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Manila’s RCBC Sues Bangladeshi Central Bank for Defamation in $81 M Cyber Heist

Karl Romano and Kamran Reza Chowdhury
Manila and Dhaka
2019-03-12
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Maia Santos Deguito, a former RCBC bank branch manager, walks back to her seat during the resumption of a Philippine Senate probe in Manila on the cyber theft of Bangladeshi central bank’s funds from the Federal Reserve Bank of New York, April 19, 2016.
Maia Santos Deguito, a former RCBC bank branch manager, walks back to her seat during the resumption of a Philippine Senate probe in Manila on the cyber theft of Bangladeshi central bank’s funds from the Federal Reserve Bank of New York, April 19, 2016.
AP

A major Philippine bank announced Tuesday that it was pursuing a counter-lawsuit alleging defamation against Bangladesh’s central bank for “vicious and public attacks” stemming from the theft of U.S. $81 million in the world’s biggest cyber heist.

The Manila-based Rizal Commercial Banking Corp. undertook the legal action two months after a Philippine court sentenced an RCBC bank manager to serve up to 56 years in jail and pay fines of more than U.S. $100 million in connection with the February 2016 theft of Bangladeshi central bank money.

“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 towards 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,” RCBC said in a statement, using the official name for Dhaka’s central bank.

RCBC, in court documents filed on March 6, said it was seeking at least 100 million pesos (about U.S. $2 million) in damages, alleging that its reputation had been harmed by the Bangladeshi Bank.

The private Philippine bank filed the lawsuit in Manila, Sirajul Islam, Bangladesh Bank’s executive director and spokesman, confirmed to BenarNews.

“We filed a lawsuit against the RCBC at a court in New York. Being aggrieved, they reserve the right to file a counter-lawsuit against us,” Islam said.

Last month, Bangladesh Bank filed a case against RCBC in U.S. federal court, in a bid to recover the money allegedly stolen by North Korean hackers from the Bangladesh government’s account at the Federal Reserve Bank of New York.

The hackers allegedly siphoned off $101 million in Bangladeshi central bank money on Feb. 4, 2016, transferring $81 million to the RCBC bank in the Philippines, while the remaining $20 million went to a bank in Sri Lanka.

The Federal Reserve Bank said it had agreed to help Dhaka in the lawsuit, which alleged that Chinese citizens had acted as “middlemen” who facilitated the electronic transfer of funds after it had been diverted to Manila. RCBC has repeatedly denied any hand in the theft.

All the funds transferred to Sri Lanka had been recovered, along with a little less than $10 million surrendered by a Chinese casino junket operator to Philippine authorities.

The Bangladeshi lawsuit claimed that the hackers placed payment orders through its Federal Reserve account using an exclusive code in the SWIFT financial system, a vast messaging network that allows international wire transfers between banks.

The thieves had allegedly placed 35 payment orders in an effort to steal up to $1 billion, but only five cleared because an eagle-eyed New York Fed employee spotted a misspelling in the transfer to the Sri Lankan bank account.

RCBC argued in its lawsuit that “there is absolutely no act attributable to RCBC that caused the payment instructions to reach the NY Fed and the Correspondent Banks.”

In January, a Philippine court found former RCBC bank manager Maia Santos Deguito guilty of money laundering, sentencing her to between 32 years and 56 years in prison for processing the money stolen by the North Korean hackers. Deguito’s lawyers filed an appeal and she remains free on bail.

‘Merely a strategy to save their image’

Islam, the central bank chief, told BenarNews that Bangladesh Bank officials were visiting Manila to coordinate with Philippine authorities on how to recover the funds.

“They had meetings with RCBC officials and other officials regarding recovery of the stolen money though discussion,” Islam said.

But a Bangladesh central bank official told BenarNews that their meeting with RCBC officials had not been fruitful.

“They were unhappy with our decision to file a lawsuit at a New York court,” said the official, who requested anonymity. “So, I do not think recovery of the stolen money through negotiation is a possibility.”

“RCBC’s defamation lawsuit against Bangladesh Bank is merely a strategy to save their image,” he said. “But we will remain engaged with them.”

Jeoffrey Maitem in Cotabato, Philippines contributed to this report.

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