additional steps to be taken such as submitting the client’s application for review before senior management members,” Swampillai said.
Red flags
Swampillai said large funds were transacted in SRC BVI’s accounts but “there was no information as to the final destination of these funds”.
“The senior management pressed Low for the information but he refused, citing strict confidentiality and saying the transactions were of government-to-government nature.
“We then stopped asking Low,” Swampillai said, adding that they did not want to lose such a “big client”.
The ex-banker said that between Nov 22, 2011 and Feb 2, 2014 a total of US$845.5 million was transferred from SRC here to the subsidiary’s account in Singapore.
The funds were subsequently moved into fiduciary funds.
Swampillai told the court that BSI should have issued STRs to the Monetary Authority of Singapore due to a lack of information about the nature of the funds and the high value transacted.
“BSI failed to do so as it was likely ‘seduced’ by the size of the fees that it was earning in respect of these transactions.
“This caused BSI to fall short of its regulatory standards,” Swampillai added.
The hearing continues before Justice Ahmad Fairuz Zainol Abidin on Wednesday.