Lombard Odier indicted in Switzerland for cash laundering

By Dave Graham and Oliver Hirt

ZURICH (Reuters) – Swiss prosecutors on Friday indicted non-public financial institution Lombard Odier and one of many agency’s former workers for “aggravated cash laundering”, in a uncommon cost of such magnitude in opposition to one in every of Switzerland’s greatest and oldest wealth managers.

The financial institution and the ex-employee are suspected of getting performed a decisive position in enabling the concealment of the proceeds of a prison enterprise allegedly arrange years in the past by Gulnara Karimova, daughter of the late president of Uzbekistan, Islam Karimov, the Swiss Legal professional Basic’s Workplace (OAG) stated.

Lombard Odier denied wrongdoing and stated the investigation in query started after it had itself reported suspicions to Swiss authorities in 2012. Swiss authorities stated in 2017 that they had opened an investigation into the case.

“The allegations are unfounded and with out benefit and are firmly rejected by the financial institution,” it stated in a press release, including that it had totally cooperated with authorities all through.

Karimova, who’s at present in jail and was indicted by the Swiss OAG final 12 months over alleged participation in a scheme on the centre of the case, couldn’t instantly be reached for remark. She has beforehand denied these allegations. 

Geneva-based Lombard Odier, which dates again to 1796, reported complete consumer belongings of 296 billion Swiss francs ($336 billion) on the finish of final 12 months.

“It is extremely uncommon for a financial institution to be charged,” stated Peter V. Kunz, a professor of enterprise regulation on the College of Bern.

Kunz stated the allegations had been damaging for Lombard Odier no matter the end result. Beneath prison regulation, the financial institution confronted a high quality at most, though additional sanctions could possibly be utilized by regulators if the case led to a conviction, he stated.

Banking secrecy was as soon as the cornerstone of Switzerland’s prowess in wealth administration, however that stronghold has been steadily eroded underneath worldwide stress, making it more durable for individuals to make use of the nation to cover their wealth.

The OAG alleged Lombard Odier did not adjust to anti-money laundering requirements and its personal inner tips in opening and managing 9 financial institution accounts underneath suspicion.

Prosecutors filed the costs in opposition to Lombard Odier only a few days after Credit score Suisse, which is now part of UBS, was acquitted of failing to stop cash laundering by a Bulgarian cocaine trafficking gang, overturning a 2022 conviction.

Dominik Gross, an financial historian at Swiss NGO Alliance Sud, stated the indictment was the newest in a rising collection of setbacks for the nation’s monetary sector, even when it alone regarded unlikely to do severe harm to Lombard Odier.

“A non-public financial institution is much less uncovered to the markets than was the case with Credit score Suisse,” he stated, noting how scandals steadily sapped confidence in Credit score Suisse, which collapsed in 2023.

Swiss prosecutors stated Karimova and one other individual are suspected of collaborating in a prison organisation often known as “The Workplace”, which operated in a number of international locations, and of laundering proceeds in Switzerland, between 2005 and 2012.

The operation allegedly channelled tons of of hundreds of thousands of {dollars} price of bribes from telecoms corporations.

The OAG believes a part of the laundered cash might have been transferred utilizing financial institution accounts at Lombard Odier in Geneva.

The ex-employee labored on the financial institution’s non-public shoppers’ part between 2008 and 2012, and is suspected of getting opened or organized for the opening of the 9 accounts, it stated.

Karimova, 52, is presently in jail in Uzbekistan, after being jailed in 2019 for violating the phrases of her home arrest and receiving a sentence in 2015 on expenses of embezzlement and extortion. She was handed an extra sentence in 2020.

($1 = 0.8808 Swiss francs)