Bangladesh is not pleased with the NY Fed.
One Friday in early February, hackers who had apparently been stalking the Bangladesh central bank for at least two weeks bombarded the Fed with requests for transfers of nearly $1 billion from the country's FX reserves.
The good news: the vast majority of that total was not transferred. The bad news: $100 million of it was and of that $100 million, more than $80 million is still missing.
For those who missed the story, you can review it in all its James Bond-ish glory in the four posts linked below, but here is a brief summary of what happened to the $81 million: 1) it was transferred to four accounts at the Jupiter Street, Makati City, branch of Rizal Commercial Banking Corp (RCBC) in the Philippines, 2) $470,000 in cash went into the branch manager's trunk and the rest went to a possibly forged (but possibly not) account registered to one William Go, 3) the money was transferred to an FX broker called Philrem, 4) $50 million was split between two casinos and the remaining $31 was delivered to a "Weikang Xu" in cash.
From there, the trail goes cold.
(branch manager Maia Santos Deguito)
The CCTV cameras at the bank weren’t functioning during the questionable transfers but branch manager Maia Santos Deguito stands accused of ignoring a stop order from the central bank and from her superiors. Meanwhile William Go claims he had nothing to do with it, Bangladesh's finance minister AMA Muhith thinks his country’s central bank was in on the scam, and the NY Fed says it followed proper protocol. This evening, WSJ reported that according to people familiar with Bangladesh central bank's operations, its SWIFT terminal for interbank messaging might have been left logged on on the night of February 4, creating a hole via which more than $100 million was stolen.
- Plot Thickens In New York Fed Heist As $30 Million In Cash Said Delivered To Mystery Chinese Man
- The Incredible Story Of How Hackers Stole $100 Million From The New York Fed
- Chinese Hackers Break Into NY Fed, Steal $100 Million From Bangladesh Central Bank
- Mystery Of New York Fed Robbery Has Central Banks Asking Who's Next
As we wrote last week, “what seems likely here is that this is part of something far larger and it could very well be that none of the people along the paper trail (Deguito, Go, whoever was or wasn't involved at the Bangladesh Bank, etc.) actually knows who is ultimately pulling the strings.”
Regardless of who is behind the heist, the Fed “cannot avoid their responsibility in any way," FinMin Muhith insists.
His government is apparently willing to push that line, because as Reuters reports, “Bangladesh's central bank has hired a lawyer in the United States for a potential lawsuit against the New York Federal Reserve.”
"We view this as a major lapse on the part of FRB NY," BB said in the report, a copy of which was obtained by Reuters.
RCBC has since fired Deguito and her assistant Angela Torres who requested the money that later ended up in her boss's car. Branch officer Romualdo Agarrado claims Deguito told him that she feared for her life and that was why she had to ignore the freeze order on the accounts. Here's what he told lawmakers: “But the one that stuck in my mind – she said, 'I would rather do this than me being killed, or my family.'” Deguito denied making the statement.
Deguito would later say William Go asked for 10% of the $81 million to keep quiet about the scheme. Go has since threatened to sue Deguito.
“We offered Maia (to be included in the) Witness Protection Program but she turned it down,” Osmena, chairman of the Senate committee on banks and financial institutions, told PhilStar who adds that Sen. Joseph Victor Ejercito said there is a need to establish first Deguito’s role before she can be tapped as state witness. “I don’t think that’s proper at this point. Being a state witness means she must not be the most guilty, but according to the testimonies during the hearing, she appears to be one of the main actors in this scheme,” Ejercito said.
Perhaps she should have accepted the witsec offer. Over the weekend, reports suggested a cyber crime expert who spoke to police and the media about the heist had disappeared.
"Kamrun Nahar Chowdhury said her husband Tanveer Hassan Zoha had been taken from a motorized rickshaw in the early hours of Thursday by people in plainclothes who blindfolded him and drove off with him in a vehicle," Reuters said.
Meanwhile, the Philippines’ anti-money-laundering agency has filed criminal complaints against Weikang Xu - the casino junket operator who took delivery of $31 million in cash at the Bloomberry - and another businessman named Kim Wong. "The president of PhilRem, a local money-remittance firm that helped transfer the money, testified that once the money was in the Philippines, $29 million was directed to the account of a man he identified as Mr. Xu at Manila-based Solaire Resort & Casino. He also said that approximately $30 million was delivered to Mr. Xu in cash," WSJ writes. "PhilRem’s president said an additional $21 million was transferred to a local online gambling company called Eastern Hawaii Leisure Co., owned by Mr. Wong."
"The AMLC alleged that Wong knew or should have known that the funds remitted or transferred to the accounts of the four 'John Does,' 'Willam Go,' Philippine Remittance Ltd. (PhilRem), Eastern Hawaii Casino and Resort in the Cagayan province, and to his own account were part of the stolen funds from the Bangladesh Bank," CNN Philippines reports.
Who is Kim Wong, you ask? Good question. Here's a bit of useful background information from ABS-CBN:
Fifteen years ago, on August 23, 2001, a 39-year-old Chinese man--also named Kam Sin Wong, alias Kim Wong--faced the Senate Blue Ribbon Committee.
Wong sat in the same room just a few steps away from three other men who had accused him of involvement in illegal drugs and other criminal activities.
The three were Col. Victor Corpus, then chief of the Intelligence Service of the Armed Forces of the Philippines (ISAFP); former Manila Mayor Alfredo Lim; and one Ador Mawanay, an alleged agent of the now defunct Presidential Anti-Organized Crime Task Force.
According to the Senate transcripts of the hearing, Corpus had suspected Sen. Panfilo Lacson of links to the illegal drug trade and that it was Wong who was the senator’s conduit to the drug mafia.
Both Lacson and Wong denied the allegations.
Wong told the Senate hearing that he had no clue as to why the ISAFP was accusing him of such crimes. “Ako ay isang negosyante lang na maliit,” Wong said.
But as the hearing unfolded, it became clear Wong was anything but a small-time businessman.
By 2001, Wong owned a garments business and three restaurants in Manila as well as golf and tennis club memberships.
It would appear business was going very well because he and three Chinese friends were in a position to gift the Western Police District with a building which was constructed within the police headquarters' premises.
By the time the Senate wrapped up its 2001 investigation, Wong was left unscathed, while his principal accuser, Corpus, was admonished for his "blunder."
Corpus had presented the picture of the wrong Wong to the media at the onset of the probe. Mawanay too was deemed an "unreliable" witness, according to the committee report.
Allegations against Lacson were merely passed on to the Department of Justice for further investigation in 2001.
NBI records in 2001 showed one Kam Sin Wong had been charged for swindling and estafa.
And then, in 2009, a case of illegal dismissal was filed by one John Aguyaoy before the National Labor Relations Commission against the Eastern Hawaii Leisure Co. and Kim Wong.
The case reached the Court of Appeals, with the Eastern Hawaii Leisure Corporation saying Wong was “neither an employee (nor) director or stock holder of the company” and Aguyaoy saying “Wong is the real owner …and the police, the public, his employees …were all made to believe that he is the owner because he was in control of all the activities” of the company.
But aside from these cases, not much was heard about Wong, until the name of one Kam Sin Wong alias Kim Wong surfaced again last week.
PhilStar sums all of the above up as follows: "In 2001, Wong was tagged as one of former Sen. Panfilo Lacson's financiers during the investigation of the former senator's alleged hidden wealth and ties with drug lords." According to Deguito, it was Wong who introduced her to Michael Francisco Cruz, Jessie Christopher Lagrosas, Alfred Santos Vergara and Enrico Teodoro Vasquez, the four "John Does" whose names were on the RCBC accounts where the money was initially transferred after it left the NY Fed.
She also says it was Wong who told her to open the account under William Go's name. "When the Senate Blue Ribbon committee opened the investigation on March 15, it said it could not locate Lagrosas, Vasquez, Cruz and Vergara at their given addresses," ABS-CBN goes on to note.
So we suppose the question now is this: who does Wong work for? Or is this, like the accusations against the businessman in 2001, a case of mistaken identity wherein unscrupulous witnesses are presenting a picture of the "wrong Wong"?
Incidentally, Panfilo Lacson is running for Senate again. In two months.