Low’s $12bn rape of Malaysia
In September 2009, a 27-year-old Wharton business school graduate stole $US700 million in one go from 1 Malaysia Development Berhad, a government investment fund where he held no formal position. By five years later, according to the US Department of Justice, Jho Low and his associates had gouged out $US4.5 billion.
PETER ALFORD
12:00AM JANUARY 12, 2019 5 COMMENTS
In September 2009, a 27-year-old Wharton business school graduate stole $US700 million in one go from 1 Malaysia Development Berhad, a government investment fund where he held no formal position. By five years later, according to the US Department of Justice, Jho Low and his associates had gouged out $US4.5 billion.
In terms of scale and depravity, the looting of 1MDB is one of the financial crimes of this or any other century. The potential cost to Malaysians of the fund’s collapse, only now being quantified after a unanticipated change of government, is north of $US12bn ($17bn).
Today Low scuttles with his diminished entourage to and from China (we assume), dodging Interpol red notices and his former US playgrounds, where the DoJ has seized some $US1bn of his assets and has laid criminal charges. Low denies everything and pays expensive international lawyers to defend his interests.
His one-time patrons, former prime minister Najib Razak and his wife Rosmah Mansor, are bailed in Kuala Lumpur on a growing mound of charges that should put them away for decades. They too deny everything.
Their colossal mess confronts a new government under 93-year-old Mahathir Mohamad, who led and shaped UMNO, Najib’s party, for two decades but, enraged by 1MDB, thundered out of retirement to lead the opposition’s conquest last May.
Former Goldman Sachs Southeast Asia chairman Tim Leissner, who connived with Low in raising $US6.5bn from 1MDB bond issues even though the young Malaysian was supposedly persona non grata at the bank, has pleaded guilty to bribery and subverting Goldman’s internal controls and forfeited $US43.7m.
The planet’s most powerful investment bank has, yet again, ugly questions to answer about a multibillion-dollar debacle.
Having demanded that Goldman disgorge the extraordinary $US600m fees received from 1MDB, Mahathir’s Finance Minister, Lim Guan Eng, is preparing a $US7.5bn reparations case against the firm.
International Petroleum Investment Company, an Abu Dhabi wealth fund that was a counter-party in the bond deals, is suing Goldman for unspecified damages.
IPIC is also suing its former chief executive Khadem al-Qubaisi and offsider Mohamed al-Husseiny, both Low accomplices, who are believed to be jailed in the emirate.
Yet, for all this contemporary account settling, 1MDB was effectively shuttered four years ago. And as far back as 2010, Low’s near-insane spending and Cristal champagne-soaked revels in the company of Paris Hilton, Leonardo DiCaprio and their fecklessly expensive ilk had attracted attention back in KL, where a tenacious opposition MP, Tony Pua, was probing 1MDB’s rackety finances.
By late 2014, dangerous questions were being asked about Low’s penthouse and hotel purchases in New York, exceeding $US300m, from resources he couldn’t plausibly explain.
From London, he’d snagged the attention of activist journalist Clare Rewcastle Brown.
She began tracking Low as a diversion from her mission to expose the commercial rape of Sarawak’s rainforests by the man she held most responsible, Taib Mahmud — the Borneo state’s dominant politician and a grasping multi-billionaire.
Rewcastle Brown first spotted Low in 2010 dealings with Taib. Next she noted him at The Wolf of Wall Street launch alongside DiCaprio, the star, and co-producer Riza Aziz, whom Low befriended during their England schooldays and who had clambered in three years from Hollywood nobody to financing a $US130m marquee movie.
So, on Boxing Day 2013, her Sarawak Report website speculatively drew together a skein of links between 1MDB, the unaccountably wealthy Low, Riza the arriviste filmmaker, his avaricious mother, Rosmah, and her second husband.
Najib, a blue blood of the ethnic Malay party, had just scraped through an election to extend 56 years of UMNO government, but already trailed a plume of suppressed scandals.
Unknown to any but the inner conspirators, 1MDB was by then crippled and 12 months later it was effectively a corpse, through which $US9.5bn in borrowings had been pumped.
The scandal remained containable until February 28, 2015, when Sarawak Report and The Sunday Times blew off the lid with simultaneous reports, informed by an electronic documents hoard Rewcastle Brown obtained from a disgruntled former PetroSaudi International executive. A $US2.5bn joint venture with PetroSaudi had been hailed in September 2009 as 1MDB’s first big undertaking under thrusting new PM Najib, as a “partnership to spearhead the flow of foreign direct investment from the Middle East”.
Perhaps Najib was sincerely deluded by Low’s crooked Emirati sovereign wealth contacts and his introduction to PetroSaudi co-founder, Prince Turki bin Abdullah al-Saud.
Seventh son of Saudi Arabia’s then monarch, Turki was just one of a swarm of royal drones trying to monetise their status. (Today he’s among a more select group of relatives, those still detained since the 2017 roundup by sinister Crown Prince Mohammed bin Salman.)
Otherwise, PetroSaudi was a grab-bag of mediocre assets operated by a pair of slick go-getters, chief executive Tarek Obaid, a Riyadh-connected Saudi expat, and chief investment officer Patrick Mahoney.
 Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood and the World, by Tom Wright and Bradley Hope.
Unknown to 1MDB’s directors ratifying the agreement, a $US700m loan had been fabricated, from PetroSaudi to the joint venture. Within two days, 1MDB had dispatched “repayment” to a purported PetroSaudi subsidiary, Good Star Ltd, whose single share was owned by Low.
A pattern was established in what the DoJ, meticulously unpicking the crimes, called the “Good Star phase”: four subsequent debt raisings were immediately pillaged; 1MDB executives who were Low’s accomplices misled or ignored directors; stolen funds were siphoned through a labyrinth of offshore bank accounts, tax-haven companies and lawyers’ client funds.
Also during the Good Star phase, $US20m was paid into an account of a person the DoJ called Malaysian Official 1: Najib Razak.
If the February 2015 exposure blew the lid off the cover-up, on July 2 Wall Street Journal reporters Tom Wright and Simon Clark reached inside to drop a bomb in Najib’s lap with a report headlined “Malaysia leader’s accounts probed”. Sarawak Report again published simultaneously, though this time the deadly material had leaked from the Malaysian Anti-Corruption Commission.
The WSJ report lit a fire under the DoJ’s Kleptocracy Assets Recovery Initiative, where FBI investigators were sieving through Rewcastle Brown’s documents.
The reports revealed that in March 2013 — seven weeks before an election UMNO won, barely, by dint of colossal campaign spending — a Najib account received $US681m from Singapore. Rewcastle Brown claims more than $US1bn eventually found its way from 1MDB to Najib. The lacerating detail of the DoJ investigation, unveiled in mid-2016 by attorney-general Loretta Lynch, showed Riza’s Red Granite Pictures received $US238m and Rosmah was gifted jewellery costing $US28m.
1MDB is a technically difficult story. The crimes need complex explanation for lay readers, there is a profusion of actors across a decade and three continents, and exposure begins in earnest only in year seven.
The Sarawak Report, by Clare Rewcastle Brown
In two books on the scandal, Rewcastle Brown’s The Sarawak Report and Tom Wright and Bradley Hope’s Billion Dollar Whale,this necessitates frequent and confusing time shifts.
Also, the big consequences came in May last year, when presumably both books were with their editors.
Wright and Hope focus tightly on Low and his milieu, telling his story linearly: from son of a seedy Penang millionaire already exhibiting weird talents at school, through the 2009-15 roaring years, to jaded fugitive.
Their book is directed at an international audience that knows little of Malaysia and isn’t much interested, but might thrill to the escapades of a precocious criminal genius cavorting through Beverly Hills and Wall Street with a conga line of celebrities. The folk who brought you Crazy Rich Asians have the film rights.
The vivid, cinematic writing fleshes out interesting common characteristics among the conspirators. Obaid, Mahoney, al-Qubaisi, al-Husseiny, Leissner, and Low’s lieutenant Seet Li Lin are, like him, from privileged upbringings, internationally educated, youngish, insatiably greedy and ethically void. These are globalisation’s spawn.
Malaysia in Billion Dollar Whale, however, becomes merely one backdrop for Low’s escapades and not even the most picturesque, what with his supermodels and superyachts. With such a man, this treatment implies, 1MDB could happen anywhere.
Even Najib, his patron, without whose implied authority Low could not have moved, is rendered as a bluff fool. Until suddenly, following the July 2 revelation, the PM bares his fangs at sullen colleagues and savagely regathers political control.
Rewcastle Brown’s Najib isn’t the sharpest arrow in the quiver either but through her immersion in environmental issues and her Malaysian political and civil society contacts she conveys how the entwined roots of business and political corruption and the baleful sway of UMNO incumbency enabled an admittedly phenomenal thief.
In contact throughout with the opposition, including its moral leader Anwar Ibrahim as well as Mahathir, and having herself been hounded by the vengeful Najib, she explains the scandal’s political dynamics, which Whale barely acknowledges.
The Sarawak Report is undeniably a tougher read for anyone not closely interested in the 1MDB affair or journalistic hot pursuit.
It is more voluminous and more dense, and the lack of an index is more noticeable than in the case of the airier Billion Dollar Whale.
We are reminded by the constant first person that here is “the inside story of the 1MDB expose” — her expose. In mitigation, Rewcastle Brown is primarily responsible for exposing the worst larceny in East Asia in decades: this is a monument to public-interest journalism.
Without her, third-term prime minister Najib might now be patting the back of his shovel over the deep-buried 1MDB scandal.
Peter Alford was a foreign correspondent in East Asia for 16 years. |
