Liquidators representing three subsidiaries of Malaysia’s sovereign wealth fund, 1Malaysia Development Berhad (1MDB), have launched legal proceedings against Standard Chartered Bank in Singapore.
The civil suit alleges the bank played a critical role in facilitating fraudulent fund transfers that resulted in more than US$2.7 billion in losses.
The lawsuit was filed in the High Court of Singapore by Angela Barkhouse and Toni Shukla of Kroll.
They are acting as liquidators for three 1MDB-linked entities currently in liquidation.
The case forms part of 1MDB’s broader global campaign to recover public funds lost in one of the world’s largest financial fraud scandals.
According to US investigators, around US$4.5 billion was misappropriated from 1MDB in a scheme involving officials and financiers spanning multiple jurisdictions.
In their statement, the liquidators claim Standard Chartered enabled more than 100 intrabank transfers between 2009 and 2013.
These transactions allegedly masked the true nature and destination of stolen funds.
The plaintiffs argue these transfers violated Singapore’s anti-money laundering laws and due diligence obligations, and resulted in losses of over US$2.7 billion and S$20 million in public funds.
The claimants assert that Standard Chartered failed to act on numerous red flags linked to the transactions.
The liquidators state the bank’s compliance lapses directly contributed to the concealment of stolen assets.
“These 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,” said the liquidators.
A spokesperson for the 1MDB board added: “We are pleased to see the court-appointed liquidators taking action which will benefit the victims of the fraud, including 1MDB.”
Bank denies wrongdoing, vows to defend itself
Standard Chartered, in a statement to the Financial Times, said it had not yet received formal notice of the lawsuit.
The bank “emphatically rejects any claims” made by the liquidators, whom it described as “shell companies with no legitimate business”. It also stated that “any claims by these companies are without merit”.
Standard Chartered further noted it had “made significant investments” in strengthening its anti-money laundering procedures and would “vigorously defend any lawsuit commenced by the liquidators”.
In 2016, Singapore’s financial regulator fined Standard Chartered S$5.2 million for breaches of anti-money laundering rules. These violations were tied to fund flows related to the 1MDB scandal.
The latest lawsuit intensifies scrutiny on the bank’s past conduct and compliance systems during the period when 1MDB funds were allegedly siphoned.
Funds allegedly linked to Najib and associates
Court filings in the current suit detail how diverted funds were allegedly used for the personal benefit of former Malaysian prime minister Najib Razak, his wife Rosmah Mansor, and his stepson Riza Aziz.
Among the claims are US$150 million transferred into Najib’s personal accounts and over US$130 million used for luxury purchases, including jewellery and handbags.
Najib was convicted in 2020 over related charges and initially sentenced to 12 years’ imprisonment and fined RM210 million.
A partial pardon in 2024 reduced his term to six years and the fine to RM50 million.
The 1MDB liquidators are represented in Singapore by LVM Law Chambers LLC, with additional legal support from Lim Chee Wee Partnership in Malaysia.
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