The US Department of Justice is investigating whether Deutsche Bank AG broke laws during dealings with Malaysia’s 1MDB investment fund that included helping it raise $1.2 billion in 2014, the Wall Street Journal reported, citing unidentified people with knowledge of the matter.
Authorities are examining whether the Frankfurt-based bank violated foreign-corruption or anti-money-laundering laws while working with the economic-development fund, which officials have said was ultimately plundered, the Journal said. Tim Leissner, a former Goldman Sachs Group Inc. executive who pleaded guilty last year for his role in 1MDB’s scandals, has been helping with the look at Deutsche Bank, the newspaper said.
“Deutsche Bank has cooperated fully with all regulatory and law enforcement agencies that have made inquiries relating to 1MDB,” the company said in an emailed statement late Wednesday. It pointed to asset-forfeiture documents previously filed by the Justice Department 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.
Probes into 1MDB have mainly focused on more than $6 billion it raised in 2012 and 2013. Goldman Sachs handled the deals, reaping almost $600 million in fees. The bank, which has said it’s cooperating with investigations of that business, has portrayed Leissner as a rogue employee who circumvented the firm’s internal controls. Now, the Justice Department expects to start negotiating with the New York-based investment bank soon to potentially resolve a criminal probe, the Journal 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, it said.
The probe 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 $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 will 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 a 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 are now examining the same executive, according to the Journal’s report.
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 $43.7 million and admitted to bribing officials in Malaysia and the United Arab Emirates to get bond deals for Goldman Sachs.