Headhunter sues Swiss bank linked to 1MDB saga
SINGAPORE: A legal sidelight has emerged involving key players in Singapore's money laundering probe over 1Malaysia Development Berhad (1MDB).
Singapore-based Swiss private bank BSI, the employer of private banker Yak Yew Chee, who is caught up in the probe, has been sued here over claims it did not pay headhunting fees.
Executive search firm Mancano and Associates filed a lawsuit in the High Court last August seeking S$7.1mil (RM21mil) in fees from BSI for helping it recruit 23 staff in 2009.
Yak, who later handled the controversial 1MDB account at BSI, was one of the 23 that Mancano said it had referred to the Swiss bank.
He was working as the market head for Malaysia for another private bank, RBS Coutts, at that time, according to a research report reproduced in the court papers.
The headhunter's fees are 28% of an employee's first-year remuneration package.
For Yak, a senior banker with a base salary of S$500,000 (RM1.49mil), joining fee of S$350,000 (RM1.04mil) and target bonus of S$350,000 (RM1.04mil), the fees totalled about $336,000 (RM1mil), said Mancano in the court papers.
But BSI has countered that there was no binding agreement between the search firm and the bank. And there was "no accepted practice and/or common understanding" between Hanspeter Brunner, BSI's chief executive, and Michael Mancano, the search firm's managing director. The efforts Mancano had claimed to have put in were a precursor to a possible subsequent engagement by the bank, BSI has said in the court papers.
In 2013, BSI rejected the headhunter's bill for S$38mil (RM113mil) for its search work, which included the recruitment of the 23 bankers. Despite the lack of a binding pact, the bank had paid Mancano S$250,000 (RM748,000) at the end of 2009 for related administrative costs, but no more payment was outstanding, BSI has said.
Mancano said in court papers that he had known Brunner since 1997 and they had worked together to recruit bankers for Brunner's former employer Coutts Bank, later RBS Coutts. They had a common understanding, and even when search assignments were done without a signed agreement, Brunner always ensured his then employer would pay Mancano.
Brunner left RBS Coutts for BSI in 2009, and some 70 staff later joined him. Yak has emerged as the only named figure here in the money laundering probe linked to Malaysia's state investor 1MDB.
Last November, Yak applied to the Singapore High Court to release funds from his accounts seized by the Singapore authorities to pay some S$1.36mil (RM4mil) owed to the Inland Revenue Authority of Singapore, as well as to pay for legal fees and basic expenses.
His lawyer later withdrew the application after the prosecutor raised no objection to Yak transferring S$1.76mil (RM5.27mil) from his overseas bank accounts to pay for his expenses. Yak had 12 bank accounts with about S$9.71mil (RM29mil) seized by the authorities last September.
This was part of the investigations into whether his huge bonuses - which jumped from S$649,000 (RM1.94mil) in 2011 to $10.5mil (RM31mil) in 2014 - were the fruit of criminal conduct.
BSI's legal challenges are not limited to Singapore. Last March, it agreed to pay US$211mil (RM886mil)) to settle an outstanding dispute with the US authorities after admitting it had for decades helped thousands of US clients to open accounts in Switzerland to evade taxes in the US.
Meanwhile, BSI's parent Grupo BTG Pactual is struggling to stay afloat after its founder Andre Esteves was arrested last November in connection with a graft probe involving Brazil's state-run oil producer Petrobras. Despite just having acquired BSI for 1.25bil Swiss francs (RM5.39bil) last September, the Brazilian bank is putting it up for sale to boost liquidity and shore up investor confidence. – The Straits Times/Asia News Network
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