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Kindle Notes & Highlights
by
Tom Wright
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September 18 - September 20, 2018
Deutsche Bank kept pushing for documents, and Geh eventually was forced to doctor 1MDB’s accounts and Brazen Sky’s bank statements at BSI to make it appear the cash was still there.
Kamaruddin, who was in close contact with Najib, informed the board, in a meeting on November 25, 2014, that there was no choice but to sell assets and wind down operations as soon as possible. Interest costs alone were more than $800 million per year and the fund was close to default.
“Neither any money spent on travel, nor any jewelry purchases, nor the alleged contents of any safes are unusual for a person of the prime minister’s position, responsibility and legacy family assets,” Najib’s office said in a statement to the Times.
The statement from the prime minister’s office was the last straw for Najib’s four brothers, who for years had complained inside the family about Rosmah’s spending.
The news of Low’s apparent theft caused a civil war within UMNO.
Some senior politicians even arranged to tap the prime minister’s phone and heard him discussing with Jho Low a plan to put the blame for any corruption on 1MDB’s Middle Eastern partners. Until the dust settled, Najib ordered Low to leave the country and keep a low profile.
Low shifted some of his accounts to Amicorp’s bank. He also looked for other new places to stash his money. For help, he once again turned to Tim Leissner. The German Goldman banker was willing to help, writing a letter of reference in June 2015 to Banque Havilland,
The Journal story galvanized the Malaysian task force into action. Members of the group shared futher password-protected documents on their investigation with the Journal. The password for many of the files: “SaveMalaysia.”
Over the summer, he told a 1MDB board member: “If they sacrifice me, I’ll go nuclear. I was acting on the instructions of the boss.”
With many of his accounts in Singapore and Switzerland now shut, Low was being shunted to the furthest reaches of the global financial system, forced to rely more on Thai baht or Chinese yuan transactions.
When one contact asked Low about all the money that appeared to be missing, he was quick to assign the guilt to Rosmah. “She is an avid purchaser of jewelry in the millions. Where is the money from?” he asked.
The United States for decades had been concerned that corruption would undermine free-market capitalism, making it harder for American firms to compete internationally.
kleptocracy—the word is from the Greek and means “rule by thieves”
“Corruption leads to lack of confidence in government. Lack of confidence in government leads to failed states. And failed states lead to terror and national security issues,”
Corrupt foreign leaders and officials had an Achilles’ heel—they relied on the U.S. financial system to transfer cash and had a penchant for acquiring real estate in New York, Los Angeles, and Miami.
Is not easy to hide ill gotten monies without passing thru US financial system when corrupt leaders prefer greenbacks
The 1MDB scheme, McMurry’s team must have soon realized, was of a whole different magnitude. For one thing, Low just seemed so brash: His money-laundering techniques, although sophisticated, had been carried out through major banks, and there was a solid money trail. This was easier to deal with than Pakistani money launderers, who often would go into hiding for years and make their funds disappear through the informal hawala money-transfer network. Then there was the scale: The 1MDB affair was shaping up as the single largest financial scam of all time.
this is perhaps the most daring and the largest heist in history
The broad contours of the scheme had appeared in the pages of Sarawak Report and the Wall Street Journal, but only the first heist, involving the $1.5 billion taken from 1MDB starting in 2009, was clearly drawn.
Why issue bonds and then pay almost half of the proceeds in “collateral” to the guarantor of the bonds? But what we discovered next deepened the mystery: IPIC’s financial reports made no mention of receiving the money.
Wall Street Journal published the most detailed story yet about Low’s involvement in Najib’s secret accounts and his behind-the-scenes role at 1MDB. After the story published, Malaysian Source, our secret contact involved in the scheme, stopped all communication. MS realized it was not so easy to influence our coverage.
The troubles at 1MDB offered a perfect opportunity for China to supplant the United States in Malaysia
There had been intimidation—a murder, even—of those involved in 1MDB investigations, and people were frightened.
At the Malaysian Anti-Corruption Commission, which had recommended the prime minister’s arrest, there was simmering anger over the mothballing of their investigation. And so, a handful of investigators began to secretly feed information to the FBI.
This was a civil lawsuit, looking to seize assets, but from here on Jho Low would avoid the United States, fearing criminal proceedings were also under way. Even Najib would keep out of the United States for a while, sending a deputy to the U.N. General Assembly in New York later that year.
The prime minister never expected the hammer of U.S. justice to land so close to his door.
He better believe it
Global Financial Integrity, a Washington-based anticorruption group, estimated that $1 trillion was drained from developing economies in 2012 alone,
The U.S. kleptocracy action was a civil case—an attempt to claw back assets. But only jail time, not simply a slap on the wrist and a confiscation of assets, would serve as a real deterrent to this kind of transnational fraud.
Normally, Wall Street bankers are savvy about keeping sensitive business offline, either meeting in person or using private emails and phone messages. But Leissner had been sloppy.
Earlier in 2015, the banker had prepared his unauthorized reference letter for Jho Low—to help him open an account with Banque Havilland in Luxembourg—from a personal computer. The letter never should have formed part of Goldman’s internal inquiry. But someone on Kimora Lee Simmons’s staff mistakenly sent the document to Leissner’s Goldman email, and compliance executives uncovered it.
August 2017 the Justice Department made a bombshell announcement: It was pursuing a criminal investigation into the 1MDB scheme.
Christie’s, the auction house that sold Low many paintings, began demanding that agents looking to buy or sell works reveal the names of their clients. These rules were voluntary, but Christie’s was taking action.
“When you fine a bank billions of dollars, it hurts basically shareholders and other stakeholders. It doesn’t hurt the board and senior management, and it doesn’t hurt the individuals much. And that is what, in my view, is one of the failings of the current regime globally, that people continue to do wrong things because they’ve not been held personally liable and responsible,”
The hopes that China would bail out Malaysia seemed to have been misplaced. In early 2017, one deal for a Chinese state–owned company to acquire a parcel of 1MDB’s land fell apart, after President Xi Jinping’s government declined to sign off on the arrangement.
Foreign investors, worried over the 1MDB scandal, sold Malaysian assets, pushing the local ringgit currency down 30 percent against the U.S. dollar in just a few months. About half of the fund’s debt was in dollars, and a weaker ringgit made it even more costly to repay in local-currency terms.
A few weeks later, at an Asia-Pacific summit that Najib also attended, President Obama, in his last few days in office, made an allusion to Malaysia, one that wasn’t lost on its people. “There are limits to our reach into other countries if they’re determined to oppress their people,” Obama said, “or siphon off development funds into Swiss bank accounts because they’re corrupt.”
Thailand, ruled by a military junta, was a safe harbor for Low. China, meanwhile, saw him as a strategic asset—a pawn who gave Beijing influence over Najib.
The money he took, by and large, was not stolen directly from Malaysia’s treasury or through padded government contracts. Instead, it was cash that 1MDB borrowed on international financial markets with the help of Goldman Sachs.
Low’s genius was he sensed that the world’s largest banks, its auditors, and its lawyers would not throw up obstacles to his scheme if they smelled profits.
Low cozied up to Elliott Broidy, a venture capitalist, Republican fund-raiser, and close associate of President Donald Trump. Broidy’s wife ran a law firm, and Low, in 2017, negotiated to pay tens of millions of dollars to the company in return for efforts to lobby the Justice Department to drop its probe.
Suddenly, about two weeks after the election, Low disappeared again, leaving his family behind.
As the dragnet closed, Low, finally, appeared to be running out of options.
