The Pak Banker

World's top banks in US govt cross-hairs over 1MDB dealings

-

US Department of Justice officials have asked Deutsche Bank and JPMorgan Chase & Co to provide details on their dealings with 1MDB, as global investigat­ions into the troubled Malaysian state fund widen.

US Department of Justice officials also traveled to Kuala Lumpur to speak to senior bankers and other people with close links to the state fund, three people with direct knowledge of the matter told Reuters. They said JPMorgan (JPM.N) and Deutsche DBCBW.PK were not the target of investigat­ions at this stage, but had only been asked to provide details. Deutsche Bank and JPMorgan declined to comment. The Department of Justice also declined to comment.

The US move marks the latest developmen­t in a wide-ranging global investigat­ion across three continents into possible corruption and money-laundering at 1MDB, whose advisory board is chaired by Prime Minister Najib Razak.

Najib has denied any wrongdoing and said he has not taken any funds for personal gain, but opposition leaders and government critics have stepped up calls for him to resign.

The sources spoke on condition of anonymity as they were not authorized to speak to the media. It was unclear how long the U.S. officials were in Kuala Lumpur, or whether they had completed their visit. A team of lawyers for Deutsche Bank are in Kuala Lumpur preparing the report they intend to submit to the Department of Justice, one of the sources said.

Malaysia's Attorney General, who was hand-picked by Najib, cleared him of all criminal offences in January, declaring that $681 million that were deposited into his personal bank accounts were a gift from Saudi Arabia's royal family. The Wall Street Journal reported in March that more than $1 billion was deposited in Najib's account and global investigat­ors believe much of it originated from 1MDB.

The fund has consistent­ly denied these claims and repeated again on Thursday that no 1MDB funds went into the prime minister's personal accounts.

Deutsche Bank is one of the many global lenders who had dealings with 1MDB, as the energy-to-real estate group expanded rapidly after its inception in 2009. The bank provided a $975 million loan for 1MDB in late 2014, which was repaid last year.

The German bank was also advising the fund on a proposed $3 billion initial public offering of its energy assets, which never took place.

JPMorgan normally acts as a U.S. clearing bank for lenders operating in Malaysia. Its dealings if any with 1MDB were not immediatel­y clear.

The U.S. government is already reviewing Goldman Sachs' (GS.N) relationsh­ip with the Malaysian fund. A Federal Bureau of Investigat­ion team specializi­ng in "internatio­nal kleptocra- cy" is leading the bureau's inquiries, a person familiar with the matter told media last year.

Goldman came under fire for the fees it charged for helping 1MDB raise funds through bond offerings. The fund racked up borrowings of about 42 billion ringgit ($11.5 billion), before selling off assets in 2015 to pay down debt. Goldman has declined to comment.

Other internatio­nal banks that have dealt with the fund are also facing questions. Singapore's central bank said on Friday it had asked financial institutio­ns to provide details of any transactio­ns linked to 1MDB, without identifyin­g any lenders by name.

The burgeoning 1MDB scandal has rocked Najib's government as public outrage over the alleged mismanagem­ent and corruption grows. The scandal has fueled a sense of crisis in a country under economic strain from slumping oil prices and a prolonged slide in its currency last year. Mahathir Mohamad, Malaysia's longest-serving leader and once Najib's patron, has become his fiercest critic and is leading a campaign to oust the prime minister with the support of some opposition leaders.

Mahathir quit the long-ruling United Malays National Organisati­on party, and joined hands with long-standing foes to crank up pressure on Najib to quit.

Along with the United States and Singapore, other countries are conducting investigat­ions.

On Thursday, Luxembourg's state prosecutor launched a judicial inquiry into allegation­s of money laundering involving hundreds of millions of dollars against 1MDB. This follows a similar inquiry by Swiss prosecutor­s, who said earlier this year they had identified four cases of alleged criminal misconduct in the suspected misappropr­iation of about $4 billion from Malaysian state companies. Malaysia's central bank also said it would pursue administra­tive action against 1MDB for missing a deadline to submit documents on its finances abroad.

 ??  ??
 ??  ??

Newspapers in English

Newspapers from Pakistan