International Cooperation in Asset Recovery

1. International Cooperation in Asset Recovery Mike Burley IMS Principal Investigator Independent Commission Against Corruption

2. The Malaysian Experience • The defendant was charged with Criminal Breach of Trust. • Defendant was the Ex-Managing Director of one of Malaysia’s largest public owned company. • That company went bankrupt in 1996 with losses of over US$4 billion.

3. Who Organized the Money Laundering Scheme? • ACA Malaysia discovered that the defendant was connected to two Japanese businessmen Yuji and Yasuomi. • ACA suspect Yuji and Yasuomi to be the middlemen in a massive long term money laundering scheme orchestrated by the defendant using banks in Hong Kong and Switzerland. • They were assisted in Hong Kong by Jessica, a Public Certified Accountant and MD of a Corporate Services Company.

4. Where did the Money Go? • Jessica established two BVI companies named Frilsham and Borneo. • Sole registered proprietor of Frilsham was Ms WONG and of Borneo was Mr Cheng. • Yuji and Yasumi established Water International Ltd, in Japan. • Two bank accounts in the name of Frilsham and one bank account in the name of Water were opened by Jessica with an American Registered Bank Hong Kong.

5. Swiss Banks • Jessica arranged for Yuji and Yasuomi to open an account with Calyon Bank in Geneva through Calyon Bank Hong Kong (Formerly known as Banque Agricole Indosuez) in the name of Borneo. • Yuji maintained his own Hong Kong based Swiss account with UBS Hong Kong.

6. The Money Flow The Defendant Misappropriate MR74 million from his company and dev. Funds disguised as settlement proceeds of a fraudulent invoice with ABC Japan. Transfer from Bank BPM via Bank BPM Tokyo to Frilsham HK account 1 Jessica of Corporate Service caused the funds to be diverted to Frilsham No.2 acc. Upon receipt onto Frilsham no. 2 account MR64 million transferred to Water Account with the American Bank. MR10 million transferred to UBS Hong Kong (Yuji’s personal account) MR10 million then forwarded to UBS Geneva (Also Yuji’s personal account) MR64 million transferred from Water’s HK account with the American Bank to the account of Borneo with Calyon Bank Geneva. MR64 million transferred to the account in the name of Sitar Investments With UBS Zurich. There it was held on a 24 hour time deposit Before being dispersed through various accounts maintained by the defendant’s family.

7. 94 FEB 22 Frilsham A/C #195-300-18xx-x Written instruction to divert the money from Frilsham A/C #1 to Frilsham A/C #295-470-03xx-x

8. 25th Feb 1994 Please transfer by telex YEN 2.8 Billion…to the Waterfront Int’l Ltd A/C by debiting our YEN A/C 95-470-03xx-x

9. Time is of the Essence • It took less than 72 hours for the funds to pass from Malaysia through Japan and Hong Kong before arriving in Switzerland.

10. Covering the Tracks • It took less than another 72 hours for all Bank accounts in Hong Kong to be closed.

11. Lessons from the Search WarrantLOOK!!!! File of Sake Inc. another BVI company seized under strong protest from Jessica of Corporate Services. Review of file discovered a further Swiss Bank Account. • ACA later confirmed that this account was used to pay Jessica and others involved in minor aspects of the laundering scheme. ACA were unaware of the Sake connection before ICAC’s search of Corporate Services

12. Don’t Underestimate the Power of a Production Order • American Bank claimed that all documents were destroyed. • Evidence clearly suggested the contrary. • The Production Order issued by the District Court demanded American Bank to produce. • They finally produced and guess what?

13. A Near Smoking Gun • Bank TT Document showing funds intercepted and route from BPM Tokyo Japan to account of Frilsham Account 1 with American Bank. • Effectively diverted in cyberspace to another account called Frilsham Account 2

14. How an MLA Production Order Works • Issued by the District Court. • Proceedings for failure to produce would be before the District Court. • Response by means of affidavit with documents exhibited. • Response must be within 7 days.

15. Section 10 MLA Examination • This procedure is used to examine witnesses orally. • It is an independent procedure that can be used in conjunction with a Production Order and a Search Warrant. • However it is not necessary if full and cooperative production is obtained through either Warrant or Production Order.

16. Proceedings before Eastern Magistrates Court. • Prosecution represented by the AG of Malaysia personally. • Defence represented by a Distinguished Lawyer. • Before Mr. D.I. Thomas Magistrate. • All evidence and exhibits obtained by way of deposition.

17. How Does the Evidence Get to Malaysia? • All witnesses sign their depositions which are prepared by the court. • The evidence is then given by the Court to the D of J Hong Kong. • D of J report outcome to Ministry of Foreign Affairs. • Evidence officially handed to the Consular General for Malaysia in Hong Kong. • Transported to the Ambassador for Malaysia in Beijing.

18. But this story did not end there.

19. A Brilliant Success turns to Disaster- Defendant Acquitted • It seemed odd that throughout the HK deposition proceedings the Defence Counsel said absolutely nothing. • He had found a fatal flaw and kept it up his sleeve. • Under the Malaysian Evidence Laws, (pre MLA Agreement) in relation to Foreign witnesses, it was necessary that they indicate their unwillingness to give evidence at trial.

20. The Evidential trap • The Defence kept this quiet right up until an appeal was lodged at Malaysia’s Highest Court. • The Court ruled that none of the Hong Kong Evidence was admissible as there was no precedent to accept evidence from a Hong Kong Deposition Proceedings and no witnesses said that they were unwillingness to appear in Malaysia to testify. • This issue was missed by all parties to the prosecution until it was too late.

21. The Hard Lesson to Learn • Respect for Sovereignty is a work in progress in all matters that deal with ground level multi- jurisdictional investigations. • Remember that as part of the respect for the sovereignty of other Nations in MLA that it is our duty to acquaint ourselves with all the aspects of the Evidence Laws of the client jurisdiction. • Any doubt in this regard should be referred to your Justice department for clarification and advice. IF NOTHING ELSE PLEASE REMEMBER THAT.

22. Don’t let them get away with it • If we don’t then it is only the criminal that will benefit !!!

23. Options of Evidences for MLA • Production Orders • Search Warrants • Deportation before a Magistrate • etc… ALL other things are possible!

25. International Cooperation in Asset Recovery Thank You