Deutsche Bank faces US probe over Malaysia scandal

Deutsche Bank faces US probe over Malaysia scandal

The US Department of Justice (DoJ) is probing Deutsche Bank as part of Malaysia’s scandal-ridden 1MDB sovereign wealth fund investigation. 

The news comes as Deutsche Bank announced at the weekend it would axe around 18,000 jobs by 2022, about one-fifth of its workforce, as it seeks to end over a decade of mismanagement and return to sustained profits.

After studying the involvement investment bank Goldman Sachs, US prosecutors are looking into a former Goldman banker who then worked at the Frankfurt-based bank. 

The inquiry is examining whether Deutsche Bank broke foreign corruption or anti-money-laundering laws when it helped the disgraced state-run investment fund raise US$1.2 billion in 2014. 

1MDB received two loans from Germany’s embattled largest lender.

The first of US$250 million was disbursed in May 2014 and by June, at least US$142 million had allegedly reached the personal bank accounts of rogue Malaysian trader Jho Low, who is in hiding.

The DoJ said Low used the cash to buy his luxury yacht, the Equanimity.

Tan left Deutsche Bank in 2018 after it became known she had been in contact with Low, according to the Wall Street Journal.

The US authorities alleged that at least US$1,277,250 of the loan went into the personal bank account of former prime minister Najib Razak on June 18, 2014.

A former Goldman and Deutsche Bank employee, Tan Boon-Kee, who now purportedly works for Hong Kong-based insurer FWD Group, is in the spotlight, according to Bloomberg. 

The second loan for US$975 million was applied for under the pretence of buying back shares from Aabar Investments, a branch of Abu Dhabi’s International Petroleum Investment Company.

That loan, however, was largely used to “cover the hole” in the 1MDB subsidiary Brazen Sky. Brazen Sky shares were described by the DoJ as “relatively worthless”.

The second loan was backed up be a letter from Najib, the then finance minister.

Investigations into 1MDB have mainly focused on more than US$6 billion the fund raised in 2012 and 2013 with help from Goldman Sachs, which received nearly US$600 million in fees.

Tim Leissner, Goldman’s former Asean regional boss, pleaded guilty last year to US charges that he conspired to launder money and contravened the Foreign Corrupt Practices Act. He agreed to relinquish US$43.7 million and admitted to bribing contacts in Malaysia and the United Arab Emirates to secure Goldman’s bond deals. 

 

Deutsche Bank’s Frankfurt headquarters. Picture credit: Flickr 

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