Deutsche Bank's week from hell just got worse after reported links with Epstein and a US probe into its role in the 1MDB scandal
- Deutsche Bank is being investigated by the US Department of Justice as part of a wider investigation of the 1MDB scandal, The Wall Street Journal reports.
- The New York Times also reported that compliance staff at the German bank had raised concerns about its deals with Jeffrey Epstein's firm that were overruled by senior managers at the bank.
- The reports add to Deutsche Bank's woes. The share price has tanked, and the bank just kicked off a brutal round of job cuts and restructuring.
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Deutsche Bank's bad week is getting worse.
The US government is investigating whether the German bank's work with the Malaysian fund 1MDB violated foreign corruption or anti-money-laundering laws, The Wall Street Journal reported Wednesday night.
It came after The New York Times reported that Deutsche Bank managers had overruled compliance-staff concerns in their dealings with Jeffrey Epstein, a financier now facing charges of sex trafficking.
It has been a rough week for Deutsche Bank. When trading opened Thursday the German bank's shares were down by more than 1%.
After kicking off a brutal round of cuts earlier this week meant to eliminate 18,000 jobs, Deutsche Bank has come under fire for "golden parachute" sendoffs for senior execs and has seen share-price declines from traders who think the bank didn't go far enough in its restructuring plan.
Adding to headaches for Germany's largest lender have been a handful of scandals in the past year, including having its offices raided, claims linking it to the Danske Bank money-laundering debacle, and new attention on about $2 billion in loans to President Donald Trump's companies.
Investigators at the Department of Justice, who had investigated Goldman Sachs' lucrative dealings with the Malaysian fund known as 1MDB, are also now delving deeper into a new link of an ex-Goldman exec who later went on to work at Deutsche Bank, The Journal said on Thursday.
So far the employee has not been named by US authorities, who have not accused the person or Deutsche of any wrongdoing.
The Times reported that compliance officers at Deutsche had raised concerns about transactions by Epstein's company, saying he posed a reputational risk to the bank.
But Deutsche Bank managers overruled their concerns, The Times said, noting that there was nothing illegal with the transactions and that Epstein was a lucrative client. The bank ended its relationship with Epstein earlier this year.
Deutsche Bank declined to comment on the Epstein matter to Business Insider.
On 1MDB, the bank said: "Deutsche Bank has cooperated fully with all regulatory and law enforcement agencies that have made inquiries relating to 1MDB."
The US inquiry aims to determine whether Deutsche violated foreign corruption or anti-money-laundering laws as it helped 1MDB raise $1.2 billion five years ago, according to The Journal.
Another former Goldman employee, Tim Leissner, who pleaded guilty last year to helping siphon of billions of dollars from the fund, has been aiding US authorities with the investigation.
1MDB started out as a government plan to fund infrastructure projects in Malaysia but is now thought to have turned into a swindle of more than $3 billion.
It's one of the biggest financial scandals in history, bringing down the then Malaysian prime minister. The prime suspect, Jho Low, has been on the run, and Goldman has been under fire over its links with the fund.
The scandal managed to embroil the actor Leonardo DiCaprio and the model Miranda Kerr, among others.
Investigations into the scandal have focused mainly on the $6 billion the fund raised in 2012 and 2013, using Goldman's help. The bank on that occasion managed to gain $600 million in fees, according to Bloomberg.
Epstein has pleaded not guilty to the sex-trafficking charges filed this week. Goldman Sachs has denied wrongdoing in the 1MDB case, telling Business Insider in the past that it is cooperating with the 1MDB investigations.