Bangladesh launched legal battle | The Daily Star
12:00 AM, February 02, 2019 / LAST MODIFIED: 12:08 PM, February 02, 2019

Legal battle begins

BB sues Rizal Bank in US court to recover $66m from the Philippines bank; Rizal terms lawsuit 'political stunt'

With the help of Federal Reserve Bank of New York, Bangladesh yesterday launched a legal battle to recover the full amount stolen from its central bank's reserve.

The move came nearly three years after hackers stole $81 million from a Bangladesh bank account with the NY Fed.

The BB filed a case with the United States District Court for the Southern District of New York around 7:00am (NY time 8:00pm) against Philippines' Rizal Commercial Banking Corporation (RCBC) and others, including several top executives, for their involvement in a “massive and multi-year conspiracy” to steal its money.

Read more: BB heist: FBI suspects insider involvement

The case was lodged online with the court at Manhattan in New York City and the court accepted the lawsuit immediately, Abu Hena Mohd Razee Hassan, head of BB's Bangladesh Finance Intelligence Unit (BIFU), told The Daily Star.

"The Federal Reserve Bank of New York will extend its full cooperation in the legal process and in recovering the money," he said.

Meanwhile, in a joint statement, BB and NY Fed said they were committed to work together to recover the stolen funds of BB and bring the culprits to book.

In the case statement, the BB said the RCBC and its senior personnel had full authority and control over the fictitious accounts used in the crime.

The first paragraph of the 103-page complaint reads, "This litigation involves a massive, multi-year conspiracy to carry out one of the largest banks heists in modern history right here in New York City."

Cozen O' Connor, a large US law firm, filed the case on behalf of Bangladesh.

Timeline

February 4, 2016

$101 million stolen from Bangladesh Bank reserve.

 

February 11, 2016

Anti-Money Laundering Council learns $81 million from BB reserve transferred to other places from Philippines.

 

February 17, 2016

Sri Lanka's Pan Asia Banking returns $20 million to BB's New York Fed account.

 

February 29, 2016

Case was filed on behalf of Philippines' AMLC with a court for confiscating five bank accounts.

 

March 11, 2016

Philippines' AMLC lodges complaint with the Dept of Justice against Rizal Bank's branch manager Maia Santos-Deguito for money laundering.

 

March 15, 2016

BB files case with Motijheel Police Station under Money Laundering Prevention Act against unidentified persons. After this, CID was tasked with probing the incident. 

 

March 17, 2016

Maia Deguito, former branch manager of RCBC, held responsible in Rizal's internal probe.

 

May 11, 2016

The NY Fed, BB and SWIFT issue a joint statement to bring the perpetrators to justice.

 

November, 2016

Philippines sends back $14.54m.

 

January 10, 2019

A court in the Philippines convicts and sentences Maia Deguito. 

 

February 1, 2019

BB files case with a New York court over the cyber heist.

Meanwhile, the RCBC has hired another US law firm to defend the case, claiming the lawsuit was “nothing more than a political stunt" to try to shift blame on the corporation.

On February 4, 2016, hackers broke into the central bank's system and generated 70 fake payment orders to the Federal Reserve Bank of New York amounting to $1.94 billion.

The NY Fed's security system flagged the payment orders but only five of them fell through and $101 million was released.

Of the amount, $81 million was wired to an RCBC branch in Manila, from where it disappeared into the casino industry in the Philippines. The rest $20 million made its way to Sri Lanka.

Sri Lanka sent back the entire sum immediately after the heist was exposed while the Philippines returned $14.54 million in November 2016 -- meaning $66.46 million is yet to be retrieved.

Talking to this newspaper yesterday, Razee said the case was filed to recover the money and realise the legal and other costs.

Asked about the fee of the law firm, he said it had to do a lot of things before filing the case and the BB bore all the costs.

"We also have to pay the firm when it will move the case," said the head of BIFU.

Asked, he said the firm had assured them of recovering the money as per the international laws.

Razee, however, could not say how much time would be needed to get back the money.

Another BB official, involved in the process, said many such money laundering cases were dissolved within three years and the money was recovered during that period.

However, there are also instances that some cases took years to be disposed of, said the official, wishing not to be named.

On the reason for the delay in filing the case, Bangladesh Bank Governor Fazle Kabir on January 30 told reporters that the process of case disposal with the Philippines was a lengthy one.

He hoped that less time would be required to have the case dissolved by the NY court.

On this January 10, a court in the Philippines convicted Maia Deguito, a former branch manager at the Manila-based RCBC, of money laundering, in the first conviction over the BB heist.

The Makati Regional Trial Court sentenced Deguito to a jail term ranging from 32 to 56 years, with each count carrying four to seven years. She was also ordered to pay a total of about $109 million in fine.

Later on January 28, a BB team, including Debaprasad Debnath, a consultant of the central bank, flew to New York.

RCBC's LAW FIRM

The RCBC has hired top US law firm Quinn Emanuel to defend the lawsuit. The Philippines bank revealed this in a stock exchange filing yesterday.

"We will show that this suit is nothing more than a political stunt by the Bangladesh Bank to try to shift blame from themselves to RCBC," Tai-Heng Cheng, Quinn Emanuel's lead attorney in the case, was quoted as saying in the filing.

"Not only are the allegations false, they don't have the right to file here since none of the defendants is in the US," Cheng said, reports the Philippine Daily Inquirer.

RCBC had nothing to do with the theft of the funds and has cooperated fully with every investigation into the matter, he said, adding that, "This suit is nothing more than a blatant attempt by Bangladesh Bank to shift blame and cover up their own liability."

BB, NY Fed to work together

A joint statement by BB and NY Fed yesterday said, “To further the recovery effort, the New York Fed and BB have entered into a Resolution and Assistance Agreement, where the New York Fed will provide technical assistance to BB in its litigation against those who were complicit in the fraud to recover the stolen funds.”

Among others, that technical assistance includes a joint meeting of the two organisations with relevant agencies or parties in Philippines to encourage assistance in the recovery of stolen funds, it added.

The banks also termed the fraud on Bangladesh's account at the NY Fed as “a threat” to the international fund transfer system. 

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