Falcon Private Bank Seeks Distance From 1MDB Controversy

DUBAI—Falcon Private Bank Ltd. on Wednesday sought to distance itself from a controversy involving a Malaysian state fund caught up in allegations of political corruption, saying the transactions it carried out were based on purely commercial terms.

Several Swiss banks, including Falcon, have come under scrutiny for transactions involving 1Malaysia Development Bhd. fund, or 1MDB. Among the transactions that are being investigated by authorities in Switzerland and Malaysia is the transfer of $681 million to the private account of Najib Razak, Malaysia's prime minister who helped to set up 1MDB.

Malaysia's attorney general said the $681 million was a legal donation to Mr. Najib by a member of Saudi Arabia's royal family and most of it was ultimately returned. The attorney general also concluded that there was nothing improper about the donation. Investigators, however, believe the money originated with 1MDB and before much of it was returned moved through a complex web of transactions in several countries, people familiar with the investigations previously told The Wall Street Journal.

Mr. Najib has denied wrongdoing or taking money for personal gain, and 1MDB has denied wrongdoing and has said it is cooperating with investigators.

Some of the transactions between the Malaysian fund and Falcon's Abu Dhabi owner, International Petroleum Investment Co., or IPIC, were routed through Falcon accounts, investigators believe. Falcon itself hasn't been accused of any wrongdoing. Falcon previously said the bank is "fully transparent and cooperative with the current investigations by various authorities and regulators."

On Wednesday, Falcon Private Bank's chief executive, Eduardo Leemann, said the Zurich-based wealth-management firm operates independently from its Abu Dhabi owner and that the emirate plays only a minor role in helping it gain new business or clients.

"The owners, IPIC as well as Aabar, never until today, never have never had and never will get involved in any operational issues," Mr. Leemann said. "It opened doors but no more than that," he said. He made the comments at the inauguration of the bank's new office in Dubai's financial center.

Mr. Leemann said the bank suffered no impact from the association with the Malaysian scandal and that it has internal compliance mechanisms in place that have been audited internally, externally and by regulators.

"There's a process about documenting each and every transaction we execute," Mr. Leemann said. "It's excess documentation, believe me, we have followed that process on all cases, and I'm not talking on 1MDB only," he said.

Some banking industry experts have raised questions about why relatively small private banks like Falcon and other Swiss lenders are making transactions worth hundreds of millions for government funds.

Mr. Leemann, a veteran private banker who has worked at Goldman Sachs and Julius Baer, said such banks dealing with government entities is unusual but happens. "It's case by case," he said.

"This is an interesting piece of business, we accept it and then you go through the process and it doesn't matter whether the counterparty is a government or a high-net-worth individual," said Mr. Leemann.

IPIC is currently represented on Falcon's board of directors by its chief financial officer, Murtadha Al Hashmi. IPIC declined to comment.

Falcon was founded by U.S. insurance giant American International Group almost half a century ago. After AIG nearly collapsed during the financial crisis, it was sold to Abu Dhabi investor Aabar in 2009. Aabar itself is a subsidiary of IPIC, the emirate's vehicle that over the years has conducted several deals with 1MDB.

Aside from its domestic market Switzerland, the bank is looking for more business in Russia, Indonesia and the United Arab Emirates. Its Middle East offices in Dubai and Abu Dhabi account for $2.5 billion of the bank's total $18 billion assets under management, according to Falcon.

Write to Nicolas Parasie at nicolas.parasie@wsj.com

(END) Dow Jones Newswires

March 09, 2016 20:45 ET (01:45 GMT)

Julius Baer (PK) (USOTC:JBAXY)
過去株価チャート
から 5 2024 まで 6 2024