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Monday, September 12, 2011

German Federal Financial Supervisory Authority (BaFin) is investigating Deutsche Bank For Suspected Money Laundering With Taib Mahmud

Kuching
Monday, 12th September 2011

The German Federal Financial Supervisory Authority (BaFin) is investigating Deutsche Bank’s business relations with the family of Malaysian potentate Abdul Taib Mahmud (“Taib”)


In its capacity as the supervisory authority for “financial institutions in respect of money laundering legislation”, Germany’s Federal Financial Supervisory Authority (BaFin) has launched investigations into the Deutsche Bank on account of its business relations with the Malaysian Taib family. This has been confirmed by the German Federal Ministry of Finance in response to an enquiry by the Bruno Manser Fonds.

In an e-mail to the Bruno Manser Fund, the Federal Ministry of Finance, under Finance Minister Wolfgang Schäuble, states that it has “requested the German Federal Financial Supervisory Authority to clarify and check the situation that you outline in your letter to the Federal Chancellor from the money-laundering angle, insofar as this concerns a specific financial institution and, if the Financial Supervisory Authority considers it appropriate, to instigate supervisory measures.” The Financial Supervisory Authority “has already made a start on clarifying the situation.”

The Bruno Manser Fund welcomes the investigation and is calling on the German federal government to freeze any Taib assets in Germany. In addition, the Fund is demanding complete transparency from Deutsche Bank with regard to its dealings with the Taib family and the termination of its business relations with the Malaysian potentate, who has gained a bad reputation worldwide.

In a letter to Federal Chancellor Angela Merkel, the Bruno Manser Fonds, the Hamburg “Rettet den Regenwald”(Rainforest-Rescue) Association and the Society for Threatened Peoples drew the attention of the German government to the Deutsche Bank’s close business relations with Malaysian potentate Abdul Taib Mahmud (“Taib”) and demanded that any Taib assets in Germany be blocked.

Joint ventures between Deutsche Bank and the Taib family

Since 2004, Deutsche Bank has processed transactions worth several hundred million euros for the Sarawak government and is engaged in a joint venture in Malaysia with the Cahya Mata Sarawak company (CMS), which is controlled by the Taib family.

CMS and Deutsche Bank are the principal shareholders of the finance company K & N Kenanga Holdings, domiciled in Kuala Lumpur, with its subsidiary Kenanga Deutsche Futures, an accredited broker at the Malaysian stock exchange. The CMS construction conglomerate essentially lives off assignments that are awarded by the Taib government without public tenders. CMS thus benefited greatly from the construction of the disputed Bakun dam and has a ten-year contract for maintaining the entire road network in Sarawak, Malaysia’s biggest federal state.

Potentate’s assets likely to run into billions

With the German government’s announcement, the Malaysian potentate, who has been in power since 1981, is now at the centre of an investigation for the third time within just a few months. In May 2011, the Swiss Financial Market Supervisory Authority, FINMA, announced an investigation into any Taib assets in Switzerland, at the instigation of Swiss President Micheline Calmy-Rey. At the start of June, the Malaysian anti-corruption commission MACC announced that proceedings had been launched against Taib on account of corruption. Observers reckon that, during the three decades of his rule, Taib has amassed a fortune of several billion US dollars through his abuse of office and corruption.

Since 1981, Abdul Taib Mahmud has concurrently held the three posts of head of government, minister of finance and minister of natural resources for Sarawak, Malaysia’s biggest federal state. Taib is regarded as holding prime responsibility for the extensive destruction of the tropical rainforest of Sarawak on Borneo. Just recently, former British prime minister, Gordon Brown, described the destruction of the Sarawak rainforest as “probably the biggest environmental crime of our times”.

Due to Taib? – Deutsche Bank closed a Bruno Manser Fund donation account

Since it was established in 1991, the Bruno Manser Fund, which was set up by Swiss rainforest advocate, Bruno Manser, who later went missing, has been committed to fighting the clearing of the rainforests of Sarawak and the corruption of the Taib government. A paraglider flight by Manser in 1999 onto the Kuching residence of Sawarak’s head of government, Abdul Taib Mahmud, caused a great stir.

At the end of 2004, Deutsche Bank refused to continue running a donation account for the Bruno Manser Fund that it had held at the bank’s Lörrach, Germany, branch for many years. The bank terminated its business relations with the Swiss association citing its General Terms and Conditions. Despite the Bruno Manser Fund contacting Deutsche Bank CEO, Joe Ackermann, a Swiss national, the bank stuck to its decision: “There is a reason for this decision. But no one will tell you what it is”, is what a spokesman of Deutsche Bank said to the Bruno Manser Fund at the time. The Bruno Manser Fund assumes that the account was closed out of consideration to the close business relationship between Deutsche Bank and the Taib family.

Please see Statement by the German Finance Ministry to the Bruno Manser Fund on 5 September 2011

Statement by the German Finance Ministry to the Bruno Manser Fund


(English Translation: Bruno Manser Fund)


First of all, I would like to extend my sincere thanks to you and the Bruno Manser Fund for your


commitment to fighting corruption, which also emerges from your letter to the Federal Chancellor


dated 20 June 2011. In this letter, you report on accusations of corruption against Abdul Taib Mahmud


and his family and ask that potential business links to Deutsche Bank be examined. In the light of your


enquiry of 29 August 2011, I am pleased to report to you on the steps launched by the German


Federal Ministry of Finance (BMF) within its scope of competence.


The German Federal Financial Supervisory Authority (BaFin), which comes under the Federal Ministry


of Finance, is not only responsible for bank supervision but also for the supervision of financial


institutions in respect of money laundering legislation. To enable it to fulfil its duties, the Federal


Financial Supervisory Authority has event-driven and event-independent rights of information and


inspection vis-à-vis the financial institutions, under the terms of §44 of the German Banking Act


(Kreditwesengesetz), which cover all business activities; this can also include business relations with


individual customers. Under the terms of the Money Laundering Act (Geldwäschegesetz) and the


Banking Act, banks are obliged to engage in customer due diligence. In addition to identifying and


verifying the contractual partner and any beneficial owners, the bank is required to clarify the


background to the business relationship and continuously monitor the business relationship. This


measure is designed to make it possible to track flows of money and to recognise unusual or even


suspicious transactions. In the case of so-called politically exposed persons, an increased risk of


money laundering has to be assumed, and hence a greater level of due diligence must be observed.


Corruption offences rank amongst the predicate offences for money laundering.


Against this background, I have requested the German Federal Financial Supervisory Authority to


clarify and verify the situation that you outline in your letter to the Federal Chancellor in moneylaundering


terms, insofar as this concerns a specific financial institution and, if the Financial


Supervisory Authority considers it appropriate, to instigate supervisory measures. The Financial


Supervisory Authority has already made a start on clarifying the situation. It must, however, be borne


in mind that the employees of the Financial Supervisory Authority have a duty to maintain


confidentially under the terms of § 9 of the German Banking Act. It is thus not possible to provide you,


or the Bruno Manser Fund, with details of this examination and the results.


I trust that the measures taken constitute a satisfactory response to your concerns.


With kind regards,


Sarah Merzbach


Sarah J. Merzbach, LL.M. (Univ. of Chicago)



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