A Trust Company Penalised for Opening a Doorway to Money Laundering

A team of accountants and economists have been fined by a court in Channel Island for neglecting obvious risks related to corruption and embezzlement. They were involved in providing services to a company working with the government of Angola. The company is an investment management firm. 

Jersey’s Royal Court took a decision this week to penalise the LGL Trustees Ltd.  A sum of $835,000 has been fined to the firm for violating two of the island’s anti-money laundering compliances. The company has already pleaded guilty in December 2020. 

The judgement analysed that, from 2010 to 2016, LGL firm took more than $1 million for providing their services to Angola’s management sovereign wealth fund. These investments were reviewed by Jean-Claude Bastos de Morais. According to the prosecutors, a questionable and huge amount of fees was paid to Bastos. The banks were reluctant to work with Bastos but the trust company accepted the work and opened a doorway for the possibility of money laundering. 

Bastos is known to have close relations with José Filomeno Zénu dos Santos, who was appointed by the President of Angola to manage the sovereign wealth funds of the Country. Both Bastos and dos Santos were previously charged with embezzlement in 2018. Bastos denied the charges and settled the case with the authorities. Zénu was, however, sentenced to some time in prison for a fraud case.

A BBC journalist revealed the Bastos’ personal windfall being part of the Paradise Paper investigation. The leaked financial records also revealed that Bastos was given a total amount of $41 million in 20 months. Experts called this very unusual arrangement for the sovereign wealth fund of Angola.

Bastos’ lawyers said that the “Jersey case involved no findings that any crime had been committed, by anyone including Bastos and his company, Quantum Global.” 

The lawyers also pointed out the previous allegations made by Angola’s sovereign wealth fund against Bastos and his firm Quantum Global were dismissed by the court. The company was subjected to due diligence. 

Jersey’s Royal Court said that “While Angola’s wealth fund and investments were not in themselves suspicious, LGL’s “ineffective” approach missed red flags.” 

The prosecutors said, “The firm took the risk of being involved in the diversion of tens of millions of dollars of public funds of one of the poorest countries in the world to its corrupt rulers, and their relatives and associates.”