The United States (US) Department of Justice's mushrooming investigation into the scandal-ridden Malaysian state fund 1MDB has extended to Deutsche Bank, two people familiar with the matter said on Thursday.
The big German bank, which announced deep job cuts earlier this week and is embroiled in other high-profile government probes, says it is cooperating with the investigation and maintains that it is a victim in the scandal.
The Justice Department is looking into whether Deutsche Bank broke anti-money laundering laws through its work for 1MDB, which included helping the Malaysian fund raise US$1.2 billion in 2014, two people familiar with the matter said, confirming a report in The Wall Street Journal.
Billions of dollars were looted from the Malaysian investment vehicle between 2009 and 2014 and spent on everything from yachts to expensive artwork, in a fraud allegedly involving disgraced Malaysian ex-premier Najib Razak and his cronies.
Deutsche is the second big western bank to be implicated in the scandal. Goldman Sachs is also being investigated by the Justice Department and is fighting efforts by Malaysia to recover billions of dollars that authorities maintain were stolen by the bank.
Prosecutors are looking into the role of Tan Boon-Kee, who formerly worked as Deutsche Bank's Asia Pacific head of banking for financial institution clients.
Tan, who previously worked at Goldman Sachs, left Deutsche Bank in August 2018 and now works for Asian insurer FWD Group.
Based in Singapore, Tan has been questioned by local authorities on 1MDB, one of the sources said.
Goldman has blamed former managing director Tim Leissner for implicating the bank in the scandal. Leissner has pleaded guilty to US criminal charges and awaits sentencing.
The investigation into Deutsche Bank has been helped by Leissner, who is cooperating with authorities, The Journal reported.
Leissner and Tan worked together at Goldman before Tan quit for Deutsche Bank, where she continued to work on the Malaysian fund.
Deutsche Bank has "cooperated fully" with the investigation, it said in a statement, and claims it was misled by 1MDB.
Deutsche Bank pointed to language in a Justice Department filing that "1MDB made 'material misrepresentations and omissions to Deutsche Bank officials' in connection with 1MDB's transactions with the bank."
Deutsche Bank is already under scrutiny in the US, after top Senate Democrats in June asked the Federal Reserve to examine the lender over allegedly suspicious transactions tied to President Donald Trump and his son-in-law Jared Kushner.
Democratic lawmakers suspected the bank staff of deliberately suppressing warnings of suspicious activities.
Trump alluded to the latest Deutsche Bank issues on Twitter on a thread that lambasted "Fake News."
"And remember, a bank that I did use years ago, the now badly written about and maligned Deutsche Bank, was then one of the largest and most prestigious banks in the world! They wanted my business, and so did many others!" - AFP