Malaysia’s finance ministry said last week that 1MDB has filed a total of 22 lawsuits against financial institutions and individuals alleging wrongdoing that includes breach of trust and fraud in connection with losses the country claims it suffered in the infamous corruption scandal.
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The southeast Asian country seeks to recover assets worth more than $23 billion embezzled from its state investment fund by various parties. Among the group of those litigants are two foreign financial institutions and 25 individuals, including Deutsche Bank and a Citigroup Inc. executive.
Full case filings were not immediately available, but public dockets show 1MDB is suing Citigroup’s head of commodities research, Edward Morse, alleging professional negligence, while Deutsche Bank’s Singapore branch faces a claim from 1MDB, 1MDB Energy Holdings and Brazen Sky Ltd.
The finance ministry said that the state investment fund and its subsidiary, SRC International, “contend that these entities and/or individuals have been unjustly enriched by wrongfully receiving monies from 1MDB or SRC.”
1MDB was an investment fund set up by the Malaysian government that ultimately lost billions because of fraudulent activity.
U.S. and Malaysian prosecutors have alleged that the money raised by the state fund was instead used to line the pockets of a few powerful individuals. It allegedly funded luxury properties, private jets and even financed Hollywood blockbusters.
The global web of fraud and corruption led to a 12-year jail term for Malaysia’s former prime minister, Najib Razak.
These court proceedings are part of government efforts to recover losses linked to the debacle.
“The government will not rest until all those involved are made fully accountable for the wrongdoings caused to the country through their involvement in 1MDB and/or SRC,” the finance ministry said in its claim.
A representative for Deutsche Bank stated the lender does “not believe there is any legitimate basis for, nor merit to, any claims by 1MDB and will be reviewing the matter accordingly. Deutsche Bank has cooperated fully with all regulatory and law enforcement agencies that have made inquiries relating to 1MDB.”
The Malaysian government and Goldman Sachs reached a $3.9 billion settlement last July for its role in the scheme. It was accused of misleading investors when raising $6.5 billion for 1MDB in 2012 and 2013.
Settlements have also been reached with AmBank Group and Deloitte PLT.
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Source: https://www.law360.com/articles/1382946/1mdb-sues-deutsche-bank-others-for-23b-over-scandal
