Industrial & Commercial Bank Ltd v Banco Ambrosiano Veneto S.P.A.: Standby Letters of Credit & Banking Fraud
In Industrial & Commercial Bank Ltd v Banco Ambrosiano Veneto S.P.A., the High Court of Singapore ruled in favor of the plaintiff, Industrial & Commercial Bank Ltd, against the defendant, Banco Ambrosiano Veneto S.P.A. The case involved a claim for payment on two standby letters of credit (SBLCs) issued by the defendant. The defendant argued that the SBLCs were fraudulently issued by its employee. The court found that the SBLCs were valid and enforceable, and that the plaintiff was entitled to payment. The court found that the defendant was bound by the authenticated SWIFT messages, and that the plaintiff had no knowledge of the fraud.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment for Plaintiff
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court case involving standby letters of credit, banking fraud, and the legal effect of SWIFT messages. Judgment for Plaintiff.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Industrial & Commercial Bank Ltd | Plaintiff | Corporation | Judgment for Plaintiff | Won | |
| Banco Ambrosiano Veneto S.P.A. | Defendant | Corporation | Claim Dismissed | Lost | |
| Super Shipmanagement Pte Ltd | Other | Corporation | |||
| Global Trade & Consultancy Pte Ltd | Other | Corporation | |||
| Amarendra Nath Ghosh | Other | Individual | |||
| Sofia Palace International Pte Ltd | Other | Corporation |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tay Yong Kwang | Judicial Commissioner | Yes |
4. Counsels
4. Facts
- Plaintiff claimed payment on two Standby Letters of Credit (SBLCs) issued by the Defendant.
- Defendant alleged the SBLCs were fraudulently issued by its employee, Philip Martino Pigozzo.
- The first SBLC was for US$12 million (Global SBLC) issued to secure banking facilities granted to Super Shipmanagement Pte Ltd.
- The second SBLC was for US$3 million (Ghosh SBLC) issued to secure facilities granted to Amarendra Nath Ghosh.
- Plaintiff made demands for payment on both SBLCs via authenticated teletransmission.
- Defendant failed to pay the sums demanded in respect of both SBLCs.
- The Plaintiff sent three enquiries to the Defendant’s Head Office about the authority of the Udine Branch.
5. Formal Citations
- Industrial & Commercial Bank Ltd v Banco Ambrosiano Veneto S.P.A., Suit 600167/2000, [2001] SGHC 120
6. Timeline
| Date | Event |
|---|---|
| Defendant proposed the formal establishment of a correspondent bank relationship with the Plaintiff. | |
| Plaintiff replied, agreeing to set up a direct correspondent relationship with the Defendant. | |
| Ghosh became a customer of ICB. | |
| Plaintiff sent an updated copy of its book of authorised signatories to the Defendant. | |
| Philip Martino Pigozzo was posted as the co-ordinator or manager of NOEM. | |
| Plaintiff notified all its correspondent banks of changes made to its list of authorised signatories. | |
| Plaintiff received a SBLC (the Ghosh SBLC) via an authenticated SWIFT message from the Defendant. | |
| Defendant re-issued the Ghosh SBLC in the proper format. | |
| Letter of offer was given to Ghosh who accepted it subsequently. | |
| Plaintiff sent an authenticated SWIFT message to the Defendant’s Head Office in Milan to check on the authority of the Udine Branch. | |
| Reminder was sent to the Defendant’s Head Office in Milan to check on the authority of the Udine Branch. | |
| Authenticated SWIFT message came from the Defendant’s Udine Branch confirming that the Udine Branch was authorised to issue the Ghosh SBLC. | |
| Amendment by way of authenticated SWIFT was then received from the Defendant. | |
| Letter of offer signed by both Joseph Wong and Quinton Chew was given to Ghosh who accepted it on the same day. | |
| Plaintiff received the Global SBLC for US$4 million from the Defendant via authenticated SWIFT message. | |
| Amendments to the Global SBLC were confirmed by authenticated SWIFT from the Defendant. | |
| Plaintiff received the amended Global SBLC via authenticated SWIFT message. | |
| Plaintiff received the revised Global SBLC with the amendments requested, again via authenticated SWIFT message. | |
| Plaintiff sent for confirmation from the Defendant’s Head Office via an authenticated SWIFT message. | |
| Authenticated SWIFT message was received, again from the Udine Branch, confirming its own authority. | |
| Plaintiff issued a letter of offer of additional facilities to Global. | |
| Plaintiff received faxes and SWIFT messages from the Defendant alleging fraud. | |
| Plaintiff received faxes and SWIFT messages from the Defendant alleging fraud. | |
| Plaintiff received faxes and SWIFT messages from the Defendant alleging fraud. | |
| Plaintiff wrote to Global and to Ghosh demanding repayment of all outstanding sums under the respective facilities. | |
| Plaintiff certified that US$10,659,605.96 and interest at the rate of 3.5% over three months SIBOR from 12 February 2000 were due and owing under the Global SBLC and demanded immediate payment of the same. | |
| Plaintiff terminated Samuel Lee’s services. | |
| Plaintiff was awarded summary judgment in both actions. | |
| Decision Date |
7. Legal Issues
- Enforceability of Standby Letters of Credit
- Outcome: The court held that the standby letters of credit were enforceable against the defendant.
- Category: Substantive
- Effect of Authenticated SWIFT Messages
- Outcome: The court held that authenticated SWIFT messages have the legal effect of binding the sender bank according to the contents.
- Category: Substantive
- Fraudulent Issuance of Letters of Credit
- Outcome: The court found that Pigozzo and Ghosh committed fraud against the Defendant.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
- Payment on Standby Letters of Credit
9. Cause of Actions
- Breach of Contract
- Enforcement of Standby Letter of Credit
10. Practice Areas
- Commercial Litigation
- Banking
- Fraud
11. Industries
- Banking
- Financial Services
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Yogambikai Nagarajah v Indian Overseas Bank | Court of Appeal | Yes | [1997] 1 SLR 258 | Singapore | Cited regarding the standard of proof required when alleging fraud. |
| Standard Bank v Bank of Tokyo | N/A | Yes | [1995] 2 LIR 169 | N/A | Cited regarding the banking system's reliance on tested telexes. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Standby Letter of Credit
- SWIFT message
- Authenticated teletransmission
- Fraudulent scheme
- Correspondent bank relationship
- Authenticated SWIFT message
- Cheque-kiting
- User-ID
- Password
15.2 Keywords
- Standby Letters of Credit
- SWIFT
- Banking Fraud
- Singapore High Court
- International Banking
- Documentary Credit
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Banking and Finance | 90 |
| Standby letters of credit | 90 |
| Letters of Credit | 90 |
| Banking Law | 90 |
| Documentary Credits | 80 |
| SWIFT message | 70 |
| Fraud and Deceit | 70 |
| Contract Law | 60 |
| Estoppel | 30 |
16. Subjects
- Banking
- Finance
- International Trade
- Civil Procedure