US probes Deutsche Bank over dealings with Malaysia's 1MDB fund

Pedro Gonçalves
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US probes Deutsche Bank over dealings with Malaysia's 1MDB fund

The US Department of Justice has launched a probe against German lender Deutsche Bank to examine the latter's role in the 1MDB Malaysian state fund scandal, the Wall Street Journal reports.

The investigation centres on a former colleague of ex-Goldman Sachs banker Tim Leissner, who last year admitted to conspiracy charges linked to money laundering and foreign bribery. Goldman Sachs helped 1MDB raise $6.5bn in 2012 and 2013, much of which has gone missing.

The Justice Department is focusing on the role of Tan Boon-Kee, who previously worked with Leissner on 1MDB dealings.

Deutsche Bank has cooperated fully with all regulatory and law enforcement agencies that have made inquiries relating to 1MDB"

After quitting Goldman Sachs, Boon-Kee joined Deutsche Bank as Asia Pacific head of banking for financial institutions clients. At Deutsche Bank she was responsible for handling 1MDB-related matters.

She eventually departed from Deutsche Bank after revelations of her connection with Malaysian financier Jho Low, who is said to have played a central role in the 1MDB case.

The news is the latest in a series of regulatory and legal troubles afflicting the German lender, which just days back announced a massive restructuring plan involving nearly 18,000 job cuts in a bid to reverse its sagging fortunes.

"Deutsche Bank has cooperated fully with all regulatory and law enforcement agencies that have made inquiries relating to 1MDB," the bank told Bloomberg in an emailed statement, pointing to a civil forfeiture filings by the DOJ that suggest that the bank was misled by 1MDB.

"As stated in asset forfeiture complaints filed by the US Department of Justice, 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 in this matter," it said.

Deutsche Bank has been subject to a string of legal inquiries in recent years, raising questions about the effectiveness of its compliance department.