Named a Best Book of 2018 by the Financial Times and Fortune, this “thrilling” (Bill Gates) New York Times bestseller exposes how a “modern Gatsby” swindled over $5 billion with the aid of Goldman Sachs in “the heist of the century” (Axios). Now a #1 international bestseller, Billion Dollar Whale is “an epic tale of white-collar crime on a global scale” (Publishers Weekly), revealing how a young … scale” (Publishers Weekly), revealing how a young social climber from Malaysia pulled off one of the biggest heists in history.
In 2009, a chubby, mild-mannered graduate of the University of Pennsylvania’s Wharton School of Business named Jho Low set in motion a fraud of unprecedented gall and magnitude–one that would come to symbolize the next great threat to the global financial system. Over a decade, Low, with the aid of Goldman Sachs and others, siphoned billions of dollars from an investment fund–right under the nose of global financial industry watchdogs. Low used the money to finance elections, purchase luxury real estate, throw champagne-drenched parties, and even to finance Hollywood films like The Wolf of Wall Street.
By early 2019, with his yacht and private jet reportedly seized by authorities and facing criminal charges in Malaysia and in the United States, Low had become an international fugitive, even as the U.S. Department of Justice continued its investigation.
Billion Dollar Whale has joined the ranks of Liar’s Poker, Den of Thieves, and Bad Blood as a classic harrowing parable of hubris and greed in the financial world.
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Fascinating tale of greed-gone-bad. We keep hearing this story over and over, wondering when we still stop hearing it?
Unbelievable. Supports the notion that the truth is stranger than fiction. Bill Gates recommends this book – I think that says it all.
Review #7 of my new 52 Week Book Challenge: Billion Dollar Whale
Wow. Rarely does a book pull me in so much, but this one definitely had me up well past my bedtime.
The Wall Street Journal’s Tom Wright and Bradley Hope do an excellent job at putting together the intricate pieces of one of modern history’s biggest scams. We’re not talking about something from the 1980’s. This scam is still going on today, impacting almost everyone on the planet. This isn’t a crazy conspiracy theory. The characters are real.
My moral conundrum: you’ve got to respect the guy for gaming the system so masterfully.
Absolutely fascinating, all the more so because the story is true!
Jho Low grew up in privilege in Malaysia, idolizing American pop culture and obsessed with gaining prestige. His combined audacity and financial genius enabled him to first make connections with powerful people (Middle Eastern royalty and politicians to start, and then A-list Hollywood celebrities), and then leverage those connections into lending him credibility for his various business and financial schemes so that no one would look too deeply beneath the surface. He’s the ultimate example of “fake it till you make it,” except for the fact that he never actually produced anything of value to the economy. Rather, he used his connections and genius to boldly pull off several multi-billion dollar heists in which he moved money from one place to another, making it look like actual profits. Then he spent the money on outrageously opulent parties, extravagant gifts, courting supermodels, and his own Hollywood production company–all with the apparent goal of being acknowledged by the world as “cool.”
So it’s a sad story, really, but a fascinating one. Spoiler alert: in the end, Jho Low was found out, but never caught. He’s currently a fugitive from Malaysia, Singapore, and the US for pulling off one of, if not the greatest financial heists in history.
The Billion Dollar Whale, by Wall Street Journal reporters Tom Wright and Bradley Hope, describes the looting of Malaysia’s 1MDB sovereign wealth fund by con man Jho Low and his associates. Although this story has been in the news for years, and many are familiar with its outlines, the book provides rich details about a series of financial crimes whose scope and audacity is breathtaking.
Jho Low came from a family in Penang provice, Malaysia, that had enough money to send him to boarding school at Harrow, where he met the children of some of the world’s richest families. Among them was Riza Aziz, the step-son of the man who would soon be Malaysia’s prime minister. Low carefully cutivated his connections to Aziz, and to a number of other well-connected Asians and Arabs he would meet at Harrow and later at the University of Pennsylvania’s Wharton School.
The authors compare Low to Jay Gatsby, the Fitzgerald character who was obsessed with gaining acceptance into the world of the ultra-rich. Low certainly seemed to want to impress the wealthy, and especially the gilded celebrities who would eventually surround him. The only way he knew how to do that was by making huge shows of wealth. In his early twenties, he didn’t have enough money to show off, but he kept his eyes open, looking for opportunity, and was unusually canny in both identifying and cultivating connections with morally pliable people who had access to money.
After meeting the manager of one of Abu Dhabi’s sovereign wealth funds, Low understood it would be a lot easier to con his way into managing someone else’s hard-earned money than to earn it himself.
When his friend’s step-father, Najib Razak, became prime minister of Malaysia, Low saw his chance. The purpose of a sovereign wealth fund is to invest the assets of a country’s government. Malaysia didn’t yet have such a fund, and Low convinced the prime minister to set one up.
Low made a number of clever moves early on. One was to orchestrate carefully-staged meetings between the Malaysian prime minister and Low’s connections in Abu Dhabi to convince prime minister Najib that investment money from the Persian Gulf was available to fund land and business development in Malaysia. Another was to convince the prime minister to start the 1MDB fund, using proceeds from a state bond, to assist in the development. Low’s third early move was to stuff the board that oversaw the 1MDB fund with people who were willing to let him make all the behind-the-scenes decisions without inquiring into what he was doing.
The success of Low’s scheme depended in part on him funneling cash back to the prime minister to help prop up his corrupt government. Najib seemed willing to accept hundreds of millions of dollars without ever asking where it came from.
At 1MDB’s inception in 2009, Low suddenly found himself in control of over a billion dollars, which he was supposed to invest on behalf of the people of Malaysia. He immediately deposited most of it into accounts he controlled. The accounts belonged to shell companies he had set up in territories with lax banking laws in the Carribean and in the Seychelles.
Low paid huge sums of money to his friends in Abu Dhabi who had helped orchestrate the meetings that persuaded Najib to establish the fund. Those cronies turned out to be just as crooked as Low, setting up fake accounts that looked like they belonged to their employers, so that wary bankers would not be suspicious of the huge wire transfers flooding in. Low, of course, was also careful to push money back to Najib.
In order to pull all this off, Low needed the help of a number of banks, each of which had internal compliance departments responsible for stopping or reporting fraudulent transfers as well as anything that looked like money laundering.
As he had done in cultivating his connections with the prime minister and with the fund managers in Abu Dhabi, Low was careful to test out the banks’ willingness to participate in transactions that would have raised the suspicions of any auditor. A number of world-renowned banks, as well as several smaller private banks refused to do business with him.
Though these banks couldn’t prove he had done anything wrong, the air about Low’s finances was like the smell around a barrel that contained a rotting corpse. You didn’t have to open it up to know you wanted no part of what was inside.
Nevertheless, because the illicit transactions would be profitable for whoever processed them, and because he was shuttling huge sums of cash through multiple accounts to hide their provenance, Low promised to bring in lots of business to any bank willing to turn a blind eye to his operations.
Several banks did agree to work with Low, including Goldman Sachs, which was still trying to repair its image after the subprime mortgage collapse. Goldman’s leaders had recently been forced to explain to Congress why they sold mortgage-backed secutities to their customers, and then correctly bet that those securities would fail, profiting twice on the transactions at the expense of their own customers.
The authors seem to reserve special disdain for Goldman and its then president, Gary Cohn, who seemed to encourage the bank’s participation in Low’s 1MDB scandal, and to reward those who made it possible.
The Billion Dollar Whale focuses primarily on Jho Low and his absurdly lavish lifestyle. Low liked to party with the Hollywood elite all around the world. Among the celebrities appearing often at his parties were Leonardo DiCaprio, Kanye West, Alicia Keys, Jamie Foxx, Swizz Beats, Busta Rhymes, Paris Hilton, and Britney Spears.
At the time, none of them knew Low’s money was stolen. He was simply a guy who liked to have a good time — sometimes a few million dollars worth of good times in a single night.
After raising and stealing several more rounds of capital for 1MDB, Low wound up owning a chunk of EMI Music, a multi-million dollar penthouse in New York, mansions in Los Angeles, his own $35 million dollar plane, a $250 million yacht, a Hollywood film studio, and over $300 million worth of art. That’s in addition to the $681 million in kickbacks he gave to the Malaysian prime minister, over $600 million in commissions paid to Goldman, and countless millions he gave to his co-conspirators.
In all, Low made off with around $5 billion over a period of seven years. The audacity with which he committed his crimes and his spectacularly public spending displays are astonishing. Most readers, I suspect, will want to read the book just for the accounts of his partying and the way his intoxicating displays of wealth blinded even the richest and most celebrated people in the world.
It’s also ironic to note that his most visible legacy in the US may be The Wolf of Wall Street, the Scorcese-DiCaprio film he financed. The movie itself chronicles the life of Jordan Belfort, a smooth-talking swindler who conned investors out of millions and lived an over-the-top party lifestyle, just like Low.
While Low was able to fool bankers, investors, statesman, royals, celebrities, and journalists, the reformed Jordan Belfort recognized him instantly as a fellow swindler. Belfort’s first exposure to Low came at an absurdly lavish pre-production party for the The Wolf of Wall Street. Belfort calculated the cost of the event in his head, then turned to his girlfriend and said, “This is a fucking scam — anybody who does this has stolen money. You wouldn’t spend money you worked for like that.”
The Billion Dollar Whale is an extraordinary piece of reporting. Simply finding and piecing together the details of this sprawling story is an accomplishment in itself. Actually being able to tell it, with all its characters and complexities is a testament to the abilities of the authors.
The story dazzles as a portrait of wealth and excess, and disheartens as an exposé of rampant corruption that seeps even into the most highly regulated institutions of a supposedly respectable society. If this story were fiction, it would never fly. It’s too outrageous and too unlikely. And yet it happened. Wright and Hope’s breathless account of it is fascinating and almost impossible to put down.
Being a native of Latin America I grew up thinking we had a monopoly on corruption. This books makes it clear corruption festers wherever human nature lurks and goes unchecked by the rule of law. The case of Malaysia’s 1MDB sovereign wealth fund might not be unique on its scale but it certainly is in that it’s perpetrator was a super ambitious parvenu who knew exactly how to exploit Wall Street’s hunger for returns. For 1MDB wasn’t a simple scheme where a country’s riches were siphoned away to some offshore accounts, in this case there was little money coming from the country itself and instead consisted of having others lend enormous amounts of money to the fund in the hope of excellent returns.
The story is tragic in that it shows that money laundering is not a victimless crime. Millions of Malaysians will have to pay this money for generations with nothing to show for it. And even more depressing, the corrupt were able to extract so much money that very likely they will find some friendly rogue state to provide safe sanctuary.
A compelling read and one that shouldn’t be missed by all of those who aspire to a rules based world.
Even the most skilled fiction writer would have trouble conjuring the corrupt and colorful protagonist of Billion Dollar Whale. Bradley Hope and Tom Wright’s gripping portrait of Jho Low and his enablers throughout the global financial system will both fascinate and enrage you.
Wright and Hope deliver a scintillating and prodigiously reported tale of a globe-spanning modern Gatsby and his audacious fraud.