SINGAPORE (July 15): The US Department of Justice (DOJ) is investigating Deutsche Bank as part of a broadened probe of Malaysia’s scandal-plagued 1Malaysia Development Bhd (1MDB) investment fund, according to a person with knowledge of the matter.
Investigators, who have spent years examining Goldman Sachs Group’s lucrative dealings with the fund, are now taking a closer look at a former Goldman executive who later worked at the German bank, said the person, who asked not to be identified discussing the confidential enquiry. US authorities have not accused Deutsche Bank or the former employee of wrongdoing. The employee, according to a Financial Times report, is believed to be Tan Boon Kee, former Asia-Pacific head of the bank’s financial institutions group.
The enquiry aims to determine whether Deutsche Bank might have violated foreign corruption or anti-money laundering laws as it helped 1MDB raise US$1.2 billion in 2014, The Wall Street Journal (WSJ) said in an earlier report on July 10. Tim Leissner, another ex-Goldman executive who pleaded guilty last year for his role in the scandal, has been helping with the Deutsche Bank examination, the paper said, citing unidentified people with knowledge of the matter.
“Deutsche Bank has cooperated fully with all regulatory and law enforcement agencies that have made inquiries relating to 1MDB,” the Frankfurt-based company said in an emailed statement. It pointed to asset-forfeiture documents previously filed by the DOJ indicating 1MDB misled Deutsche Bank during transactions. “This is consistent with the bank’s own findings in this matter,” the firm said in the statement. DOJ spokesman Peter Carr declined to comment.
Probes into 1MDB have mainly focused on the more than US$6 billion the fund raised in 2012 and 2013 with help from Goldman Sachs, which reaped almost US$600 million in fees. The New York-based bank, which has said it is cooperating with related investigations, has portrayed Leissner as a rogue employee who circumvented its internal controls. The DOJ now expects to start negotiating with Goldman Sachs soon to potentially resolve a criminal probe, the WSJ wrote.
“We do anticipate getting into active discussions with Goldman, at this point, in the near future,” it cited assistant attorney general Brian Benczkowski as saying in an interview. He declined to comment on other aspects of the 1MDB case.
The investigation of Deutsche Bank is emerging just as the lender makes its most dramatic effort yet to overhaul its business after a decade in which it paid more than US$18 billion in fines and other legal costs.
In recent years, regulators and prosecutors have raided the bank’s headquarters, subpoenaed documents and grilled executives in dozens of probes on three continents. This week, the company said it would cut a fifth of its 91,000-person workforce and exit some business lines as it seeks to improve profitability.
Deutsche Bank previously fielded questions from authorities in Singapore examining possible ties between the former executive who worked at both Goldman Sachs and the German bank and fugitive financier Low Taek Jho, people with knowledge of the situation said last year. US prosecutors have portrayed Low as the mastermind behind the scandal surrounding 1MDB, though he has consistently denied wrongdoing.
Leissner, Goldman’s former head of Southeast Asia, pleaded guilty last year to US charges that he conspired to launder money and violated the Foreign Corrupt Practices Act. As part of the deal, he agreed to forfeit US$43.7 million and admitted to bribing officials in Malaysia and the United Arab Emirates to get bond deals for Goldman Sachs.
