Bags of cash: How money laun­der­ers used CBA

Kuwait Times - - BUSINESS -

In a run-down mall in one of Syd­ney’s big­gest Chi­nese neigh­bor­hoods in 2015, 29-year-old Jizhang Lu showed up at the top-floor of­fices of a meat ex­port com­pany car­ry­ing a car­rier bag stuffed with hun­dreds of thou­sands of dol­lars in cash.

Ac­cord­ing to po­lice doc­u­ments filed in court and re­viewed by Reuters, Lu said he made the trip to the shopfront of CC&B In­ter­na­tional Pty Ltd eight times over three weeks. Each time a CC&B em­ployee would hand him a re­ceipt show­ing a dif­fer­ent com­pany had bought tens of thou­sands of kilo­grams of meat.

The cash - as much as A$530,200 ($416,840) at a time - was then de­posited at a Com­mon­wealth Bank of Aus­tralia (CBA) branch, ac­cord­ing to the po­lice state­ment of facts agreed by Lu.

But the ap­par­ent pur­chases were fake, and last year Lu was jailed for two years after plead­ing guilty to help­ing laun­der A$3.2 mil­lion of what po­lice al­lege were pro­ceeds from an uniden­ti­fied in­ter­na­tional drug syn­di­cate. The court records re­viewed by Reuters did not name Lu’s lawyer. Lu could not im­me­di­ately be con­tacted di­rectly be­cause he was in cus­tody.

The po­lice case against Lu is now one of sev­eral be­ing cited by fi­nan­cial in­tel­li­gence agency AUS­TRAC in its state­ment of claim against CBA, the largest civil court ac­tion of its kind in Aus­tralian cor­po­rate his­tory. AUS­TRAC has ac­cused CBA of “se­ri­ous and sys­temic” breaches of money-laun­der­ing and counter-ter­ror­ism fi­nanc­ing rules, al­leg­ing the coun­try’s se­cond big­gest mort­gage lender failed to de­tect sus­pi­cious trans­ac­tions nearly 54,000 times. It faces fines po­ten­tially amount­ing to bil­lions of dol­lars.

CBA has said it will fight the AUS­TRAC law­suit, say­ing it would never de­lib­er­ately un­der­take ac­tion that en­ables any form of crime. CBA said a cod­ing er­ror with new au­to­mated teller ma­chines was be­hind most of the breaches but that it rec­og­nized there were “other se­ri­ous al­le­ga­tions” in AUS­TRAC’s claim were un­re­lated to that soft­ware prob­lem. It de­clined to com­ment specif­i­cally about the po­lice case against Lu.

Pro­ceeds of crime

AUS­TRAC’s law­suit against CBA as­serts that, in to­tal, A$17.7 mil­lion was de­posited at the bank from Fe­bru­ary to Au­gust 2015 on be­half of a com­pany iden­ti­fied in the ear­lier crim­i­nal case as CC&B.

“These funds were the pro­ceeds of a drug im­por­ta­tion syn­di­cate and were pro­ceeds of crime, within the mean­ing of the Crim­i­nal Code Act,” AUS­TRAC’s state­ment of claim says, re­fer­ring to CC&B only as Com­pany 1. Lu was iden­ti­fied in AUS­TRAC’s state­ment of claim against CBA, which also spec­i­fied the time and length of Lu’s sen­tence. A sub­se­quent Reuters search of the crim­i­nal case against Lu pro­duced the po­lice “facts sheet” which pro­vided fur­ther de­tail of his op­er­a­tion, in­clud­ing the name of CC&B.

The records of Lu’s crim­i­nal case, pro­vided to Reuters by a com­mu­ni­ca­tions of­fi­cer for the court which con­victed Lu, showed that he pleaded guilty. A call to the phone num­ber listed on CC&B’s web­site went unan­swered. A Reuters visit to the ad­dress where Lu said he dropped off bags of money, at Lemon Grove shop­ping cen­tre, showed no sign of CC&B - other than a men­tion in an old store guide for shop­pers.

Calls over two days to Lemon Grove also went unan­swered. Aus­tralian com­pany fil­ings showed CC&B’s cor­po­rate ad­dress as “Sun­ny­side Ac­coun­tants”. A woman who an­swered the phone at that firm said CC&B was a former client but that she could give no fur­ther in­for­ma­tion be­cause the or­ga­ni­za­tions had parted ways. Sun­ny­side hasn’t been named in AUS­TRAC’s suit.

“Can you help?”

Lu, a Chi­nese na­tional on a busi­ness visa, de­scribed him­self as a “net en­gi­neer”, ac­cord­ing to the po­lice doc­u­ment filed in court. He had no in­volve­ment in the meat ex­port in­dus­try and earned 60,000 yuan ($9,000) a year in his home coun­try, he told po­lice. Lu said he met an­other Chi­nese man while gro­cery shop­ping in the Syd­ney sub­urb of Chatswood, where CC&B was based.

“After some chat­ting, he say, ‘can you help me do this please?’,” Lu told po­lice, ac­cord­ing to the doc­u­ment.

Lu agreed to help “be­cause the man asked him”, the po­lice state­ment said, with­out elab­o­rat­ing.

He told po­lice he didn’t un­der­stand the re­ceipts be­cause they were writ­ten in English. Aus­tralia’s Joint Or­ga­nized Crime Group charged two CC&B em­ploy­ees with deal­ing in crim­i­nal pro­ceeds about the same time as Lu, in Au­gust 2015.

The Aus­tralian Fed­eral Po­lice could not im­me­di­ately pro­vide an up­date on the two CC&B em­ploy­ees iden­ti­fied as be­ing charged.

The po­lice state­ment said a third CC&B per­son, com­pany di­rec­tor Ka Chun Le­ung, was a “po­ten­tial coac­cused” but has left the coun­try. Ef­forts by Reuters to con­tact Ka were un­suc­cess­ful. —Reuters

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