The US Department of Justice (DoJ) is probing Deutsche Bank as part of Malaysia’s 1MDB sovereign wealth fund investigation.
After studying the involvement Goldman Sachs, US prosecutors are reportedly looking into a former Goldman banker who then worked at the Frankfurt-based bank.
The inquiry is looking at whether Deutsche Bank broke foreign corruption or anti-money-laundering laws when it helped the troubled state-run investment fund raise US$1.2 billion in 2014.
1MDB took two loans from Germany’s embattled biggest 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 (pictured).
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, Bloomberg reported.
Tan left Deutsche Bank in 2018 after it was revealed she had been in contact with Low, according to the Wall Street Journal.
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, shares in which the DoJ described as “relatively worthless”.
The second loan was backed up be a letter from Najib, who was 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 chief, pleaded guilty last year to US charges that he conspired to launder money and violated the Foreign Corrupt Practices Act. He agreed to hand back US$43.7 million and admitted to bribing contacts in Malaysia and the United Arab Emirates to secure Goldman’s bond deals.
Deutsche Bank also announced at the weekend it would make 18,000 job cuts by 2022, about 20 per cent of its workforce, as it seeks to escape years of mismanagement and return to sustained profits.
Equanimity. Picture credit: Wikimedia