PDF Summary:Billion Dollar Whale, by Tom Wright and Bradley Hope

In Billion Dollar Whale, Pulitzer finalists Tom Wright and Bradley Hope chronicle the rise and fall of Jho Low, a Malaysian entrepreneur who allegedly stole billions of dollars from his government’s coffers. Low spent his newfound wealth on a decadent lifestyle, hosting parties with celebrities, purchasing yachts, and gambling exorbitantly.

In addition to covering Low’s excesses, Wright and Hope describe the tactics Low used to succeed as a con man. In our guide, we’ll focus primarily on those techniques, detailing how Low manipulated his image to become accepted among the elite, then leveraged those connections to build financial power. We’ll also describe how Low’s focus on his lifestyle and image ultimately caused his scheme to collapse. We’ll provide political and financial context for Low’s scheme, as well as comparing Low to other notable financial fraudsters.

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Low Manipulated Financial Systems to Take Money From 1MDB

Wright and Hope note that 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.

(Shortform note: While PetroSaudi was involved in Low’s shady dealings through 1MDB, the exact extent of this involvement is still debated. Some experts have alleged that PetroSaudi used illicit funds from 1MDB to expand operations in Venezuela, advancing their own oil exploration and buying new drilling ships. While PetroSaudi’s lawyers have continually denied this, the allegations are still being investigated by the Malaysian legal system.)

With Najib on board, Low’s next step was to convince banks to both process the deal and to send Low a cut. However, sending large sums to an individual as part of a transaction between sovereign funds made some institutions uncomfortable. When the first few banks refused to work with Low, he adopted a new strategy. Instead of trying to ease suspicion, Low chose to avoid it altogether. According to Wright and Hope, if a particular bank scrutinized Low’s transactions, he would simply test the waters at other institutions until he found one that was willing to work with him without questioning him. Using this strategy, Low found a group of financial institutions and individuals who were willing to cooperate with him on the PetroSaudi deal.

(Shortform note: Low’s tactic of shopping out different banks was especially effective because of the large number of major financial institutions that take part in money laundering. Leaked US government documents show that many major banks engage in illicit transactions, including Deutsche, HSBC, and JP Morgan. With such an abundance of banks willing to get their hands dirty, it was inevitable that Low would find an institution that was ready to work with him.)

As the deal went through, Low once again used shell companies to take his cut of the funds. As a result of his strategic maneuvering, Low managed to get banks to wire hundreds of millions of dollars to offshore accounts he alone controlled.

(Shortform note: While Low used offshore accounts to hide his income from authorities, there are also plenty of legal reasons that offshore accounts exist. For example, companies that do business in multiple countries often use multiple bank accounts in different countries to make it easier to work with different currencies.)

Low’s Associates Ignored Wrongdoing Because They Stood to Profit

Wright and Hope write that throughout Low’s tenure at 1MDB, he worked with powerful political figures such as Najib, Otaiba, Prince Turki, and bankers at well-known international firms such as Goldman Sachs and Coutts. All of these people knew Low was stealing money, and yet they all worked with him anyway because they wanted cuts of the money for themselves.

(Shortform note: According to some authors, the reason financial leaders engage in these types of unethical behaviors is that they prioritize profit over purpose. These authors argue that when individuals and organizations are only in business to make money and aren’t interested in providing a meaningful service, they’re more likely to behave unethically. By contrast, organizations that are organized around purpose and values are less likely to succumb to corruption.)

Low held up his end of the bargain. In the wake of the PetroSaudi deal, Low sent multimillion-dollar payouts to his associates and bought extravagant jewels for Najib’s wife, rewarding them for aiding him.

Focused on His Image and Lifestyle, Low Made Mistakes as His Scheme Grew

When the PetroSaudi deal went through, Low suddenly became a multimillionaire. Low used the money to boost his status even further, befriending a laundry list of celebrities. However, Wright and Hope note that as Low focused on funding his new, glamorous lifestyle, it became difficult for him to manage an increasingly complicated scheme.

Low Leveraged Success to Prop Up His Image

Low spent exorbitant amounts on parties and gambling excursions in an effort to court increasingly famous and powerful friends. As Wright and Hope describe them, Low’s parties were almost unbelievably extravagant. Hosted on multimillion-dollar yachts or at high-end Vegas casinos and hotels, Low’s parties featured A-list musicians and actors, as well as Low’s accomplices and other wealthy businesspeople. Guests drank the most expensive wine and spirits, and seven-figure gifts of jewelry and luxury vehicles were often exchanged.

(Shortform note: While Low was obviously chasing money and power, his high-profile parties indicate that to some degree he may have also been chasing fame. Low’s desire for renown isn’t unique—psychological surveys have shown that about a third of adults regularly fantasize about being famous. Experts believe that the lifelong desire for fame often stems from a nagging sense of social rejection. In Low’s case, this explanation fits fairly well, considering his struggle to fit in at both Harrow and Wharton.)

Through his newfound celebrity acquaintances, Low began to invest in the entertainment industry, funding musical projects and even his own film development company, Red Granite Pictures. While these ventures were largely vanity projects for Low, they also served a financial function. By investing in legitimate businesses, Low hoped to be able to make back enough money to repay the funds he pilfered from 1MDB before anyone noticed they’d disappeared. As Wright and Hope note, thanks in part to Low’s friendship with actor Leonardo DiCaprio, Red Granite would go on to produce the acclaimed 2013 film The Wolf of Wall Street.

(Shortform note: Low wasn’t alone in using the film industry as a vehicle to launder money. Thanks to the high production costs as well as the potentially large margins associated with Hollywood filmmaking, the industry has attracted its share of grifters. In 2006 several executives at Limelight Films were arrested, accused of money laundering, and charged with intent to distribute illegal drugs. And, in 2022, an executive at Aviron Pictures was convicted of using Aviron to commit both fraud and money laundering.)

In addition to his aspirations as an entertainment mogul, Low also began to invest in the art market, purchasing works by Basquiat, Monet, and others at multimillion-dollar auctions. Wright and Hope argue that Low’s forays into art collecting served a dual purpose, much like his entertainment investments. Collecting art raised his stature in elite circles and gave him assets he could quickly and untraceably liquidate if he found himself in need of emergency cash.

(Shortform note: As Low’s art investments illustrate, money laundering is rampant in the world of fine art. The art world exists in a legal loophole, where sellers are not required to disclose the names of their clients in the same way that a banker would. As a result of this, art investments allow individuals to anonymously store their wealth.)

The 1MDB Scheme Continued to Expand

Wright and Hope note that as Low’s lifestyle grew increasingly expensive, he continued to set up deals at 1MDB that allowed him to take the money he needed to keep up with his expenses.

According to the authors, Low’s past successes brought him increased legitimacy and a wider network of contacts. Because he had worked with reputable institutions, individuals and banks viewed him with less scrutiny. On his next major deal, Low brought together the International Petroleum Investment Company (IPIC), a sovereign wealth fund owned by Saudi royalty, with Goldman Sachs on a plan to sell bonds through 1MDB. Goldman Sachs’s involvement is especially notable considering that they were once again engaging in questionable practices only a few years after their actions contributed to the subprime mortgage bubble crash.

As with the PetroSaudi deal, Low wasn’t trying to set 1MDB up for success. Low set up the deal with IPIC and Goldman Sachs solely so that he could poach a cut of the transactions involved in the deal, taking the money and moving it into his accounts or those of his associates.

(Shortform note: Human nature may help explain why Low was able to charm so many wealthy and powerful people into investing in his schemes. According to some experts, human beings tend to trust each other by default. These experts argue that the human tendency toward trust may help explain how white-collar criminals win others over—in many cases people are inherently too trusting to notice wrongdoing.)

Low Struggled to Tie Up Seemingly Endless Loose Ends

While the IPIC deal proved lucrative for Low, the money he took from 1MDB pushed the fund further into debt. To make matters worse for Low, there was almost no income going back into 1MDB to make up for it.

Additionally, Wright and Hope note that Low now had to pay out those who had worked with him on the IPIC deal in addition to the Mubadala deal. Sending such large sums of money to so many people scattered across the globe necessitated a complex network of shell companies and offshore accounts to avoid arousing suspicion. Low struggled to manage these payments and was often late or forgetful making them. Additionally, as the number of illicit transactions increased, Low became lazy, often doing little to hide the nature of the transfers. These practices began to arouse suspicion at the banks Low worked with.

(Shortform note: Low’s struggle to repay his associates in some ways mirrors the collapse of Bernie Madoff’s Ponzi scheme. During the 2008 recession, many of Madoff’s investors tried to pull out of the scheme, but Madoff lacked the funds to repay them all. Madoff became overwhelmed and confided in his sons, who reported his crimes. While Low would make no such confession, like Madoff he too became ensnared in his own complex financial web.)

According to the authors, Low’s negligence began to put the entire scheme at risk. In 2013 a disgruntled former PetroSaudi employee named Xavier Justo reached out to Low’s associates. Justo threatened to leak thousands of emails detailing Low’s illicit dealings to the press and legal authorities unless he was paid the two million dollars he felt he was owed.

(Shortform note: While releasing the emails would have been a major threat to Low and company, in doing so Justo would likely have implicated himself in the scheme too. By threatening his former employers, Justo inadvertently created a situation resembling a prisoner’s dilemma. The prisoner’s dilemma is a famous thought experiment that explains why individuals in a group may sometimes choose to betray each other instead of acting in their shared best interest. Just as in the prisoner’s dilemma, both Low and Justo chose to betray each other—Justo by leaking information, and Low by refusing to pay Justo. Again, just as in the prisoner’s dilemma, both groups paid a price for their refusal to cooperate.)

Wright and Hope note that two million dollars would have mattered little to Low, and yet instead of paying Justo off, Low ignored his demands. Eventually, Justo began reaching out to journalists in an attempt to get them to pay him for the evidence he’d collected.

(Shortform note: Within the field of journalism, writers debate whether it’s ethical to pay sources like Justo for their stories. Many journalists believe it’s unethical to pay sources, as doing so creates a conflict of interest in which the source has a financial incentive to exaggerate their story to make it more attractive to publications. However, some journalists argue that when breaking a particular story helps expose corruption and wrongdoing, it can be worth paying sources in order to publicize critical information.)

Just as he could have easily paid Justo off, Low had plenty of money that he could have used to cover 1MDB’s debts and pay off his accomplices. However, distracted by his luxurious lifestyle, Low allowed these problems to fester while continuing to spend wildly at casinos and auctions.

(Shortform note: While caught up in extraordinary financial circumstances, Low succumbed to an ordinary problem: procrastination. According to experts, procrastination is a vicious cycle—by seeking to avoid an uncomfortable situation or task, you put it off, which only causes the problem to escalate, making it more difficult and uncomfortable to deal with later. Unfortunately for Low, he was unable to break this cycle before his problems came to a rapid boil.)

Low and His Associates Began to Attract the Attention of Journalists

Low’s friendships with the rich and famous, as well as his extravagant parties, brought him an increasing amount of attention from journalists and paparazzi. According to Wright and Hope, as Low’s lifestyle brought him into the spotlight, he attempted to shift the public narrative around his wealth. Just as he had done with his boarding school friends, Low tried to convince the media that his family was much wealthier than they really were. While Low had previously attempted to brand himself as a dealmaker in order to build a network, now that he was established, his goal was to disguise the source of his wealth. Attributing his money to inheritance served that purpose.

(Shortform note: Low’s attempt to change the media narrative around his wealth was an ultimately unsuccessful public relations strategy. Instead of changing the story, public relations experts advise that during a crisis, it can be helpful to engage with criticism and focus on positive news stories. According to these principles, Low’s denial may have only made his situation worse, as it did little to calm the negative buzz around him.)

As Wright and Hope note, in spite of Low’s best efforts, journalists began to investigate both Low’s debauchery and 1MDB’s dealings, with some stories beginning to link the two, albeit without strong evidence. Notably, The New York Times published a front-page story on Low, linking him to Najib. None of the media coverage of Low was able to conclusively implicate him in any wrongdoing until Justo, the disgruntled former PetroSaudi employee, contacted blogger and journalist Clare Rewcastle-Brown. Using Justo’s evidence, Rewcastle-Brown published a story in 2015 detailing 1MDB’s fraudulent deals. As Wright and Hope describe, the story exposed the scandal and kicked off a wave of international investigations.

(Shortform note: Just as Justo worked with Rewcastle-Brown to publicize Low’s misdeeds, whistleblowers often work with journalists to expose scandal and wrongdoing. These whistleblowers reach out to journalists to help them share information when it isn’t safe for them to do so themselves. In a particularly famous example, Edward Snowden provided journalists with documents that contained details of the US government’s surveillance of its own citizens. While Snowden later chose to reveal his identity, he originally leaked the documents anonymously in an attempt to avoid arrest.)

Low’s Scheme Unraveled as Authorities Closed In

As a result of the information Justo leaked, world governments began prosecuting Low and his associates. Low’s co-conspirators at Goldman Sachs and in Abu Dhabi were now facing hefty fines and in some cases jail time.

Najib Used Extreme Measures to Silence Dissent

Wright and Hope note that while foreign governments were able to prosecute individuals and institutions within their jurisdictions, at home in Malaysia, Prime Minister Najib took extreme measures to protect himself and his allies, including Low. According to the authors, Najib’s regime imprisoned Justo and publicly attempted to discredit him. With Justo silenced, Najib made sure to keep stories about 1MDB and Low out of state-controlled media. He threatened journalists and political opponents with violence. During this period, a Malaysian anti-corruption prosecutor is alleged to have been murdered by Najib’s regime.

(Shortform note: While Justo spent almost two years in prison, he was eventually pardoned, and he recently released a book detailing his experience as an imprisoned whistleblower. According to Justo, in prison, he faced inhumane treatment, while his wife was simultaneously threatened and harassed. On his release, he reportedly struggled to find work in the banking industry, as many employers saw hiring a prominent whistleblower as a liability.)

However, despite his dictatorial actions, Najib could not hold on to power forever. Eventually, Wright and Hope write, Najib lost a reelection bid in 2018 and was subsequently prosecuted and sentenced by the opposition government.

(Shortform note: While he was sentenced in 2020, Najib only began to serve his 12-year sentence in 2022, when the Malaysian court system rejected his final appeal. In addition to jail time, Najib was also ordered to pay almost $50 million in fines.)

Low Evaded Capture by Hiding Out in Countries That Refused to Pursue Him

According to Wright and Hope, authorities in Malaysia and the United States seized any of Low’s assets that they could access, but Low escaped with plenty of money still discreetly squirreled away.

(Shortform note: While Low and his associates stole billions from the Malaysian state, at least some of that money eventually made its way back after being seized by international governments. The United States has reportedly repatriated over one billion dollars in seized assets to the Malaysian government.)

While his associates faced fines and prosecution, Low himself managed to evade capture, slipping away into countries where he knew he wouldn’t be extradited. Low kept a low profile, being only occasionally sighted in Bangkok and Shanghai. As Wright and Hope note, Low’s money still protected him in China, where the government was happy to shelter him, believing that his influence in Malaysia could eventually prove useful.

(Shortform note: While Low has evaded capture and is presumed to be under the protection of Chinese intelligence as of early 2023, some authors believe that Low may soon face justice. According to these authors, Low has become less valuable to the Chinese government and may one day soon be extradited to Malaysia.)