KUALA LUMPUR (July 12): The US Department of Justice (DoJ) is investigating whether German lender Deutsche Bank (pictured) violated foreign corruption or anti-money laundering laws in its work for 1Malaysia Development Bhd (1MDB), which included helping the fund raise US$1.2 billion in 2014.
In a report on Wednesday, The Wall Street Journal (WSJ), citing people familiar with the matter, wrote that the investigation into Deutsche Bank has been helped in part by a former Goldman Sachs Group Inc executive, Tim Leissner, who is cooperating with authorities.
The WSJ said prosecutors have been investigating similar issues at Goldman, where Leissner, a former managing director, pleaded guilty last year and admitted to earlier helping siphon off billions of dollars from the fund.
The DoJ is also set to begin negotiations with Goldman soon to try to resolve allegations through a possible criminal settlement, the report quoted a senior official.
“We do anticipate getting into active discussions with Goldman, at this point, in the near future,” Assistant Attorney General Brian Benczkowski, who runs the agency’s criminal division, said in an interview. But he declined to comment on any other aspect of the 1MDB investigation.
The report added that prosecutors are focused, in particular, on the role of one of Leissner’s former colleagues, Tan Boon Kee, who worked with Leissner on 1MDB-related business, before she left Goldman to become Asia-Pacific head of banking for financial-institution clients at Deutsche Bank, where she was involved with further 1MDB dealings.
WSJ said she was interviewed by Singaporean authorities last year.
Tan left Deutsche Bank last year, after the bank discovered communications between her and Low Taek Jho, better known as Jho Low, the Malaysian financier that the US DoJ has described as the central player in the 1MDB scandal, according to a person familiar with her exit.
Neither she nor the bank have commented publicly about the reason for her departure, the report added. Meanwhile, a spokeswoman for Tan’s current employer, FWD Group — an insurer with operations in Singapore and Hong Kong, where Tan joined as group chief business officer in April — said Tan declined to comment.
“Deutsche Bank has cooperated fully with all regulatory and law enforcement agencies that have made inquiries relating to 1MDB,” a spokesman for the bank was quoted as saying.
He cited US DoJ documents, saying 1MDB made “material misrepresentations and omissions to Deutsche Bank officials” in connection with 1MDB’s transactions with the bank. “This is consistent with the bank’s own findings on this matter,” he added.
The financial irregularities that went on at 1MDB have been described as “kleptocracy at its worst” by US Attorney-General Jeff Sessions, after the US DoJ said at least US$4.5 billion have been diverted from the fund between 2009 and 2014. The scandal led to multiple investigations around the world and the downfall of former Malaysian prime minister Datuk Seri Najib Razak.
Funds stolen from 1MDB have allegedly been used to pay bribes to government officials, pad a slush fund controlled by the former prime minister and purchase hundreds of millions of dollars in luxury goods including jewellery, artwork and real estate.
This article first appeared in The Edge Financial Daily, on July 12, 2019.
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