Franklin, Andrews, Kramer & Edelstein

[scion]

Revealed: Coutts managed tax haven firms for controversial clients

‘Queen’s bank’ provided offshore services to Brunei prince accused of stealing from his own country, Panama Papers show

Lionel Faull Thursday 1 December 2016 11.01 GMT
https://www.theguardian.com/world/2016/dec/01/revealed-coutts-bank-managed-tax-havens-high-risk-clients-jefri-bolkiah-brunei-panama-papers

Coutts, the taxpayer-owned bank, provided offshore services to controversial clients including a member of the Brunei royal family accused of stealing billions from his own country, and a banker charged with assisting the sons of Egypt’s deposed president, Hosni Mubarak, in financial crime.

Known as the Queen’s bank after its most famous customer, Coutts is revealed to have managed secretive tax haven structures for the Sultan of Brunei’s younger brother, Prince Jefri Bolkiah, and the investment banker Hassan Heikal.

The information was uncovered in the Panama Papers, a database of 11.5m documents leaked from the archives of the offshore law firm Mossack Fonseca.

Emails between Coutts and Mossack show the law firm regarded these individuals as presenting a high risk under criteria designed to combat money laundering: Jefri was ordered by a UK court to repay an estimated $15bn taken from the Brunei sovereign wealth fund, which he chaired; Heikal was charged in 2012 and is awaiting trial for facilitating insider trading, which he denies.

Both were clients of Coutts & Co Trustees in Jersey. Their offshore companies were active until at least the end of 2015. The bank would not confirm whether they remained on its books, saying it did not comment on individual cases.

The revelations raise new concerns about controls at Coutts, which was fined just under £9m four years ago for major failures in its checks on high risk customers, including those with political connections. Regulators said at the time these led to an “unacceptable risk of Coutts handling the proceeds of crime”.

While it is entirely legal to offer banking services to what are known as politically exposed persons (PEP) – politicians, state officials and their families and associates – these individuals must be subject to enhanced checks, in particular on their source of funds.

Between 1986 and 1998, Jefri served as finance minister of the oil-rich state and chairman of its sovereign wealth fund. In a breathtaking spending spree, cash from the Brunei Investment Agency was funnelled into more than 500 properties around the world. Jefri amassed thousands of luxury cars, antique paintings by Renoir, Manet and Degas, five boats, and nine aircraft including a private Boeing 747 reportedly customised to carry polo ponies.

In a settlement agreed in 2000, Jefri undertook to return the money to Brunei. Years of litigation in various jurisdictions followed, with Jefri challenging the repayment agreement, saying he had only acted on his brother’s orders, but the British courts upheld it.

The legal battles ended in 2014 when Brunei accepted that the prince had honoured the original settlement.

Records show Jefri remained a Coutts client throughout this period. Mossack Fonseca learned only last year that it was acting as registered agent for two British Virgin Islands companies of which Jefri was the ultimate beneficiary. Crescent Invest & Trade was incorporated in 1998, the year the prince resigned as finance minister. Taurus Estates Limited was set up the following year.
...
more
https://www.theguardian.com/world/2016/dec/01/revealed-coutts-bank-managed-tax-havens-high-risk-clients-jefri-bolkiah-brunei-panama-papers