Trust firm could face £650K fine over Angola arrangement
A TRUST company could be fined £650,000 for failing to recognise ‘obvious’ money-laundering risks when dealing with a firm investing millions of dollars of Angolan public money.
LGL Trustees Ltd, represented by Anthony Pitcher, the chairman of its Jersey board, and John Pirouet, its chief executive, appeared in the Royal Court yesterday after pleading guilty to two charges in December last year.
In 2010 the company set up a ‘limited partnership’ structure which was to be managed by Jean-Claude Bastos de Morais, a Swiss-Angolan national who ran a Swiss-based investment business called Quantum Global. QG was commissioned in 2009 by the Angolan Council of Ministers to negotiate the purchase of real-estate investments into which the Angolan state could invest.
Solicitor General Matthew Jowitt, prosecuting, said LGL failed to recognise ‘numerous red flags’. He added that the risky nature of the Angolan arrangement became apparent two years after LGL ended its relationship with QG when the Angolan president’s son and Mr Bastos faced prosecution for allegedly appropriating public funds in the country.
Mr Bastos reached a settlement with prosecutors and QG transferred control of some bank accounts totalling $2 billion to the sovereign wealth fund of Angola. Meanwhile, the Angolan president’s son was convicted of fraud and sentenced to five years in prison.
It also transpired that Mr Bastos de Morais had previously been convicted by a Swiss court in July 2011 of ‘repeated qualified criminal mismanagement’.
Mr Jowitt said: ‘The suggestion that Bastos and dos Santos junior – Zenu – might have been involved in a fraudulent skimming operation in relation to Angolan state funds is far from fanciful. It was staring LGL in the face.’
He added: ‘LGL were completely wrong to dismiss those concerns at the time. LGL should have done what its [money laundering reporting officer] said in the summer of 2011 and ceased to work with Quantum Global. Instead, it behaved as if there was no problem, and carried on assisting these probable criminals – and making money from doing so.’
Mr Jowitt said the firm could face a fine of £1.2 million. However, after applying discounts for an early guilty plea, among other factors, he said that a fine of £650,000 would be appropriate.
Referring to the £200,000 cost of employing a law officer to work on the 24-month-long investigation, he also recommended that LGL make a £50,000 ‘contribution’.
Advocate William Grace, defending, told the court his client was ‘contrite’ and rather than not following anti-money-laundering procedures whatsoever, it was the case that they had not followed them to a sufficient degree.
Referring to LGL’s annual profit of around £750,000 he also said the fine moved for by the prosecution would have a significant financial impact on the business which would suffer ‘serious reputational damage’.
‘LGL understands why they are before the court today and understands the seriousness and rationale of anti-money-laundering regulations. It stands shoulder to shoulder with the court on that and is not an industry outlier,’ he said.
‘It got something wrong in this case but it seeks to uphold the highest standards. It is not a rogue business and is before the court because of one mistake it made in 2010.’
Due to the complexity of the case, the Royal Court chose to reserve its judgment, which will be published at a later date.
Commissioner Julian Clyde-Smith was presiding. Jurats Jane Ronge and Gareth Hughes were also sitting.
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