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MAKATI RTC COMPLAINT STEMS FROM 2016 CYBERHEIST

Countersuit: RCBC files defamation case vs Bangladesh Bank

/ 07:24 AM March 13, 2019

Yuchengco family-led Rizal Commercial Banking Corp. (RCBC) has slapped the central bank of Bangladesh with a defamation suit at a local court, complaining of what it described as “baseless” allegations of complicity in relation to the $81-million cyberheist that victimized Bangladesh Bank in 2016.

RCBC filed the civil complaint on March 6 with the Makati City Regional Trial Court (RTC), arguing that its “reputation has come under the vicious and public attack by Bangladesh Bank since 2016.”

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“It is public knowledge that Bangladesh Bank has embarked on a massive ploy and scheme to extort money from plaintiff RCBC by resorting to public defamation, harassment and threats geared toward destroying RCBC’s good name, reputation and image, all with the intention of getting RCBC to pay Bangladesh Bank money that RCBC does not have in its custody or possession and which it does not owe to Bangladesh Bank,” RCBC argued.

The suit was served on Abu Hena Mohammad Razee Hassan, deputy governor and head of Bangladesh Bank Financial Intelligence Unit (BFIU) and the other members of Bangladesh Bank delegation who arrived in the Philippines this week for meetings with banking officials.

Money laundering

Bangladesh Bank last month sued RCBC in US District Court for the Southern District of New York in relation to alleged money laundering.

The Federal Reserve Bank of New York (New York Fed) agreed to provide “technical assistance” to Bangladesh Bank, setting the stage for its long-promised litigation over the February 2016 heist of $81 million, of which only $15 million has been recovered.

Court documents say hackers from North Korea used fraudulent orders on the SWIFT payments system to the New York branch of the US central bank, which oversees the account and was tricked into releasing the funds.

Harmed reputation

The hackers created 70 orders to the New York Fed amounting to $1.94 billion. Of that amount, $101 million was released.

Of the total requested, $81 million was sent to accounts at RCBC’s Jupiter branch in Makati City. The money was quickly withdrawn and eventually laundered in local casinos.

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In a statement on Tuesday, Tai-Heng Cheng, RCBC’s lead lawyer and a partner at the New York office of the law firm Quinn Emanuel Urquhart & Sullivan LLP, said Bangladesh Bank’s claims were “baseless and have harmed RCBC’s reputation as one of the best banks in the Philippines.”

“Bangladesh’s suit is nothing more than a political stunt to try to shift blame from themselves to RCBC. The action taken today by RCBC finally puts the case in a court where—at the very least—the alleged crime took place,” Cheng said.

RCBC’s lawsuit alleged that Bangladesh had failed to secure its network and to timely disclose those failings. The complaint also refuted Bangladesh Bank’s allegation that RCBC had played a premeditated role in the cyberheist.

“Bangladesh Bank had lost the $81 million the minute it left defendant Bangladesh Bank’s account at the New York Fed and way before it had even reached the Philippines,” the complaint said, adding that there was “absolutely no act attributable to RCBC that caused the payment instructions to reach the NY Fed and the Correspondent Banks.”

Shifting blame

Thea Daep, partner at the Manila law firm Villaraza & Angangco, said “RCBC had nothing to do with the theft of the funds and has cooperated fully with every investigation into the matter.”

The suit was “nothing more than a blatant attempt to shift the blame and cover up their own liability at RCBC’s expense,” Daep said.

The $81-million money laundering issue, which RCBC claimed to be the handiwork of a “rogue” Jupiter branch officer, then branch manager Maia Deguito, thrust the Philippines into the global spotlight in 2016 for what was considered the world’s biggest cyberhacking incident.

Deguito, who maintained her innocence, was convicted of money laundering in January by the Makati RTC.

Casino junket operator Kim Wong had identified two Chinese—junket agent Gao Shuhua and Ding Zhize, a businessman from Macau—as the people who allegedly brought the $81 million into the country and arranged the opening of accounts at the RCBC Jupiter branch. Authorities have yet to locate and charge the two.

During a Senate probe, Wong accused Philrem, the remittance company used for the transactions, of holding on to $17 million of the missing Bangladeshi funds, an allegation Philrem denied. Those funds remain unaccounted for to this day.

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TAGS: 2016 cyberheist, Bangladesh Bank, RCBC
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