By K C Vijayan

A MALAYSIAN businessman is suing Standard Chartered Bank in Singapore for losses incurred from failed investments linked to massive Wall Street fraudster Bernard Madoff.

Real estate developer Che King Tow is seeking redress over some US$350,000 (S$512,000) placed by his firm Mamagina Investments (MI) in a United States-based hedge fund.

The sum includes about US$100,000 invested last September, after signs of trouble had already emerged.

The US fund, Fairfield Sentry, parked all its investments, worth about US$7.3 billion, almost exclusively with Bernard Madoff Investment Securities.

Madoff was jailed for 150 years last week for the multi-billion dollar fraud he had operated for decades, using money from new investors to pay off the old.

Fairfield Sentry, based in the British Virgin Islands, has claimed that it was the largest victim of the fraud.

Court papers filed here through lawyer Niru Pillai of Global Law Alliance on Tuesday allege that Stanchart knew or should have known that Madoff and his company 'were allowed to do what they liked with the investments without any control or intervention from Fairfield'.

Mr Che's firm, MI, originally had a relationship with American Express Bank, which was acquired in March last year by Stanchart.

Mr Che claims he made clear that he wanted to put his money in safe investments with moderate returns.

The officer assigned by Amex Bank to handle MI's investments initially advised placing the money in foreign currency bonds before transferring it to safe government and corporate bonds.

In 2006, after a smooth six-year business relationship, the bank officer allegedly convinced MI to invest in Fairfield.

Mr Che claims he was shown a prospectus which described Fairfield as 'particularly safe', with an US$18 billion portfolio and that it managed its own hedge funds internally.

Mr Che said he took the advice and, in August 2006, placed US$250,000 in Fairfield as hedge funds.

Then, around August last year, he asked the bank to withdraw all his investments, including those in Fairfield and another hedge fund, Permal Funds.

He said the bank withdrew his Permal funds, but not the Fairfield lot.

Instead, he said, the bank officer told him to continue with Fairfield, notwithstanding the crisis surfacing in the US over sub-prime housing loans.

He alleged that she also convinced him to invest cash withdrawn from the Permal fund in Fairfield, and that led to him placing a further US$100,000 in Fairfield last September.

Mr Che argues that the bank should have known that placing funds with a Madoff-linked firm was a 'substantial risk which was almost certain to lead to losses'.

Among other things, he is alleging that the bank failed to heed telltale signs of a potential collapse, as concerns about Madoff and his firm had surfaced as early as March last year.

There had been concerns about Fairfield too, Madoff's largest feeder fund.

Another telltale sign, Mr Che noted, was that investment bank JP Morgan Chase pulled out US$250,000 from Fairfield last August.

By advising him to put more money into Fairfield, Mr Che says, Stanchart exposed him to a loss of US$350,000.

A Stanchart spokesman said yesterday that the bank could not comment on a pending court matter.

'The plaintiff was a client of American Express Bank, which Standard Chartered Bank acquired in March 2008,' she noted.

Mr Che, 55, who is currently on holiday in Canada, is understood to have filed the suit here, where he operates major accounts. A real estate developer, his flagship project is Jaya33, a sprawling, upmarket shopping and office complex in Petaling Jaya, outside Kuala Lumpur.

A High Court pre-trial conference is due to be held next month.

This article was first published in The Straits Times.