(Bloomberg) – The former head of a dissolved Zurich private bank that was involved in the multi-billion dollar 1MDB scandal is facing a lawsuit next week that will be charged with money laundering for a golf businessman convicted of the affair.
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Eduardo Leemann, who denies any wrongdoing, will appear before the Swiss Federal Criminal Court to answer the allegation that he used his role as CEO of Falcon Bank between 2012 and 2016 to collect illegal income amounting to 133 million euros (156 Million US dollars) to wash for Khadem Al-Qubaisi.
While prosecutors say the money was not embezzled or misappropriated by 1MDB, the process is moving back into the spotlight as the Swiss lender and former boss allegedly injected cash flows for a key player in the 1Malaysia Development Berhad scandal – an investment fund originally added to it thought to develop the economy of the Southeast Asian country.
Leemann “categorically denies any kind of wrongdoing and is convinced that the court will ensure that the proceedings against him are completely unfounded,” his spokesman said on the phone.
The 64-year-old, who was born in Zurich, used trust accounts, funds and sub-funds in the British Virgin Islands and Luxembourg to create “personal, material and geographical distance” between the money and its owner, according to the prosecutor.
“Leemann invested a lot of time and resources in the preparation and implementation of the hundred million euro transactions,” assert Swiss public prosecutors in the 52-page indictment. He is also charged with paying Al-Qubaisi € 61 million to buy luxury cars, invest in foreign real estate and fuel credit card spending “to maintain his lifestyle,” the indictment said.
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Read more: How Malaysia’s 1MDB Scandal Shook the Financial World: QuickTake
The money Leemann is accused of being laundered comes from a deal Al-Qubaisi developed to sell shares in Italian bank UniCredit SpA, which he owned through an entity he controlled in the British Virgin Islands, say Swiss public prosecutors. These shares were sold to Aabar, an Emirati investment firm of which Al-Qubaisi was chairman at the time, prosecutors claim that they were sold at an “overpriced” premium of 148 million euros.
Falcon Bank was then owned by Aabar, which in turn was controlled by Abu Dhabi’s International Petroleum Investment Co (IPIC), which was also run by Al-Qubaisi. In 2016, IPIC merged with Mubadala Investment Co., which declined to comment on the case.
A Swiss lawyer from Al-Qubaisi, who was sentenced to 15 years in prison in 2019, declined to comment. Likewise a lawyer from the Luxembourg branch of Aabar, a private plaintiff in this case.
Al-Qubaisi, whose LinkedIn profile also says he has been chairman of Falcon Bank since 2007, has been accused by US prosecutors of helping launder billions of dollars embezzled by 1MDB.
The U.S. Department of Justice reached an agreement with Al-Qubaisi’s wife last year over the loss of $ 49 million in assets, including real estate in Manhattan and Beverly Hills. Al-Qubaisi himself was sentenced to 15 years in prison in Abu Dhabi in 2019 and, along with another IPIC executive, was asked to repay $ 336 million, according to the Wall Street Journal.
‘High risk’
Falcon Bank is being prosecuted for alleged negligence that enabled money laundering. Falcon failed to ensure effective monitoring of high-risk business relationships and maintain an effective independent control system, which enabled Leemann’s alleged crimes, prosecutors said.
“Falcon denies the charges raised in the indictment of organizational failures in connection with money laundering and will defend their interests in court,” said the bank in a statement by its attorney in the case. The lawyer Andrea Taormina declined to comment further.
The lender has its own difficult history with 1MDB. The Singapore office was closed by regulators at the end of 2016 for suspicious deposits of 1.27 billion euros. The Swiss financial regulator also fined Falcon in 2016 for its role in the 1MDB affair.
Read more: Singapore, Swiss regulators strike Falcon for 1MDB violations
Falcon attempted to restart its brand in 2018 with a switch to cryptocurrencies and a strange advertising campaign in Zurich featuring a gold-painted woman, before announcing in May 2020 that it would liquidate the bank.
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