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  • Writer's pictureRichard Bistrong

"Billion Dollar Whale"

Updated: Oct 25, 2021

This article initially appeared on The FCPA Blog, here and is reposted with the permission from the editor and publisher.

Both the Financial Times and Fortune named Billion Dollar Whale the Best Book of 2018. It’s the story of how Goldman Sachs helped Jho Low steal more than $5 billion from the Malaysian sovereign wealth fund, 1MDB.

The authors of Billion Dollar Whale are Bradley Hope and Tom Wright of the Wall Street Journal. Tom Wright, based in Hong Kong, is a Pulitzer finalist, a Loeb winner, and “Journalist of the Year” in 2016, awarded by the Society of Publishers in Asia.

Bradley Hope, based in London, is also a Pulitzer finalist. He has won a Loeb and the TRACE International Award for Investigative Reporting.

I spoke with them about their stunning bestseller, Billion Dollar Whale.

Q: What sparked your interest in IMDB?

Tom Wright: The first inklings of a story came in 2013, when our Wall Street Journal colleagues wrote about the huge profits Goldman Sachs was making in Malaysia. For the bank to make $600 million in Malaysia made no sense, and it was a red flag. The first hard evidence of fraud emerged in early 2015, when The Edge, a Malaysian newspaper, and the Sarawak Report, a muckraking website, reported on Jho Low’s alleged purloining of hundreds of millions of dollars from a state investment fund. We began to look into the story, and in mid-2015 a source leaked us documents that showed Malaysia’s then-Prime Minister Najib Razak had received $681 million into his private accounts. This was explosive news, implicating a sitting world leader. But Malaysian politics was just the starting point: over the next three years we showed how the money flowed into Hollywood, Las Vegas nightclubs, and even U.S. politics.

Q: Was Tim Leissner, the Goldman Sachs partner in charge of the 1MDB account and someone you describe as prone to go off the reservation, an “open secret” at the bank?

Tom Wright: Goldman says that Leissner and another banker called Roger Ng were rogue operators. From his earliest days, however, Leissner’s behavior had raised eyebrows inside Goldman. At one point, he agreed for Goldman to underwrite a multi-billion-dollar rights issue in Malaysia without getting the okay from headquarters. Goldman even launched a probe into Leissner’s behavior after the banker started a relationship with the CFO of a company that Goldman was advising — but it found to reason to act. What others at Goldman knew about Leissner’s role in the 1MDB scandal remains to be seen, but the bank certainly overlooked red flags about the star banker, in large part because he was a star rainmaker.

Q: In Leissner’s plea deal with the DOJ, he admitted circumventing controls at Goldman Sachs but said “that’s how things got done at the bank.” What’s next for Leissner and Goldman Sachs?

Tom Wright: Leissner has pleaded guilty to help Low launder $200 million in funds and bribing foreign officials (yes, the FCPA is not dead under Trump.) Roger Ng, who is under arrest in Malaysia, denies similar charges. One of the big unknowns at this stage is whether others in Goldman could be criminally liable— and the answer will help answer whether Leissner went rogue. After his arrest, Leissner appears to have told investigators that Andrea Vella, a Goldman partner who ran structured finance in Asia, helped to hide Low’s involvement from compliance. Leissner also talked about a compliance structure that prioritized deal-making over other weeding out malfeasance. But the Justice Department, in indicting Leissner and Ng, only named Vella as a co-conspirator, suggesting they don’t have the evidence to charge him. Vella, who is on leave from the bank, denies wrongdoing. It’ll also be crucial whether the Justice Department demands Goldman as a firm pleads guilty, or reaches some other kind of deal, including a possible deferred-prosecution agreement. Either way, the bank could face civil penalties of billions of dollars, analysts say.

Q: Are there lessons from 1MDB for today’s corporate social responsibility community?

Bradley Hope: Our experience with the 1MDB scandal actually started with the fund’s flagrant abuse of “corporate social responsibility” to engage in baldly political spending by the Prime Minister. One of 1MDB’s original sins involved overpaying for assets and getting part of that overpayment back as donations to charities affiliated with the fund; Najib and his team then used the money to boost their political party’s status in contested areas. That aspect of the scandal was overshadowed quickly by the wholesale theft of billions of dollars from the fund, but it’s really an important part of 1MDB’s evolution into the most looted sovereign fund in history. The lesson for the CSR community is always: where’s the money coming from and does the aid have any ulterior motives. In this case, probably some people who genuinely needed affordable housing got it, but the ruling party got an undisclosed benefit in the process. In short, it was good for a few people, but bad for democracy.

Q: In the book, you talk about the law firms that needed to handle the legal side of the 1MDB-related transactions. Did the legal community help make the fraud possible? Bradley Hope: The legal sector has enormous powers and understanding of how to structure deals in order to avoid breaking laws. When done correctly, they uphold the law. When done amorally, some practitioners either facilitate fraud or allow themselves to be used for fraud while being able to say they had no way of knowing. I do think law firms should have an anti-money laundering responsibility (like in the UK). In the 1MDB case, not only were law firms used to launder money as part of the original theft, but law firms continue to receive millions of dollars of stolen money to help their clients avoid justice. Both instances are failures that need to be addressed.

Q: You report that Goldman had once rejected Low’s request to open a private wealth account at the bank. Yet a future 1MDB-related deal involving Low “wound its way through five Goldman committees that look at financial and legal risk.” How did that happen?

Tom Wright: Goldman would argue that Leissner and Ng hid Low’s involvement at 1MDB from others at the bank. Leissner and Ng knew about the private bank’s decision to turn Low away, and so they lied about his involvement in 1MDB, knowing that Goldman compliance would nix any investment-bank deal involving the Malaysian. But there are documents, including Goldman emails cited in the Justice Department’s civil asset-forfeiture lawsuits, that point toward others beyond Leissner and Ng knowing about Low’s secret role at 1MDB. In other cases, Goldman bankers appear to have gone to great lengths to do business with Low despite compliance concerns. In a deal in the Middle East, compliance told bankers that Goldman could not represent Low’s firm. So Goldman switched to representing Low’s partner in the deal, a Middle Eastern fund. The Justice Department alleges a shell company controlled by Low was paid millions of dollars through the deal.

Q: You write that “none of this could have happened without the connivance of scores of senior executives in London, Geneva, New York, Los Angeles, Singapore…and elsewhere.” How, then, do you rate the effectiveness of international law enforcement?

Bradley Hope: Only the United States seems to have the willingness, resources and legal ability to go after the big fish. So many countries make noises about pursuing cases like 1MDB, but they can’t follow through for a host of reasons. Switzerland is an interesting case in point here. They put out unprecedented press releases about the 1MDB thefts, but years later they don’t appear to have done anything, including to the alleged co-conspirators living within their jurisdiction. We don’t know the size of the Justice Department’s 1MDB file, but it must be extraordinary. Undoubtedly, scores of analysts and investigators have gone through it to build the case.

Q; Jho Low is still an international fugitive. Any idea where he might be?

Bradley Hope: We believe he’s moving around between China and Taiwan, laying low and trying to destabilize the Mahathir government as best he can and instructing his many lawyers to try and strike deals with the U.S., Malaysian and Singaporean authorities. He was being careful, but still partying pretty much up until the Malaysian elections last year. Now, he’s in a much more cautious stance because he’s on everyone’s radar.

Q: And Najib and his family? Any predictions?

Bradley Hope: It would seem to me that the Malaysian government has a strong case against Najib even beyond the 1MDB case. As prime minister, you could argue he did everything he could to obstruct justice in Malaysia. He replaced all the investigators looking into the matter and declared that 1MDB only had a few corporate governance problems. He blocked foreign investigators from accessing information and, the documents show, he struck deals with China to cover up the whole scandal in exchange for political favors for Beijing. That he and his family also financially benefited from the stolen money is almost secondary to that. It’s now before the courts, which will come to a conclusion based on the evidence.

Tom Wright: Najib’s trial for money laundering and abuse of power began in April and isn’t likely to be over any time soon. I expect multiple challenges and appeals from his lawyers along the way. Najib is playing the populist card — he’s even been seen riding public transport! — and I think he’s hoping that somehow he can build a movement to call for his release. While the courts in Malaysia can be highly politicized, I don’t see this game plan working. I think the case will run its course and he will be judged at some point. As for his wife, Rosmah Mansor, it looks likely her case will start sometime in 2019. There’s huge fascination in Malaysia over her hundreds of Birkin bags and piles of jewelry. And then there’s Riza Aziz, her son from a previous marriage, who ran the film company that made “The Wolf of Wall Street,” allegedly with stolen money. He’s reportedly in Kuala Lumpur, but has not been charged.


Billion Dollar Whale is available from Amazon here.


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