Bangladesh team in Manila says close to recovering only fraction of heist money

[August 05, 2016]  By Krishna N. Das, Karen Lema and Neil Jerome Morales

MANILA (Reuters) - A Bangladesh central bank team visiting Manila to recover $81 million stolen from its account in New York said it was close to getting back $15 million of the loot frozen by the Philippines, but first has to prove ownership of the cash to its hosts.

Cyber criminals tried to steal nearly $1 billion from Bangladesh Bank's account at the Federal Reserve Bank of New York in February, and succeeded in transferring $81 million to four accounts at Manila's Rizal Commercial Banking Corp <RCB.PS>, which was then laundered through the city's casinos, according to investigators.

Only about $18 million, including $2.7 million frozen by the Philippines' casino regulator, has been accounted for.

The Philippines' Department of Justice (DoJ) has asked the Bangladesh Bank delegation to file a legal document staking its claim to $15 million of that, but the casino money will have to be pursued separately, said two sources close to the visiting team.

"We are in the final stages of recovering the $15 million, but for the rest we hope a (Philippines) senate hearing on the issue resumes so that we can get to know more details about the case," said John Gomes, Bangladesh's ambassador to the Philippines, who is helping the bank representatives on a four-day visit to Manila ending Friday.

The last Philippines Senate hearing into the heist ended in May as a new government came to power under President Rodrigo Duterte. No date has been announced for a resumption.

Bangladeshi officials say the money was able to disappear into the casino industry because of systemic failures at RCBC, not just individual error by some of its officers.

The Philippine central bank said on Friday it would fine RCBC 1 billion pesos ($21 million) in relation to failings over the heist, the largest amount it has ever approved "as part of its supervisory enforcement actions".

In March RCBC's then president Lorenzo Tan told a Senate hearing that there was "some judgment error from the people on the ground".

It said earlier on Friday that the transfers were made based on authenticated instructions over payments network SWIFT, and the hackers had used stolen Bangladesh Bank credentials.

The Bangladeshi delegation consists of Debaprosad Debnath and Abdul Rab from Bangladesh Bank's financial intelligence unit, and Bangladesh Bank lawyer Ajmalul Hossain. They have already met the DoJ and officials from the anti-money-laundering council in Manila, and will be seeing central bank officials on Friday.

The team has prepared an affidavit citing a letter by the New York Fed to the Philippines' central bank, in which the Fed said the money was stolen from Bangladesh Bank's account. The affidavit will be given to the DoJ to file with a court, the sources said.

Gomes told Reuters late on Thursday he hoped the $15 million would be returned in a month. He will hold a press conference on the issue later on Friday.

PROVE IT

Ricardo J. Paras III, chief state counsel of the DoJ, told Reuters that it has already drafted court documents to begin recovery of the $15 million, but it was important for Bangladesh to prove it is their money.

A security guard stands guard outside a branch of Rizal Commercial Banking Corporation (RCBC) in Paranaque city, Metro Manila, Philippines August 2, 2016. REUTERS/Erik De Castro

The Philippine Amusement and Gaming Corporation (PAGCOR), a government body that regulates casinos in the country, has promised to cooperate with Bangladesh Bank to help it recover the $2.7 million it has frozen, Gomes said.

"The money is with Solaire (Resort and Casino)," PAGCOR President Alfredo Lim told Reuters. "It will put us in a bad light if the money is not immediately released to them."

Solaire, operated by Bloomberry Resorts Corp <BLOOM.PS>, has said about $29 million of the funds came to the casino and most was transferred to the accounts of two junket operators.

Solaire did not immediately return requests for comment.

The Bangladeshi sources said they were writing to President Duterte, whom Gomes has already met, formally seeking his help to recover all of the stolen money.

Duterte spokesman Ernesto Abella said Bangladesh Bank should reach out to the president soon.

The sources said Bangladesh Bank would take RCBC to court if these efforts fail to bear fruit.

It is relying on internal RCBC documents to buttress its assertion that the bank’s Jupiter Street branch in Manila ignored suspicions raised by some RCBC officials when the money was first remitted to the accounts on Feb. 5, and then delayed acting on requests from RCBC’s head office to freeze the funds on Feb. 9.

"Going to court instead of the media and various Philippine government agencies is the proper procedure," RCBC said in a statement.

"Bangladesh should finish its own investigation to determine who the culprits were before concluding the theft was an outside job, without fault on their part."

(Reporting by Krishna N. Das, Karena Lema and Neil Jerome Morales in MANILA; Editing by Will Waterman)

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