Special Report: The ex-HSBC banker, go-fast limousines and bags of dirty cash
22 Nov 2018

A tale of drug money laundering spanning from the crowded streets of Casablanca to the pristine shores of Lac Leman, Geneva, has finally come to its conclusion in the courts in Paris – and an epilogue yet to play out in French prison.

The story begins almost a decade earlier in 2009 when Ernest Sasson, a well-known Genevan banker, handed over the reins of his wealth management firm GPF SA to his son-in-law Meyer El Maleh.

GPF SA had a long history of operating in offshore jurisdictions, including links to 94 entities exposed in the Panama Papers, while Ernest Sasson and Meyer El Maleh themselves are listed as officers in literally hundreds of companies, primarily in Panama.

According to a former GPF employee, the role of GPF was to ‘give the appearance of legality to funds which we knew had illegal origins.’

El Maleh’s brothers Nessim and Mardoche were involved in GPF’s work, and Nessim El Maleh was also a director for HSBC Private Banking Suisse in Geneva.

This cosy family business came undone, however, after connections between El Maleh and his brothers to cannabis trafficking from Morocco were exposed by French police in 2012.

In an investigation codenamed Operation Virus, the police said they had discovered the brothers had effectively combined two money-making schemes into one, committing both tax fraud and drug money laundering.

Go-fast cars, cannabis and cash

According to the authorities, French clients set up Swiss accounts with the intention of committing tax fraud.

These clients included a number of high profile Parisiens – HSBC refused to comment on whether or how many of these accounts may have been connected to HSBC through Nessim El Maleh.

In late 2017 the bank agreed to pay 300 million euros to French authorities to avoid an investigation into its role enabling tax fraud.

A French-Moroccan citizen allegedly served as the connection between Mardoche El Maleh and Moroccan drug gangs trafficking cannabis into France.

It is understood that in Paris, Mardoche would drive around collecting revenues from drug sales in bags of cash.

Police observed Mardoche handing off these bags of cash to the French clients, who were unaware of the connection to the drug trade and believed they were receiving their own funds from the tax fraud scheme.

French prosecutors claim Mardoche may have handed over as much as $14 million in plastic bags between 2010 and 2012.

Meanwhile, it is believed that in Geneva, Meyer and Nessim El Maleh would debit the French clients’ accounts for the amount they had received in cash, and transfer that money back to the drug gangs via a network of UK and Panamanian companies.

By balancing these two illegal flows of money like this, the brothers were able to launder the drug money whilst avoiding the risky process of trying to carry cash over international borders.

The operation was exposed when French police stopped a so-called “go-fast car”, a limousine packed with cannabis bound for the streets of Paris in February 2012.

This kick-started a cross-border collaboration between French and Swiss authorities. The Geneva-based El Maleh brothers were arrested by Swiss officials in October.

Police also reportedly seized millions of euros worth of gold ingots, cash, art and guns.

Six minutes in Switzerland

The French case is believed to be the second time the El Maleh brothers have faced charges over the laundering scheme.

In Geneva January 2013 in a six minute hearing, Meyer El Maleh was convicted of money laundering and given a three year sentence, although he only served six months in prison.

Younger brother Nessim received a two year suspended sentence and paid a 1.6 million euro fine, but avoided incarceration.

The Swiss convictions were not enough to put an end to the El Malehs’ careers in finance.

Since being fired from HSBC, Nessim El Maleh has reportedly been working for a “family office” in Geneva.

Perhaps more significantly, whilst GPF SA went into liquidation shortly after Meyer El Maleh’s conviction, less than a year later his wife Carole El Maleh-Sasson registered a new company, APF SA.

Moreover, at least two of the UK companies which were allegedly used by the El Maleh family in the laundering process continue to be active, including one which currently reports holding over £11.4 million in assets. Meyer El Maleh was re-appointed as a director of that company in March 2018.

Double jeopardy and fractious frères in France

If the El Malehs were hoping to put the entire matter behind them, however, a French case dashed those hopes.

French authorities accepted the arguments from the El Malehs’ lawyers that the brothers had already been tried and punished for their role in the drug trafficking operation and so were covered by double jeopardy rules on those charges, but not for other charges including involvement in organised money laundering and tax fraud.

The court heard that up to $800 million in funds linked to tax fraud may have been moved through GPF SA.

Nessim and Meyer El Maleh both continue to allege that they were unaware that the money they were receiving from their brother Mardoche was linked to the drug trade.

In an interview with a local Genevois newspaper, Meyer El Maleh said that he believed the scam was ‘only’ tax fraud.

He claims it never occurred to him to wonder whether the money being received in small bills was linked to drugs, and that if he had known he would have exposed the scheme.

Nessim El Maleh made a similar argument to the French court in October 2018, claiming to have believed money was coming from small grocery store owners looking to avoid tax.

Moreover, in court Nessim tried to lay the blame for the scheme on his brothers, claiming they kept him in the dark abHSout the true origins of the money.

Nessim El Maleh has been fined €200,000 by the Paris court, and received a suspended sentence.

Mardoche El Maleh, who ferried millions in cash in plastic bags around Paris, received a three year sentence of which two years are suspended, and a fourth brother Albert also received a suspended sentence.

The lion’s share of the punishment has fallen squarely on Meyer El Maleh, however.

Having been identified by the court as the mastermind behind the entire scheme, Meyer has been sentenced to six years in prison and a €1 million fine.

He was not present in the court for the ruling, and a warrant is out for his arrest.

He is currently believed to be in Switzerland, and his lawyer has said he plans to appeal the ruling.

Read more:

Analysis: The ‘stunning’ Criminal Finances Act, HSBC and the billion dollar fraud

The Road from Damascus: Europort, Gibraltar and the Butcher of Hama

Confessions of a compliance officer: How I handled dodgy demands

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