The United States Justice Department is investigating whether Deutsche Bank AG violated foreign corruption or anti-money-laundering laws in its work for state fund 1Malaysia Development Berhad (1MDB), the Wall Street Journal said on Wednesday.
The news comes after the bank announced plans to scrap its global equities unit, cut some fixed-income operations and slash 18,000 jobs globally in a 7.4-billion-euro ($8.34bn) restructuring program.
Deutsche Bank’s work for 1MDB included helping to raise $1.2bn in 2014 as concerns about the fund’s management and financials had begun to circulate, the newspaper said, citing unidentified people familiar with the matter.
Authorities in the US estimate some $4.5bn was stolen from the fund, which was established in 2009, and the fraud is under investigation in at least six countries.
US prosecutors are mainly looking into the role of Tan Boon-Kee, a colleague of a former Goldman Sachs Group Inc executive, Tim Leissner, who worked with him on 1MDB-related business, the paper said.
She left Goldman to become Asia-Pacific head of banking for financial institutions clients at Deutsche Bank, where she was involved with further 1MDB dealings, it added.
In an emailed statement, Deutsche Bank said it had fully cooperated with all regulatory and law enforcement agencies that made inquiries about the fund.
“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,” the bank told Reuters.
“This is consistent with the bank’s own findings in this matter,” it added.
A US DoJ civil asset-forfeiture complaint repeatedly describes Deutsche Bank as being misled by 1MDB officers, the WSJ said.
Tan left Deutsche Bank last year, after it discovered communications between her and Jho Low, the Malaysian financier the Justice Department has described as the central player in the 1MDB scandal, it added.
A representative of insurance company FWD Group, Tan’s current employer, said the company and Tan declined to comment.
The DoJ did not immediately respond to a request for comment from Reuters.
Last month, Malaysia’s anti-corruption agency began legal action to recover 270 million ringgit ($65.1m) embezzled from 1MDB, and estimates assets overseas worth a further $5bn may also be recoverable.
Latheefa Koya, the chief commissioner of the Malaysian Anti-Corruption Commission (MACC), said the agency has filed complaints against 41 individuals and entities to recover money given to them by former Prime Minister Najib Razak.
Najib was overthrown in a shock defeat in general elections last year and is currently on trial in Kuala Lumpur in the first of a series of cases related to the scandal at 1MDB. He pleaded not guilty when the trial opened and has denied any wrongdoing.