Financial authorities in Singapore are investigating a senior Deutsche Bank executive over her links to the corruption-riddled Malaysian state fund 1MDB.
The city state’s Commercial Affairs Department interviewed Tan Boon-Kee about her work with the fund last month. She was Asia Pacific head of Deutsche Bank’s Financial Institutions Group until August.
Ms. Tan and Deutsche Bank declined to comment on the matter and it is unclear if her departure is linked to the investigation.
Deutsche Bank was involved with the 1Malaysia Development Bhd. fund from early on. It was set up in 2009 by then-prime minister Najib Razak with the aim of driving long-term economic development in the country. But along the way some $4.5 billion disappeared.
With Deutsche Bank’s help, massive sums were withdrawn from the fund within months of it being set up. For example, 1MDB said in September 2009 it planned to invest $1 billion in a joint venture with Saudi Arabian oil company Petro Saudi. Deutsche Bank was tasked with carrying out the foreign currency transaction with the joint venture.
Shortly before the payment was to be made, Deutsche Bank’s branch in Kuala Lumpur received instructions to transfer $700 million of the $1 billion to an RBS Coutts bank account in Zurich. The account supposedly belonged to Petro Saudi. In fact, the account was controlled by Malaysian financier and play boy Jho Low, a central figure in the 1MDB scandal with close links to Mr. Razak.
Deutsche Bank went on to provide extensive loans to 1MDB. It led a consortium that lent the fund a total of $1.2 billion, according to documents from the US Department of Justice.
1MDB managers withdrew some $850 million of that in 2014, ostensibly to give it to Abu Dhabi’s Aabar fund. But the money went to the account of a company called Aabar that was based in the Seychelles, with no connection to the real Aabar. From there, some of the money went to Mr. Low, who used it to buy a lavish $250 million yacht called “Equanimity.”
Deutsche Bank smelled a rat in late 2014. In 2015, its consortium demanded the early repayment of almost $1 billion in loans because it had doubts about how safe the collateral was.
That brought 1MDB close to insolvency until Abu Dhabi state company IPIC came to the rescue by refinancing it.
The scandal shattered public confidence in Mr. Najib’s government amid allegations that hundreds of millions of dollars from 1MDB ended up in his personal account. He was voted out of power earlier this year.
The new government under Prime Minister Mahathir Mohamad launched court proceedings against Mr. Najib and issued an arrest warrant for Mr. Low, who is currently on the run. Singapore investigators are said to have asked Ms. Tan about her work with Mr. Low.
The 36-year-old denies all the accusations against him and launched a website this week to proclaim his innocence. He wrote that he made mistakes but never acted with bad intentions. He’s also worried about his seized motorboat, which he complained is docked in a dangerous place.
The luxury cruiser won’t be there for long, though. Malaysia wants to sell it as soon as possible because it costs $600,000 a month to maintain.