Billion Dollar Whale written by journalists Tom Wright and Bradley Hope tells the extraordinary story of the fraud committed against the Malaysian people, most notably by a man named Jho Low.
Jho Low, a Malaysian financier set up a sovereign wealth fund with the help of his contacts in the Malaysian government after he completed his education in the UK and US. The fund, named 1MDB, then issued billions in debt, with the help of global banks like Goldman Sachs, supposedly for the economic development of Malaysia. Instead those billions were funnelled into shell companies under Low and associates’ names and afforded Low an extremely extravagant lifestyle.
Authors Wright and Hope did an incredible job at explaining the expanse of the global financial channels Low & co utilised to pull off the epic fraud in a manner that was accessible to the general public. Additionally, the pair took the time to examine the cultural moment in Malaysia to explain both why Prime Minister Najib would tolerate a figure such as Low to front the 1MDB fund, beyond their personal relationship, and why global financial institutions were so keen to gain a foothold in the fast developing South Asian nation that they skirted corners to be at Low’s service.
The 1MDB plot existed in a distinctly post-Great Financial Crisis world. Large banks were hunting for growth and profits that were just not possible in developed markets at that time. Not only were the banks keen on potential profits but the bankers were incentivised by faster promotions to move to developing markets and help the banks expand their presence. Wright and Hope dedicated time in their book to explore each parties’ drivers for their participation in the plot, whether they were wholly aware of the fraud or not.
Where the book falls short, in my opinion, is how little time it spends on the tangible impact of the 1MDB scandal. When writing a book such as this, it is easy to spend a lot of time outlining every salacious detail of how Jho Low spent his stolen billions. We have all heard about the insane parties, the celebrity relationships and Low’s investment in The Wolf of Wall Street (a connection that just seems too good to be true). However little time is spent examining the impact on Malaysia. Fraud can so often be seen as a “victimless crime” and so I see it as a bit of disservice to the Malaysian people for their loss to be overlooked. The Malaysian government is still attempting to clawback some funds via the courts as they continue to pay 1MDB’s dues. The burden will likely be felt by the Malaysian people for many more years to come.
The top header on the cover of Billion Dollar Whale edition is “The man who fooled Wall Street, Hollywood and the World”. To say that Jho Low, the young Malaysian financier (aka fraudster) “fooled” anyone would perhaps be giving Wall Street, Hollywood and the world far too much credit. To read through the sheer number of times the plot could have been uncovered, whether via a Swiss bank compliance department or an American law firm’s due diligence, was exhausting. Jho Low was no criminal mastermind…he was just audacious enough to try and lucky enough to succeed. Authors Wright and Hope pin a lot of the blame for the scandal on Low. This may be because it is just a better story however I think it can have the effect of absolving his many partners of their guilt and incompetence.
The JM Finn Investment Book Club was convened in the hope that, month by month, some of the wisdom of investing gurus such as Warren Buffet, Charlie Munger, and Mohnish Pabrai might rub off on the participants eager selves.