KUALA LUMPUR, July 2 — Liquidators trying to recover money from sovereign wealth fund 1Malaysia Development Bhd (1MDB) have sued Standard Chartered Bank in Singapore, alleging it enabled fraud that led to more than US$2.7 billion in financial losses over 10 years ago.
Standard Chartered yesterday said it emphatically rejects the claims.
The move is the latest in a wide-ranging effort to recover money belonging to 1MDB, from which United States investigators say about US$4.5 billion was stolen between 2009 and 2014 in a complex, globe-spanning scheme.
Shares in Standard Chartered fell on Tuesday and were down 2.7 per cent by 1110 GMT, against a 0.3 per cent drop in London’s FTSE 100.
Malaysian authorities previously said there were billions of dollars more that are unaccounted for.
Liquidators from financial services firm Kroll, which filed the suit in the High Court of Singapore, said in a statement on Monday they were seeking to hold Standard Chartered accountable for its role in allegedly enabling fraud to be committed against 1MDB.
Three companies in liquidation linked to 1MDB say Standard Chartered permitted over 100 intrabank transfers between 2009 and 2013 that helped conceal the flow of stolen funds.
They also allege the bank chose to overlook obvious red flags in relation to the transfer of funds, resulting in the losses, the liquidators said.
“According to this suit, the transfers demonstrate serious breaches and control failings which ultimately enabled the theft of public funds by people operating at the highest levels of the Malaysian government during that period,” the liquidators said.
Standard Chartered said it had not yet received the legal filing documents.
“Any claims by these companies are without merit and Standard Chartered will vigorously defend any suit commenced by the liquidators,” Standard Chartered said in a statement to Reuters.
It added the liquidators had earlier publicly stated the firms involved were shell companies with no legitimate business and were linked to alleged 1MDB mastermind and fugitive Low Taek Jho, also known as Jho Low. Low has consistently denied wrongdoing.
The liquidators said the funds that flowed through the Standard Chartered accounts included transfers to the personal bank account of former prime minister Najib Razak, who is serving a six-year prison sentence after being convicted of graft linked to 1MDB.
The fund transfers also involved business payments and purchases of jewellery and luxury goods for Najib’s wife and stepson, the liquidators said.
Najib and his family members have consistently denied wrongdoing.
The board of 1MDB welcomed the move by the court-appointed liquidators.
“The Malaysian people were the true victims of this global fraud, and all parties are determined to hold every facilitator to account — including financial institutions that failed in their most basic duties of vigilance and responsibility,” a spokesperson for the board said.
At least six countries, including Singapore and Switzerland, have launched investigations into 1MDB dealings in a global probe that has implicated banking and high-ranking officials worldwide, including Najib and executives from US bank Goldman Sachs.
Malaysia said last year it had recovered a total of RM29 billion ringgit in 1MDB assets between 2019 and February 2024.
In 2016, Singapore’s central bank imposed penalties of S$5.2 million on the local unit of Standard Chartered for money laundering breaches related to the 1MDB scandal.
The Monetary Authority of Singapore said its investigations into Standard Chartered revealed “significant lapses in the bank’s customer due diligence measures and controls for ongoing monitoring” but did not find “wilful misconduct”.
News of the suit yesterday weakened Standard Chartered’s share price.
“While it’s tough to gauge the lawsuit’s outcome, the potential hit — about 7 per cent of market cap — is likely enough to weigh on shares in the short term,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
Standard Chartered is facing a separate US$1.9 billion suit in London over allegations the lender broke US sanctions against Iran in a more widespread way than it has previously admitted.
— Reuters
