After Goldman, Malaysian fund 1MDB pursues JPMorgan and Deutsche

by BLOOMBERG / pic by AFP

AFTER successfully recouping more than $3 billion from firms including Goldman Sachs Group Inc., Malaysia’s 1MDB is casting a wider net.

The state-owned investment fund is suing companies including JPMorgan Chase & Co. and Deutsche Bank AG in an effort to recover assets worth more than $23 billion the country says are linked to the fund. 1MDB and a former unit filed a combined 22 civil suits against entities and individuals for various alleged wrongdoings including fraud and conspiracy to defraud the fund, the Finance Ministry said on Monday.

The suits are the latest twist in Malaysia’s continuing efforts to recover billions of dollars allegedly siphoned from 1MDB by people connected to the country’s former prime minister. For much of the past decade, authorities have tried to track funds that allegedly flowed from 1MDB into high-end art and real estate, a super yacht and, ironically, the hit Hollywood movie “The Wolf of Wall Street,” chronicling an earlier era of financial crimes.

In a move that broadens the dragnet, at least two suits were filed in London, according to publicly-available court records. Deutsche Bank’s Singapore branch faces a lawsuit, while 1MDB separately sued Citigroup Inc.’s head of commodities research Ed Morse alleging professional negligence, the filing shows.

JPMorgan declined to comment while Deutsche said it hasn’t been served any papers on 1MDB and isn’t aware of any basis for a legitimate claim. The banks were named earlier on Monday by the Edge newspaper. New York-based Morse declined to comment.

‘Pursuing Wrongdoers’

The Malaysian government has had a string of successes in its recovery efforts, the most high-profile coming last year when Goldman Sachs reached a $3.9 billion pact to resolve probes into the Wall Street giant’s role in the scheme. Goldman’s overall tab for additional settlements with authorities in the US, UK and Hong Kong swelled to more than $5 billion.

In March, Deloitte PLT agreed to a 324-million ringgit ($80 million) settlement with the Malaysian government to resolve all claims related to the firm’s audit of 1MDB and its former unit SRC between 2011-2014. The deal also came less than a week after Malaysian lender AMMB Holdings Bhd. agreed to a $699 million settlement over its role in dealings linked to 1MDB.

“The Government’s recovery efforts are now focused on pursuing other wrongdoers who have caused losses to 1MDB and or SRC during the execution of their duties, as parties directly or indirectly involved in 1MDB and or SRC’s various operations and transactions,” Finance Minister Tengku Zafrul Abdul Aziz said in a stat Deutsche Bank’s 1MDB Probe Dropped by US Justice Department.

Jho Low

The latest effort comes as a Malaysian court is hearing an appeal by ex-Prime Minister Najib Razak to overturn his conviction and 12-year jail sentence linked to the 1MDB scandal that brought down his government in 2018.

Najib, and the fugitive financier Jho Low and his family are among individuals named in the civil suit. Low, whom prosecutors have accused of orchestrating the fraud, has previously professed his innocence.

“We have not received the summons,” Najib’s lawyer Farhan Shafee said. “We also found out from the press.” M. Purvalen, a lawyer representing Jho Low’s mother, said he has not been approached to represent the Low family in this suit.

The specific allegations against Deutsche Bank and JPMorgan weren’t immediately clear. Deutsche Bank helped 1MDB raise more than $1 billion in 2014. JPMorgan in 2017 was reprimanded by Swiss regulators over its handling of money transfers related to 1MDB in previous years.