Swiss banks such as UBS, Falcon and BSI have all been mentioned in money-laundering cases involving Malaysia. It was the Bruno Manser Fund, which had alerted the Swiss attorney general. And they are only the tip of the iceberg, Lukas Straumann, the fund's executive director, told finews.ch in an interview.

Lukas Straumann has been head of the Bruno Manser Fund for eleven years. The fund has its name from the Swiss ethnologist and environmental activist, who 15 years ago disappeared without a trace in the Malaysian region of Sarawak. The fund campaigns to protect the rainforest in Borneo and the rights of indigenous people. Straumann has written a book «Money Logging», describing the interaction of money-laundering, corruption and the destruction of the environment.


Mr. Straumann, the Bruno Manser Fund is turning into a true red rag for Swiss banks in its efforts to protect the rainforest: you denounced Credit Suisse, reported UBS to the police, and now Falcon Private Bank, BSI and Coutts find themselves in the middle of a corruption scandal in Malaysia.

Your impression is correct. To put it bluntly: We started our research about the clearing of the rainforest in Borneo and two of the three cases took us back to Zurich's Paradeplatz. In one case, Deutsche Bank was involved.

Part of our mandate is to fight corruption. It is written in the statutes of the Bruno Manser Fund. Corrupt Malaysian potentates made billions out of chopping down the rainforest. If we can't stop this corruption, we won't be able to protect the rainforest.

In recent weeks, a stream of negative news about Swiss banks emerged as corruption cases were unearthed. Is this only the tip of the iceberg?

I assume so, yes.

Why?

Research by journalists in Malaysia set the ball rolling in the case of the ailing government fund 1MDB. They received information by insiders, who were no longer prepared to cover up for activities by potentates and President Najib Razak. This is a case study of corrupt behaviour by elites, something which occurs in other emerging markets too.

«In a digital world, the theft of sensible data is much easier»

In the Petrobras scandal, there's a trail leading to Swiss banks (Pictet, Lombard Odier, Banque Cramer, Julius Bär, J. Safra Sarasin, ed.). The HSBC case in Geneva received enourmous publicity in India, because Indian politicians were found to hold bank accounts here. In the international trade of money from dubious origins, Switzerland naturally is affected.

Nowadays, banks are checking very thoroughly the origin of assets and whether these belong to PEPs, politically exposed persons.

These obligations have existed for years, but in emerging markets, growth interests took precedence and therefore the controls weren't executed strictly enough. Swiss private banks have the sword of Damocles waiting to strike.

In a digital world, the theft of sensible data and information is much easier. All corruption cases involve a string of people in the know, whose loyalities can change when the balance of power is shifting.

I get the impression that the Bruno Manser Fund is targeting the Swiss financial market.

We haven't  actively been looking for this role, it developped as a consequence of our work in Malaysia as we started to trace the flows of capital. Our legal activities directed against money-laundering don't stop at the Swiss borders at all. We've been in touch with the judiciary in the U.S., the U.K. and Canada. And in the case of Deutsche Bank we approached the German Federal Financial Supervisory Authority.

«Banks haven't done their homework»

We aim to improve living conditions in the rainforest of Borneo, not to denounce banks and their business practices. It is not us who do damage to the financial market of Switzerland, it is the potentates who take money gained through corruption to Switzerland and the banks who accept the cash or move it around.

But to fight corruption, you file suits against Swiss banks. For instance against UBS, who is said to have washed money belonging to Musa Aman, the minister of Sabah in Borneo.

This case shows exactly how banks haven't done their homework and don't implement their own compliance policies. The suit filed in 2012 against UBS had one more reason: it was based on article 102 of the criminal code, which deals with the legal responsibility of a company in cases of a deficient organisation.

Article 102 has existed for the past ten years, regulating the liability of companies in corruption and bribery cases. There has been one order of summary punishment, against Alstom, but not a single conviction. We aim to create a test case, to set a precedent - and the most recent judgement ruled that there was sufficient reason to entertain suspicions about money laundering.

Why have there been no convictions for corruption or bribery so far?

Corruption typically is very difficult to unearth and prove. But there are more cases than one might suspect. In my opinion, in many more cases criminal proceedings should be opened and brought to conclusion.

«Different standards of compliance apply»

Personally I believe that the procedures and communication between the Money Laundering Report Office Switzerland, the Financial Market Supervisory Authority and law enforcement agencies aren't working to their best. But there is also a question market behind the office of the attorney general and how it defines its priorities.

Are Swiss banks still struggling with compliance problems?

At least the problems haven't been cleared up. Within the banks, different standards apply or have applied. Let's take UBS as an example again: The case of Musa Aman concerned UBS in Singapore back in 2006 and 2007. The bank founded a string of offshore companies for the client to disguise the origin of the money.

Was this an isolated case? No. UBS Singapore alone founded more than a thousand such offshore companies for its clients, according to documents from the offshore-leaks-database. This was a business model with a strategy behind it. Presumably, it wasn't just to avoid taxes, but for money-laundering purposes.

You reported UBS both in Switzerland and Singapore. The Monetary Authority of Singapore wants to wait for the outcome of the investigation in Switzerland. Are cases affecting foreign branches of Swiss companies litigable in Switzerland?

It all depends on the strenghth of the evidence and the readiness of third countries to provide legal assistance to their Swiss colleagues. The UBS case is very well documented, for instance with paperwork regarding the opening of accounts.

«Legal assistance by Malaysia is unlikely»

As high-ranking politicians are involved, it is unlikely that Malaysia will provide any legal assistance in this case. A recent decision by a court in Bern however shows that the Swiss judiciary sees a sufficient enough reason to proceed.

What about BSI or the Falcon Private Bank, whose Singapore branch transferred 680 million dollars to private accounts of President Najib Razak?

We don't know whether the Swiss judiciary is the competent authority for treating the case, because the cash wasn't transferred through Switzerland. The Financial Market Authority (Finma) however should have a regulatory say in this case.

What are Singapore's authorities doing?

The accounts of Najib have been frozen. Even though he tried to overturn this, Singapore was unmoved. The opening of a procedure by the Swiss attorney general against organs of the Malaysian state fund 1MDB was noted not only in Singapore, but in the Arab world as well.

Will there be yet more cases when Singapore introduces the automatic exchange of information in 2018?

We will see, but we have to keep a couple of points in mind: firstly, for which countries is the exchange going to apply? If it is only OECD-member states, in Asia that's Japan and South Korea only. I doubt whether

«Business with black money is important»

Singapore will introduce the exchange with countries such as Malaysia and Indonesia as announced publicly. That would mean a huge change in policy. The business with black money from these countries for an offshore banking place such as Singapore's is still of major importance.

Back to the case of UBS: The attorney general has been trying for considerable time to get the bank to release documents about business with Musa Aman. To no avail so far. That's even as the bank insists it is cooperating with the authorities to clear up the case.

It is disappointing. UBS refuses to hand over documents it has already passed on to Finma, with reference to procedural reasons. The bank has hired a law firm and drawn up a classic defense strategy aimed at delaying and stalling. It goes to show that the bank isn't really interested in clearing up the case.

What do donors say about the stance the fund is taking against the banks?

Very well, in general. Most understand that this is in the interest of the fund's goal, namely to protect the rainforest. One single donor has cancelled his support, an employee of a large Swiss bank.

He argued that the Bruno Manser Fund pursued a campaign against his employer. This isn't the case. We're campaigning against corruption and the damaging effects on society and environment.