A former executive committee member of HSBC Private Bank’s Swiss unit has left the bank, along with a number of other employees, after his brothers were arrested in a high-profile international money laundering and drug-smuggling ring.
Geneva-based lawyer Marc Bonnant, of Bonnant Warluzel and Associates, said his client, Judah Elmaleh, had no connection with the ring but had decided to leave HSBC Private Bank (Suisse) "by mutual agreement" to limit the damage to the bank’s reputation.
Judah Elmaleh, the eldest of four Elmaleh brothers, had been on the supervisory executive committee of HSBC Private Bank in Switzerland until he left for Israel some time before the scandal became public.
This comes after the Ministère de l’Intérieur, the French Home Office, confirmed a HSBC Private Bank (Suisse) employee, Nessim Elmaleh – Judah Elmaleh’s younger brother, is at the centre of an alleged international money laundering scandal.
Franco-Swiss anti-fraud services uncovered an extensive tax scam and a cannabis-smuggling ring across Switzerland, France, Spain and Morocco and detained 17 people including 28-year-old Nessim Elmaleh and his brothers Mardoché, 52, and Meyer Elmaleh, 48, in connection with the ring.
"Name was a problem" – Bonnant
"[Judah Elmaleh] is not involved in this affair," Bonnant said, "He has not even been heard as a witness by the investigators."
Though not involved, his lawyer confirmed: "[Judah Elmaleh] noted that having the same name as his brothers was problematic in relation to his customers who weren’t familiar with the case."
His lawyer said Elmaleh had then decided to leave the bank, with the bank agreeing it was for the best.
HSBC has declined to comment on the case.
Other employees with different names leave too
Bonnant confirmed other employees – who did not share the same last name – had also left the bank.
"The bank has restructured the Israel unit," he added.
"The suspicion is already too much, so as not to tarnish their reputation those decisions were taken by mutual agreement," he added.
Names of other employees to have left HSBC have not yet been disclosed.
The "Elmaleh connection" totals $130m
While Nessim Elmaleh was working for the private bank in Switzerland, his brother Meyer was a renowned fund manager and managing director of GPF SA, a small wealth management business in Geneva.
All 17 suspects admit they were smuggling cash into France from undeclared Swiss bank accounts but deny having any connection with drug trafficking.
The French police said sums involved in the money laundering were about 40m ($52.1m), while French Interior Minister Manuel Valls said he believed the drug-smuggling may have brought in about 100m ($130.4m).
Further HSBC AML problems?
The Elmaleh case comes after HSBC was accused by the US Senate earlier this year of facilitated financing of terrorism and other criminal activities by lacking effective internal controls during 2004 to 2010, especially mid-2006 to mid-2009.
The senate also investigated whether HSBC Holdings was used to launder money coming from Central and South America, Iran and Sudan.
HSBC’s Mexican unit was fined $27.5m for non-compliance with anti-money laundering (AML) in July this year.
Agnès Thibault-Lecuivre, head of communications for the Paris public prosecutor in charge of the case, said "It is not to my knowledge that HSBC is being investigated by French authorities."
Sophie Bernard, head of communications for Geneva’s justice department, said she did not know if HSBC was being investigated.
"The investigation is still ongoing and only when the results come out will we be able to say who was suspected," she added.