The Cairo connection

Mohammed Said Raffa, a former employee in Merrill Lynch’s private banking division in London, was arrested in Cairo in December for his part in an alleged US$40 million securities fraud. He is accused of illegally transferring securities from a client account held by the Arab International Bank (AIB), one of the US investment bank’s largest customers in the middle east, to a Swiss bank account held at UBS in Geneva. The instruments are alleged to have been moved in six tranches between 1996 and 1998 on receipt of instructions bearing false signatures. Merrill Lynch has since refunded AIB and is pursuing civil action to recover the assets. Mr Raffa left the US bank by mutual agreement in September 1999. Doubts have been raised over the soundness of the internal controls that operated in the private banking division but Merrill Lynch insists that the fraud was the work of a single rogue employee.