The Cypriot branch of FBME Bank, the Tanzanian lender which US authorities described as of “primary money laundering concern”, is implicated in a money laundering case involving an Indonesian bank, the Asia Sentinel reported on Monday.
FBME, which had the licence for its Cyprus branch revoked in 2015, helped launder money coming out of the predecessors of Bank J, Bank Century in 2008 and Bank Mutiara in 2014, the Asia Sentinel reported. The news website was citing a report prepared in August 2015 by Peter Barrie Brown, described as a money laundering expert.
Brown was commissioned by the UK law firm Quinn Emanuel Urquhart & Sullivan, representing Bank Mutiara.
In 2015, the UK law firm represented the owners of FBME, the Lebanese brothers Ayoub Farid Saab and Fadi Michel Saab in a case at a US court, according to the company’s website. The two brothers who deny any wrongdoing resorted to the Paris-based arbitration court of the International Chamber of Commerce seeking €500m in damages from the Republic of Cyprus. The Cyprus unit of FBME was placed under administration and resolution in 2014 and the Central Bank of Cyprus fined the bank €1.2m for failing to adhere to the provisions of the anti-money laundering legislation.
Bank Century which almost failed in 2008, is the bank that helped Indonesian politicians to divert funds. It was taken over by Bank Indonesia, the island state’s central bank, then became Bank Mutiara.
In 2014, it was taken over by J Trust Co Ltd, a Japanese group, “whose antecedents were in the Pachinko parlour business and gaming, which are notoriously connected to the yakuza, Japan’s organised crime societies,” and renamed PT Bank J Trust Indonesia, the Asia Sentinel said. “The ties between Bank J Trust, J Trust and FBME Bank Cyprus were well documented as a money laundering operation in the Peter Brown report.”
US secretary of Commerce Wilbur Ross, who served until weeks ago as Bank of Cyprus vice-chairman, is a shareholder in J Trust, the website said. The Cyprus Business Mail does not suggest that Ross is involved in any wrongdoing.
J Trust acquired Mutiara for $363m (€346m), which was six times the Indonesian bank’s book value and believed to be the highest ever paid for the acquisition of a bank in Southeast Asia, after Indonesia’s government injected $104m in order for the bank to comply with a regulatory requirement of $50m in minimum capital. The Asia Sentinel said there is no record that any money left J Trust in 2014 or in the financial year 2015/2016.
Bank J which lost a total of $151m in the financial years 2014 to 2016, received a capital injection of $75m from J Trust, which was followed by a Bank J “recent” announcement at the Jakarta Stock Exchange saying that the Indonesian lender’s value was estimated at $750m, roughly twice as much the price J Trust paid to acquire it.
The reported book-profit may have helped J Trust offset losses from the purchase of overvalued convertible bonds issued by Group Lease, a Thai company, which saw its market capitalisation rise in December to $2.9bn, 100 times its estimated earnings, against to asset value totalling $482m, according to the website.
Group Lease business is lending money to Thai and Cambodian peasants “to buy motorcycles at usurious rates”, and saw its shares rise to 100 times, Asia Sentinel reported.
Groupe Lease’s market value fell 56 per cent after Ernst & Young published a report in which it expressed concerns about loans extended to undisclosed parties in Singapore, which in turn extended $100m in loans to other parties in Singapore and Cyprus, prompting Thai authorities to request explanation. J Trust which invested $220m in Group Lease since 2015 suffered a $2bn loss from the drop in the value of the Thai company.
Group Lease Plc, which is also J Trust’s partners in Bank J with a 3 per cent stake and announced its intention to use Cyprus as a springboard to expand into Eastern Europe, Africa and Latin America on February 28. On Tuesday, it said that it had already received interest payments in excess of €1.5m from four Cypriot companies, according to statements on its website. The bulk of the loans extended to the Cypriot companies were agreed in 2015 and 2016.
The operators of fbmeltd.com, a website reflecting the views of the Saab brothers, owners of FBME Bank, did not respond to a request for comment when contacted by the Cyprus Business Mail.
The full Asia Sentinel report is available here.