This article is an excerpt from the Shortform book guide to "Billion Dollar Whale" by Tom Wright and Bradley Hope. Shortform has the world's best summaries and analyses of books you should be reading.
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Looking for an explanation of the 1MDB Jho Low scandal? How did Low first become involved with 1MDB?
In Billion Dollar Whale, Tom Wright and Bradley Hope explain the 1Malaysia Development Berhad (1MDB) scandal, which exposed Malaysia’s corruption. At the center of the scandal was Jho Low, a fraudulent entrepreneur who worked with Prime Minister Najib Razak to siphon money from the 1MDB fund.
Read on for an overview of the 1MDB Jho Low scandal, according to Wright and Hope.
The 1MDB Jho Low Scandal Explained
The 1MDB Jho Low scandal rocked the Malaysian economy and exposed the country’s corruption. In their book Billion Dollar Whale, Tom Wright and Bradley Hope chronicle the rise and fall of Malaysian entrepreneur Jho Low and explain how the 1MDB scandal came to be. According to Wright and Hope, rather than siphoning money from a deal he was peripheral to, Low sought to gain control over a large fund for himself.
Low Set His Sights on a Malaysian Sovereign Wealth Fund
When Najib Razak became prime minister, he created the 1Malaysia Development Berhad (1MDB), a sovereign wealth fund. As Wright and Hope note, the fund’s stated purpose was to use government money to invest in green energy for Malaysia’s future. Through his experience with Mubadala, Low learned that involvement in a sovereign wealth fund would lend him unregulated access to larger sums of money than ever before.
In an attempt to leverage his influence with Najib, Jho Low proposed that in addition to funding green energy, 1MDB’s money could also be used as a political slush fund for Najib to pull from as needed. To further strengthen his position, Low connected Najib to his old friend, Ambassador Otaiba of the UAE, and through this connection was able to ensure that the Abu Dhabi government would invest alongside 1MDB in its future ventures.
(Shortform note: Jho Low and Najib’s misuse of the 1MDB funds has sparked international scrutiny of sovereign wealth funds. In the Philippines, a proposed new sovereign wealth fund has been criticized, with some fearing that it will be used and misused in the same ways as 1MDB. Criticism centered on the fact that the fund was originally going to be chaired by President Ferdinand Marcos Jr. (son of the deposed dictator), which would have created a conflict of interest, incentivizing Marcos to misuse state funds for political purposes, as Najib did.)
Thanks to his relationship with Najib, as well as his role in connecting Najib to Abu Dhabi, Low convinced Najib to put him in charge of 1MDB. Wright and Hope write that the relationship was mutually beneficial: With Low in charge of the fund, Najib could rest easy knowing that his co-conspirator would be able to assist him in moving money around. And, for Low, working closely with Prime Minister Najib meant that he was free to operate with no fear of intervention from the Malaysian government.
As he had in the past, Jho Low continued to operate in secrecy, taking no official role at 1MDB, instead staffing the fund’s board with associates who could lend 1MDB more legitimacy. Only Low himself, his associates, and Najib knew that Low was really in charge of the fund.
(Shortform note: Low may have felt especially protected by Najib because of Najib’s approach to government. Najib’s regime was so controlling that some authors have characterized him as an authoritarian. Critics of Najib note that he readily imprisoned political opponents and attempted to control Malaysian media as strictly as possible.)
Low Manipulated Financial Systems to Take Money From 1MDB
Wright and Hope note that Jho Low quickly set up a deal in 2009 between 1MDB and PetroSaudi, an oil company controlled by Prince Turki Bin Abdullah of Saudi Arabia. While Prince Turki’s domestic influence was limited, Low took advantage of his royal status to convince Najib to invest in the PetroSaudi deal. Low’s plan was for PetroSaudi and 1MDB to co-invest in an oil exploration venture—together the two funds would buy up land, look for oil, and sell what they found. The sum total of this investment was billions of dollars. Low was indifferent to whether or not the oil investment became successful. As Wright and Hope argue, Low’s real purpose was to quietly siphon money away from the massive transactions that the deal involved.
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Here's what you'll find in our full Billion Dollar Whale summary:
- A chronicle of the rise and fall of Malaysian entrepreneur, Jho Low
- The tactics Low used to succeed as a con man
- The political and financial context for Low's scheme
