Billion Dollar Whale

How to steal R70 billion and impoverish a nation  

Billion Dollar Whale by Tom Wright and Bradley Hope is a definitive account of how one man, Jho Low, stole US$5 billion (R70 billion) from 1Malaysia Development Berhad (1MBD) – Malaysia’s sovereign wealth fund. Aided by the corrupt former Prime Minister, Najib Razak, his stooges running state owned enterprises and score of senior bank executives (Goldman Sachs, BSI and Amcorp), law firms and auditors (KPMG and Deloittes), Low looted state funds went on a record breaking spending spree across the globe.

Sovereign Wealth Funds are, at least on paper, created to invest a nation’s resources for the benefit of future generations. However, in the case of 1MBD, the fund was quickly turned into a cesspool of corruption. In the book, Mr. Write and Mr. Hope provide a detailed account of how the fund, staffed with management and Board members who were loyalist to Prime Minister, Najib Razak, pilfered the coffers using offshore shell companies registered in tax haven jurisdictions like the Cayman Islands and Seychelles. Although 1MBD was established invest into the local economy and create jobs for Malaysians, it was instead turned into burden that the population has to bear for many years to come.

The book also detail how Jho Low used the stolen money to finance an extravagant lifestyle, buy friendships, loyalty and connections from rich people, celebrities and powerful political connections. Celebrities the likes of Jamie Foxx, Paris Hilton, Kanye West, Alicia Keys, Swiss Beatz, Usher and Leonardo DiCaprio were on Jho Low’s payroll, getting paid over US$1 million for cameo appearance at his lavish parties and gambling escapades. Powerful politicians like Sheik Mansour, the deputy Prime Minister of the United Arab Emirates also benefitted, receiving bribes in return for aiding Jho Low’s scheme but the excesses didn’t stop there. Low also broke a number of world records, paying US$2 million for champagne at a party, US$330 million for art collection and over US$70 million for jewellery.

Topaz: The US$500 million superyacht belonging to Sheik Monsour paid by money stolen by Jho Low

Topaz: The US$500 million superyacht belonging to Sheik Monsour paid by money stolen by Jho Low

Mr. Wright and Mr. Hope also detailed the role played by global banks, audit firms and law firms who turned a blind eye to Low’s criminal activities in return for fat profits from doing work for 1MBD. Goldman Sachs earned US$600 million in fees advising 1MBD. Local bankers at Swiss bank BSI made over US$25 million in bonuses for aiding Mr. Low and audit firms like KMPG and Deloittes took turn to sign off 1MBD’s financial statements even though they were dubious, to put it mildly.

The Prime Minister himself, Najib Razak, was also a benefactor; receiving a total of US$1 billion from the money stolen which he used to bribe politicians and win elections. Some of the proceeds were also channelled to finance Rosmah Mansor, his wife’s insatiable appetite for jewellery and designer clothes and shoes. She was well known to spend over US$30 million per year in lavish shopping spree that often required her to charter a private plane just to take the goods back home in Malaysia.

The Dustheads art masterpiece bought by Jho Low for US$48.8 million

The Dustheads art masterpiece bought by Jho Low for US$48.8 million

In the end, 1MBD had accumulated US$13 billion in debt with very little to show for it. Ironically like South Africa, all that debt is guaranteed by the government, meaning it’s a cost that would burden the people of Malaysia for years to come. Instead of getting jobs promised when the fund was established, Malaysians will have to content with service the interest the debt.

Parting shots

For many years, corrupt leaders have been looting their states at the expense of their long suffering populations. I have argued against an ideology of setting up a state owned bank or sovereign fund, especially in a country like SA where corruption is at unprecedented levels. Such institutions are an easy vehicle to loot public money which can easily be written off as bad investments.

There was great indentation when R1.8 billion was stolen from VBS bank but those guys will look like amateurs when compared to over the R70 billion that Jho Low stole from the Malaysian people. The sad part though is that the world’s justice system is broken and ineffective. Those at the forefront of looting 1MBD, just like their South African counterparties, will likely not go to prison. They will continue living their lives as if nothing happened and if we are lucky, one or two low level scapegoats will be sacrificed. That leaves a sour taste in my mouth

When corrupt people take over a country’s apparatus, their hangers-on, enforcers and people who do their bidding feel emboldened. They are not common criminals but an elite, shielded by privilege from the normal reaches of justice. The rampant corrupt activities of those condemns such countries to mediocrity for everybody but the elite – and those serving them – will continue to thrive.

 

 

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