LUXEMBOURG: A Luxembourg court Thursday fined Edmond de Rothschild bank 25 million euros ($28 million) for its role in a money-laundering scandal in which a Malaysian wealth fund lost billions of dollars.
“This is the first time that a Luxembourg banking establishment has been convicted in a money laundering case,“ the Grand Duchy’s judicial authorities noted following the punishment in the so-called “1MDB” affair, involved the misappropriation of money from 1Malaysia Development Berhad.
The fund, created in 2009 as then Prime Minister Najib Razak set out to to modernise Malaysia, soon found itself embroiled in corruption allegations, leading to a swathe of investigations notably in Switzerland, Singapore and the United States.
“A very large portion of the funds raised by 1MDB was siphoned off ... particularly between 2009 and 2013, by the prime minister, Malaysian officials, and others,“ the court stated.
In Luxembourg, which hosts the European subsidiary of Switzerland’s Edmond de Rothschild bank, dozens of accounts opened at the establishment by an Emirati national in the name of a slew of different companies were used to divert money away from the fund.
An The investigation which opened in the Grand Duchy in 2016 “established that through complex international financial flows, funds from 1MDB were ultimately credited to the bank accounts of several of these entities”.
Before arriving in the accounts, the cash moved through a number of different financial jurisdictions, including Caribbean tax havens, the court said.
The bank stressed in a statement that the events had taken place “fifteem years ago” and had led to the “implementation of a comprehensive remediation plan... completed in 2019.”
“The employees involved are no longer part of the organization,“ the statement read.
Razak, 71, who served as prime minister until 2018, was found guilty two years later of abuse of power and misappropriation of funds -- a case that essentially cost him the 2018 elections.
He was initially sentenced to 12 years’ imprisonment in 2020 but the sentence was halved by a pardons board in February last year.
The former prime minister is currently seeking to have his jail term converted to house arrest.
Thursday’s judgment closes the case regarding criminal liability of the bank.
Two other investigations are ongoing, one concerning the Emirati client and his companies, and the other targeting executives and employees of Edmond de Rothschild Europe.
