By Stelios Orphanides
A legal storm is brewing around several entities and individuals, based in various jurisdictions around the world, implicated in an alleged massive money laundering case also related to the acquisition of an Indonesian bank four years ago, which is likely to engulf Cyprus.
A lawsuit filed by a group of companies affiliated to the Mauritius-based Weston Capital Advisors, a distressed-assets recovery specialist, concerns the acquisition of Indonesia’s Bank Mutiara by the Tokyo-based financial services company J Trust Co. Ltd, a copy of the lawsuit filed in September with the Supreme Court of Mauritius and obtained by the Cyprus Business Mail shows.
On Friday February 2, J Trust announced the existence of the lawsuit against its affiliated companies and other defendants in a statement on its website. The Japanese company omits that it is also among the defendants.
The plaintiffs seek several hundred million US-dollars in compensation from 21 defendants, which include, in addition to J Trust, its affiliated units PT Bank JTrust Indonesia, as Mutiara is now known, Singapore’s J Trust Asia PTE Ltd, PT J Trust Investments Indonesia and executives, including Nobuyoshi Fujisawa, chief executive officer of J Trust, who according to recent press reports, recently obtained the Cypriot citizenship.
In 2016, Fujisawa and J Trust Co. attempted to acquire a Cypriot bank. A banking source said on condition of anonymity that following the submission of a letter of intent by Fujisawa, “there had been interest by JTrust but we did not consider it serious and therefore it was not followed up”.
The ministry of interior declined to comment when asked to confirm an Asia Sentinel January 21, report about Fujisawa acquiring the Cypriot citizenship.
According to a document obtained by the Cyprus Business Mail, in May 2016 Bank of Cyprus issued a €3.3m bank guarantee for Fujisawa related to the acquisition of a property at Limassol Marina. According to Forbes Manazine, Fujisawa was the 40th richest person in Japan in 2013. Bank of Cyprus did not respond to requests for comment.
Also, among the defendants in the Weston Capital lawsuit, are the owners of the Tanzanian former lender FBME Bank Ltd, the Lebanese brothers Ayoub-Farid Saab and Fadi Michel Saab, the latter’s son Michael Norbert Saab, the subsidiary FBME Card Services, the Cayman-Islands-based holding company FBME Ltd, the Saab Financial (Bermuda) Ltd -currently in liquidation-, and the Saab-owned Federal Bank of Lebanon SAL.
The defendants also include Indonesia’s Federal Deposits Insurance Corporation, widely known as Lembaga Penjamin Simpanan (LPS), which insures bank deposits, other former LPS executives, the document show.
The Central Bank of Cyprus, the Cyprus Securities and Exchange Commission (CySEC), the US Department of Justice, the US Treasury’s Financial Crime Enforcement Network (FinCEN), the US Securities and Exchange Commission (SEC), the UK’s Financial Conduct Authority and Serious Fraud Office and other public or private entities are named third parties and were also served a copy of the lawsuit, according to the document.
Thailand’s Group Lease Plc Co. Ltd and Singapore’s Group Lease Holdings PTE Ltd, also associated with Japan’s J Trust and since October the subject of a probe by Thai authorities, are also named third parties in the lawsuit. The value of Group Lease’s shares on the Thai Stock Exchange subsequently plunged.
Weston Capital alleges it lost money and investment opportunities from the defendants’ actions. Tanzania’s FBME Bank, which operated a branch in Cyprus, lost both banking licences after FinCEN described it as a financial institution of primary money laundering concern in July 2014.
While the owners of the bank deny any wrongdoing, they lost a legal battle in the US last year against the FinCEN decision to ban FBME from transacting in US dollar.
J Trust said they continue to contest Weston Capital’s claims as they also did in the past as “unreasonable and against the fact, and as a result, in October 2016, the Tokyo District Court rendered a declaratory judgment that the company (J Trust) had no obligations alleged by the Weston Entities” which in turn invoke a 2015 court ruling in Mauritius.
The Japanese court ruling became subsequently “final and binding,” J Trust added.
The District Court for the Southern District of New York also ordered Weston Capital Advisors to return €3.6m to Bank J Trust, which the latter failed to do, prompting the US court to impose fines on Weston Capital affiliated companies, including the plaintiffs in the lawsuit and their representative John Liegey, on the grounds that the latter were in contempt of court.
JTrust Asia added that it “is of the view that the Mauritian court has no jurisdiction over any of the claims by the plaintiffs in the lawsuit,” a view reflecting a similar position expressed by a representative of the Saabs when contacted by the Cyprus Business Mail in December.
“We believe that Mauritius is not the appropriate jurisdiction for this case,” the spokesperson of the Saabs said and alleged that Weston funded “legal and media smear campaigns” to profit from the acquisition of a security it “opportunistically” obtained for $1 at a discount.
“The allegations in Mauritius, which are without merit and denied, appear to be motivated by nothing other than a desire to cause all the Defendants as much embarrassment and inconvenience as possible,” the FBME spokesman added. “No allegations of money laundering have ever been proved against FBME” which was “always compliant” with anti-money laundering directives.
J Trust Co. added that its affiliated companies and individual defendants in the lawsuit, recognise that the claims by the plaintiffs in it “are unreasonable and groundless, and that the allegations have no basis, as well”.
“At present, the company considers that this matter has no impact on the financial results,” it said. “The company will disclose information regarding the lawsuit’s status and its impact on the financial results promptly, following occurrences that warrant disclosure”.