Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World

by Tom Wright

Mubadala was part of a trend in which rich states were playing a greater role in the global economy. Sovereign wealth funds had been around since the 1950s, when Saudi Arabia and Kuwait set up entities to find ways to invest their oil wealth with a long-term outlook. Other examples followed, from Norway’s Government Pension Fund to the Abu Dhabi Investment Authority, the emirate’s main wealth fund. By Low’s visit, sovereign wealth funds controlled $3.5 trillion in assets, larger than the annual GDP of most Western nations. But Mubadala was novel: Rather than simply invest oil profits, securing them for future generations, the fund was borrowing from global markets and actively trying to move the economy in new directions.

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Between October 2009 and June 2010—a period of only eight months—Low and his entourage spent $85 million on alcohol, gambling in Vegas, private jets, renting superyachts, and to pay Playmates and Hollywood celebrities to hang out with them. Low set himself up at the Park Imperial on 230 West Fifty-Sixth Street in New York, a granite apartment building with geometric angles that resemble bookends and sweeping views of Central Park and the Hudson River. The move put Low in the company of boldfaced names of entertainment. James Bond actor Daniel Craig was staying in a $38,000-a-month apartment there while starring in a Broadway play, and Sean “Diddy” Combs had a place in the building. Low rented a suite of rooms that cost $100,000 per month. The flashy new resident showed up at the building in a convoy of black Cadillac Escalades with a retinue of security, and he paid for a number of other apartments in the building for his entourage, which included Hamad Al Wazzan, his wealthy Kuwaiti friend from Wharton. Long-term residents complained about the bodyguards and the ostentation, but that was exactly Low’s aim: to show he had arrived.

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The seller’s agent was Raphael De Niro, the son of Robert De Niro (who himself would soon get to know Low and Prime Minister Najib Razak). The younger De Niro worked for high-end property firm Douglas Elliman Real Estate, which, like all U.S. brokers handling hundreds of millions of dollars in property transactions each year—as well as lawyers involved in real estate deals—was not required under American laws to conduct due diligence of clients’ finances. In fact, De Niro didn’t even need to know the ultimate buyer of a property, and Low purported to be representing Malaysia’s prime minister or other rich buyers as he toured apartments and mansions.

The result was The Wolf of Wall Street, a partially fictionalized tale, which prosecutors said aggrandized Belfort’s role at the firm and diminished the damage inflicted on his victims. Even the title was a stretch: Belfort’s firm wasn’t in the city limits, based miles from Manhattan, and he wasn’t widely referred to as “the Wolf of Wall Street.” But Belfort intrigued DiCaprio, who had made Catch Me If You Can, about master impersonator Frank Abagnale Jr., and, at this time in 2010, was about to sign on to play Jay Gatsby in Baz Luhrmann’s The Great Gatsby.

Singapore’s private banking industry was booming, managing $1 trillion in assets, a third of Switzerland’s total, but still making it one of the largest offshore centers on the planet. The city-state already had a reputation as a place for corrupt Indonesians, Chinese, and Malaysians to hide money. Now, it was attracting more European and U.S. clients trying to escape the increased scrutiny from Western regulators, who were fed up with tax cheats. The Financial Action Task Force, the Paris-based group which sets anti-money-laundering standards, recently had singled Singapore out for failing to prosecute more dirty-money cases.

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The deal seemed favorable to Tanjong, especially given that its power-sale agreement with the Malaysian state would soon run out, handing the government leverage to achieve a bargain price. Lazard believed the whole deal smelled of political corruption. It was common in Malaysia for the government to award sweetheart deals to companies in return for kickbacks and political financing; that was what Lazard thought was going on, and so it pulled out. With no other choice, Goldman instead became an adviser to 1MDB on the purchase, as well as helping the fund raise the capital. The bank provided a valuation range that justified 1MDB paying $2.7 billion for the plants. Leissner was at his most charming as he tried to cajole members of 1MDB’s board of directors to accept Goldman’s terms for selling the bonds. Sitting opposite the Goldman banker in a room at the fund’s downtown Kuala Lumpur offices, just a few weeks after Leissner’s meeting in Abu Dhabi, some of the board members looked skeptical. Goldman was preparing to launch what it internally dubbed Project Magnolia, a plan to sell $1.75 billion in ten-year bonds for the 1MDB fund. But some board members were alarmed by what Leissner had informed them: Goldman would likely make $190 million from its part in the deal, or 11 percent of the bond’s value. This was an outrageous sum, even more than Goldman had made on the Sarawak transaction the year before, and way above the normal fee of $1 million for such work. The banker defe...

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Even at Goldman, some bankers, including David Ryan, considered the bank’s likely profit excessive. Alex Turnbull, a Hong Kong–based Goldman banker whose father, Malcolm Turnbull, would later become Australia’s prime minister, also raised concerns internally. Turnbull wasn’t involved in the deal, but he knew how bond markets worked, and he sent an email to colleagues expressing disbelief about Goldman’s profits. The email led to a reprimand from Goldman’s compliance department, while Turnbull’s boss told him to keep his mouth shut if he ever wanted to get promoted. He left the bank almost two years later for reasons unrelated to 1MDB.

Five months later, Goldman launched Project Maximus, buying another $1.75 billion in bonds to finance 1MDB’s acquisition of power plants from the Malaysian casino-and-plantations conglomerate Genting Group. Again, the fund paid a high price, and, like Tanjong, Genting made payments to a Najib-linked charity. This time, $790.3 million disappeared into the look-alike Aabar. David Ryan, president of Goldman’s Asia operations, argued to lower the fee on the second bond, given how easy it had been to sell the first round. But he was overruled by senior executives, including Gary Cohn. While Goldman was working on the deal, Ryan was effectively sidelined; the bank brought in a veteran banker, Mark Schwartz, a proponent of the 1MDB business, as chairman in Asia, a post senior to Ryan’s. Goldman earned a little less than the first deal, making $114 million—still an enormous windfall. For bringing in the business, Leissner was paid a salary and bonuses in 2012 of more than $10 million, making him one of the bank’s top-remunerated employees. But that was just the tip of the iceberg. Unknown to his bosses at Goldman, and three months after the first bond, millions of dollars began to flow into a British Virgin Islands shell company controlled by Leissner, some of which he shared with Roger Ng, according to Department of Justice filings. Millions of dollars more moved through Leissner’s shell company to pay bribes to 1MDB officials. Over the next two years, more than $200 million in 1...

The $2.2 billion acquisition of EMI, finalized a month earlier, was led by Sony Music Holdings, the Estate of Michael Jackson, and U.S. private equity giant Blackstone Group. Low’s Jynwel Capital had invested alongside Mubadala, the Abu Dhabi fund run by Khaldoon Al Mubarak. His share, just over $100 million, was by far his most legitimate-looking deal to date. Low had set up Jynwel with his brother, Szen, and told financiers it was his “family office,” investing his grandfather’s billions. His partners in the EMI deal had fallen for it. Low’s share, in truth, was financed by the 1MDB bonds that Goldman had sold for the fund. To hide the origin of the money, Low used an old trick, getting his associate Fat Eric to set up an offshore shell company called Blackstone Asia Real Estate Partners. This firm was designed to look like a bonafide subsidiary of the Blackstone Group but was controlled by Fat Eric, who worked for Low. On official documents, it would appear that Fat Eric owned scores of shell companies and assets, permitting Low to keep his involvement secret. By now Low had siphoned off more than $1 billion of the 1MDB money generated by the bonds sold by Goldman Sachs. With the help of IPIC managing director Khadem Al Qubaisi, Low had secured control of the cash, which was sitting in a shell company that looked like a subsidiary of IPIC. The money was supposedly to compensate IPIC for guaranteeing 1MDB’s bonds, but it was now Low’s to do with as he pleased. Looking fo...

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The following year, Low had arranged for $170 million from the Goldman-prepared power-plant bonds to fill Najib’s account. To avoid questions, Cheah and Low had seen to it the account was marked as one used for internal bank transfers, meaning it would not be visible to compliance staff. The Australian and New Zealand Banking Group, known as ANZ, owned a minority stake in AmBank, giving it the right to appoint executives and board members. But ANZ’s management had no idea about this secret account’s existence. Joanna Yu, a middle-level AmBank executive, was tasked with taking instructions from Low about incoming wires and outgoing checks. Najib had used most of the initial infusion to pay off crony politicians, as well as on jewelry and a $56,000 expense at Signature Exotic Cars, a high-end car dealership in Kuala Lumpur. Now, with the elections approaching, the account was about to become a lot more active.

International journalists also had started to hear about Goldman’s huge profits, mainly from other investment bankers in Southeast Asia, many of whom were getting heat from their bosses in London and New York for losing out on the business of the century. Even Gary Cohn, Goldman’s president, boasted about the fees during meetings with journalists in New York. Around the elections, the Wall Street Journal published a story under the headline GOLDMAN SEES PAYOFF IN MALAYSIA BET, in which reporters Alex Frangos and Matt Wirz detailed how Goldman had made $200 million raising bonds for Sarawak’s government and 1MDB. The amount was, in fact, three times higher, but the story broke into the open the highly unusual Goldman windfall. A Goldman spokesman defended its role, saying clients sought out the bank for its ability to “deliver complex financing solutions” not available on “public markets.”

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To resolve this crazed theft, Low wagered an IPO of 1MDB’s power plants would bring in billions of dollars. Yet he never spent long cogitating the endgame. Bernie Madoff bet he could always find new investors in his pyramid scheme, which ran more than four decades. But Madoff’s fraud, like many other examples before, collapsed when he could no longer lure new dupes, whose money he needed to pay “profits” to other investors. Low

Auditors are meant to be independent, but Tan offered for Deloitte to help 1MDB with its media relations. With barely any business, and encumbered by huge borrowings, the only way for 1MDB to avoid a financial loss was to again revalue its land portfolio and book the profits, as it had done in 2010. In this way, 1MDB was hoping to show a $260 million profit. Tan was not only supportive of this accounting, he also offered to explain it publicly to help deflect any negative media stories. Deloitte had been so helpful, in fact, that Tan asked whether his firm would be selected to audit 1MDB’s many subsidiaries, including the energy unit that was gearing up for an IPO. The board confirmed Tan’s request immediately, and its chairman, Lodin Kamaruddin, Najib’s close aide, said he wanted Deloitte’s “professionalism and objectivity” put on record.

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Billionaires are today’s royalty, and like a modern-day Louis XIV, Low thrived at being the center of orchestrated formality, each of his whims met immediately, whether by boat staff, private bankers, or art dealers. A few days earlier, Low had taken delivery from Lorraine Schwartz of a matching set of jewelry, comprising diamond earrings, a necklace, a bracelet, and a ring. A few weeks earlier, he’d sent Schwartz a picture of Kerr wearing Tiffany jewelry to give her an idea of the model’s taste. Over the next ten days on the boat, as it sailed around Italy and to the Greek island of Corfu, Low gave the various pieces of jewelry to Kerr over elaborate set dinners. Yet Low was straining to pay for all this opulence. Although some $5 billion had come out of 1MDB, the scheme had so many tendrils—so many payments to conspirators and business partners, and to keep up a billionaire’s lifestyle—he was often hustling for cash. Recently, he had hired U.S. public relations firm Edelman to help counter the growing number of negative press stories about him, and he would later employ Schillings, the British reputation consultancy. Edelman’s services were costing him as much as $100,000 some months.

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Concerned about its reputation, Deloitte was demanding a quick repatriation of the $2.3 billion in the Cayman Islands fund. The 1MDB board, apparently under the illusion there was money there, upped the entreaties on management to comply. Since first taking cash from 1MDB, Low had relied on accounting magic to make this problem disappear, but through three different auditing firms there it remained, like a pebble in his shoe. Before, he’d gone on taking more, and spending wildly, seemingly under the assumption he could cover it up with new trickery down the road. Now, as his desperation mounted, Low was coming to a stark realization: He would have to give up some real funds. The trouble was, he didn’t have $2.3 billion at his disposal. He had to find another manuever—and it would be his most reckless yet. Turning to Yeo Jiawei, the former BSI fund specialist, Low looked for a way out. How could they turn a few hundred million dollars—the remainder of the Deutsche Bank money not used for jewelry and other purchases—into $2.3 billion? This kind of alchemy was beyond even Low, but accounting tricks had worked for years to hide his thefts from 1MDB, so why not one last, monumental sleight of hand to fool Deloitte and the board? Yeo had an idea, and he looked to Amicorp, the Singapore-based financial company that administered funds in Curaçao, to put it into practice. To make it look like 1MDB was bringing the money home, Yeo devised a complex and circuitous flow of payments. I...

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He began by telling the story of how, in February 2012, he’d undertaken his first-ever full-body medical checkup in Switzerland, only for a doctor to tell him he might have stage 2 lung cancer. “I felt my world fall apart,” Low said, sounding a bit stiff, as if trying to make sure he got the story right. “This was one of the changing moments of my life and I didn’t know what to do.” He related how he called Al Husseiny—gesturing to his friend in the audience—who had connected him with a doctor at the University of Texas’s MD Anderson Cancer Center, one of the world’s top hospitals for treating the disease. After six months of tests, the doctors told him it was only an infection. The reprieve from cancer changed his outlook on life, Low said, and later that year he set up the Jynwel Foundation to make charity a bigger part of his life. The following year, in October 2013, Low pledged $50 million to MD Anderson to fund an effort to better diagnose cancer by feeding patient data into IBM’s Watson supercomputer. Here was Low, caught on camera, carrying on as he had for his entire life, the master storyteller mixing reality with half truths, all in the service of distracting anyone from looking deeper. What you claimed to be, you were, plain and simple. Perhaps Low had been worried about dying of cancer, but he used the speech to develop another fiction, one about his origins.

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The grandfather had died, Low undoubtedly loved him, but he was not as wealthy, or such a philanthropist, as his grandson made out. Neither was Low himself so charitable; the Jynwel Foundation had done little through 2012, while Low was busy raiding the 1MDB fund, even during his own cancer scare. It was true that the Jynwel Foundation had pledged more than $100 million to charities, although it had actually paid out only a fraction of that amount. Its activity began to pick up only in late 2013, just as negative media stories about Low were snowballing, and more so in 2014. In order to change the narrative, Edelman counseled Low to publicize his charitable endeavors, including pledges of tens of millions of dollars to National Geographic’s Pristine Seas endeavor and to the United Nations to save its news service from closure. Low was even planning to donate to his alma mater. At his request, an architect drew up plans for a new building at Wharton to be called the Jynwel Institute for Sustainable Business. Low was planning to make a $150 million commitment to build and operate the institute over thirty years, a munificent gesture, redolent of a Rockefeller or a Carnegie.

In early December, Joanna Yu, the AmBank employee who ran Prime Minister Najib’s secret accounts, was in a panic. “Very stressful these days. ANZ running the bank,” she texted to Jho Low, referring to the Australian bank that held a stake in AmBank. “We need to close the accounts soonest please,” she said. Low texted back “okay” but seemed distracted, and as the month wore on, and the accounts remained open, Yu got increasingly worried. In a series of messages, she explained to Low how the situation was perilous. Cheah Tek Kuang, the chief executive who had given cover to the enterprise, had stepped down to take on an advisory role. The new chief, Ashok Ramamurthy, was an appointee from ANZ, and he’d found out about Najib’s secret business. By now, the prime minister had a number of accounts at AmBank, and Ramamurthy was watching. Late in 2014, the new chief executive became fretful about a series of huge cash payments into Najib’s accounts. In the last few months, the prime minister had been running short on funds, as he paid off politicians. Desperate to stop the accounts from becoming overdrawn, which would attract attention from compliance, Low arranged for an associate to make last-minute cash deposits, taking sacks of cash into an AmBank branch. It was a huge miscalculation and alarmed Yu, who pleaded with Low to stop. Heedless of the advice, he kept sending the associate with sacks of cash—literally bundles of notes in bags—to AmBank branches. The deposits totaled o...

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Global Financial Integrity, a Washington-based anticorruption group, estimated that $1 trillion was drained from developing economies in 2012 alone, especially poorly regulated places like Brazil, China, India, and Russia. But McMurry had a more optimistic take.

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