Billion Dollar Whale

by Tom Wright

  Neither the Prime Minister nor the 1MDB fund, now headed by Arul Kanda, a slick financier in his early forties, who previously had worked at an Abu Dhabi bank and knew Jho Low, responded to the Journal’s queries. But after the newspaper reported about the missing Abu Dhabi money, the Malaysian fund reacted aggressively. A former high school debate champion, Arul Kanda took on the Journal’s stories with sharp-worded tirades that claimed the newspaper was part of a wide political conspiracy against Najib.

  “The inability to substantiate clearly shows the shallow nature of its assertions and casts serious doubt on whether or not the Wall Street Journal editors themselves believe in the weak story, cobbled together by its reporters,” 1MDB said in one statement.

  Foreigners working as spin doctors for the prime minister’s office and 1MDB took a similar tone. Paul Stadlen, a young British man who worked for Najib in communications, played a vital role in a strategy aimed at discrediting our pieces.

  “The WSJ continue to report anonymously-sourced lies as facts,” read one statement. “They are a disgrace to journalism.”

  Arif Shah, who was working for 1MDB, on a sabbatical from British public relations firm Brunswick Group, took us to task for taking sides in Malaysian politics, without proffering any evidence.

  “I question the veracity of your sources, their intentions, and the documents they provide. A question for you—Do you think that you are being used to help oust the Malaysian Prime Minister,” he wrote in an email.

  Added to the money taken via Good Star, the Journal at this time estimated that at least $3 billion had gone missing from 1MDB. In the prime minister’s office, there was discussion over what to do about our coverage. Threats of a lawsuit were not having the desired effect—in fact the Journal appeared to be going deeper, obtaining reams of documents, from 1MDB’s board minutes to the National Audit Department’s draft report into the fund, as well as copies of BlackBerry chats between Jho Low and conspirators like Joanne Yu at AmBank.

  Some of these documents came from Malaysian Source, who wanted to show the scheme enjoyed the backing of Najib, Rosmah, and Al Qubaisi; others were provided by frustrated Malaysian civil servants and politicians, as well as Abu Dhabi officials and other sources.

  The Journal’s stories illustrated how Najib was a central decision-making figure at 1MDB, and painted in detail how Jho Low ran the show. To shut our reporting down, the prime minister needed to scare us.

  At 3 a.m. in late November 2015, Tom Wright’s phone woke him as he slept in the Shangri-La Hotel in Kuala Lumpur. It was his colleague and fellow author, Bradley Hope, calling from the Wall Street Journal’s offices in Midtown Manhattan. Just minutes earlier, Hope had gotten a call from Malaysian Source, who had some alarming news: Najib’s office was about to send the police to arrest Wright at his hotel.

  The Journal was investigating Low’s role in the 2013 elections, and Wright had flown into Kuala Lumpur from Penang the night before. While in Low’s home state, he’d left his Journal business card, with his cell phone number, at the homes and offices of the Malaysian’s associates. One of them alerted Low, who in turn told Prime Minister Najib. Malaysian Source told Hope that the government had tracked Wright down to the Shangri-La, a resort-like hotel near the Petronas Towers.

  The police would soon make an arrest at the Shangri-La, MS informed him, feigning worry. It was a threat, dressed up as a warning, and the Journal decided to pull the plug on the reporting trip. After being woken in the middle of the night, Wright left Malaysia early the next morning, avoiding Kuala Lumpur’s international airport, and traveling overland by taxi to Singapore’s border with Malaysia instead.

  At the border crossing, Wright worried he might get stopped, but he walked easily over into Singapore. Had MS misled Hope on purpose, hoping to scuttle our investigations into the scheme? Or had Najib, learning Wright had checked out of the Shangri-La, decided he had done enough to derail our coverage?

  But the Journal had what it needed, and in December it published a detailed story about the role of 1MDB money in the 2013 elections, especially in Penang. Even ruling-party politicians had been willing to talk for the piece. Low clearly was not popular in his home state.

  With no credible probe in Malaysia, the government and 1MDB could say what it wanted about the Journal’s coverage. But Najib was unable to stop the tide of investigations from the United States to Singapore and Switzerland. As the probes spread, Low’s associates panicked.

  In October, as the Journal dug into Low’s activities, Patrick Mahony, the investment director of PetroSaudi, spoke on the phone with Laura Justo. She was angry, and she wanted her husband released from jail in Thailand. A judge in the Southern Bangkok criminal court had sentenced Xavier Justo in August to three years in prison for blackmailing PetroSaudi, and he was languishing in a dank cell with twenty-five other people.

  The trial and sentencing had lasted only five minutes, but Laura believed Mahony could pull strings to get him out. In her view, Justo had played his part, signing a “confession” and telling a Singapore journalist, without evidence, that the Edge and Sarawak Report had planned to doctor the PetroSaudi server documents. She was alone with their baby, and urged Mahony to act. But Mahony wanted more.

  “The only way that you can show you’re ready to be team players is to go to the media, and to show that you’re ready to denounce everyone who’s conspiring against him,” Mahony said.

  He wanted her to say Clare Rewcastle-Brown was working against PetroSaudi.

  “But are there guarantees he will get out earlier?” Laura Justo replied.

  “You can help or not help,” Mahony snapped, his voice visibly tense. “I feel for you. But I’m also in the shit. We’re all in deep shit. There’s a prime minister of a country who is in the shit.

  “Who put us in this shit? Don’t forget that. I can’t give you any guarantees.”

  “For you it’s a matter of money. But for us, it’s a question of our lives, our family, everything,” Laura replied.

  “It’s not just a matter of money, Laura. It’s a matter of my future, my life,” Mahony broke in. “I won’t ever be able to do deals anywhere because of all this, okay!”

  “But that’s just work, money, I’m sure you have enough of that, so what’s the problem? You’re talking of the life of someone who’s locked up in a hole.”

  “But, Laura, all my assets have been confiscated. I have nothing at the moment. What do you think, that I’m living the sweet life? That I’m not paying for this? I’m borrowing money left and right to pay my bills, to pay for my kids’ school, okay. That’s what my life’s like at the moment.”

  The next month, with Justo still in jail, Mahony told Laura that tensions were mounting because of the probes into 1MDB in Switzerland and the United States. Investigators were wading through piles of material—bank transfer documents, property records, shell company registrations, and mountains of emails—to piece together what had happened.

  They had no access to Jho Low, or even any of his inner circle, many of whom had gone to ground in places like Taiwan and Indonesia, but they were interviewing people on the periphery of events and were building up a picture. Mahony told Laura that Swiss investigators had nothing, that it was all for show.

  But she had lost faith in Mahony’s promises to secure her husband’s release. In January 2016, Laura contacted the Swiss ambassador in Bangkok. A few weeks later, she submitted a dossier to Swiss authorities and the FBI detailing what had transpired. The file included secret recordings she had made of her conversations with Patrick Mahony.

  Despite his show of bravado, Mahony clearly was troubled. The Journal had reported that the FBI was formally investigating 1MDB and Najib Razak. Soon Mahony would receive a subpoena from U.S. authorities to testify. Fearing the worst, Prime Minister Najib and Riza Aziz hired Boies, Schiller & Flexner, cofounded by the well-known U.S. lawyer David Boies, to represent them. The firm assigned a tough young lawyer called Matthew Schwart
z to the new clients.

  Schwartz knew something about financial crime. In a former life, he’d been a key member of the crack team that successfully prosecuted Bernie Madoff.

  As Mahony appeared to panic, and Najib braced for the worst, Low was doing all he could to keep up appearances. And that meant continuing to party with his famous friends.

  Chapter 47

  Partying on the Run

  Aboard the Equanimity, South Korea, November 2015

  As the screws tightened, the Equanimity was sailing in the Northwest Passage, the famed iceberg-strewn route through the Arctic Sea that connects the northern Atlantic and Pacific Oceans. For years, Arctic pack ice made navigation almost impossible, but environmental changes had opened up the channel, and the Equanimity, with a steel hull designed to withstand contact with ice, became one of a small group of elite private ships to complete the journey. As it emerged into the northern Pacific around Alaska, the pilot set a course for the coast of South Korea. It was early November, and Low had arranged for friends and celebrities to fly into Seoul, before being whisked to the boat for a party to celebrate his thirty-fourth birthday.

  Despite everything going on, Low’s desire to be the center of an event and bestow favors had not diminished; in fact, those around the Malaysian saw that he looked forward even more to these immaculately concocted parties. The theme of this event was “togetherness,” and celebrity guests auctioned items to raise money for the United Nations, before everyone sang “We Are the World.” Guests drank fine wines, champagne, the Korean spirit soju, and espresso-flavored Patrón tequila, while the food included Beluga caviar, lobster bisque, and truffle pasta.

  One room of the yacht was made into a “Rose Garden,” the walls plastered with red roses with leaves plucked off. The guests, including Jamie Foxx and Swizz Beatz, wore cocktail dresses and tuxedos. This wasn’t just another secret party, with phones checked in at the door: Low also wanted to poke fun at the allegations against him, to make it seem like these falsehoods were water off a duck’s back. At one point, there was even a slideshow of positive media articles about Low.

  But another video he requested—a montage of world leaders including Barack Obama and Vladimir Putin wishing him happy birthday—even the top party planners could not have achieved.

  The Obama administration’s love of Najib was fast cooling. Later that month, President Obama traveled to Malaysia one final time, for a regional summit, a visit that had been scheduled long before the 1MDB scandal hit the headlines. After meeting behind closed doors with Najib, the president told journalists he had expressed to the prime minister the importance of transparency and rooting out corruption. With Anwar Ibrahim languishing in jail, and Najib’s crackdown on civil liberties at home, the words rang hollow.

  Low continued to act as if nothing was up. Just a few months earlier, the Malaysian told friends he had bid $170 million for Picasso’s Women of Algiers at Christie’s in New York, but lost out to a Qatari buyer who paid $179 million, at the time the most expensive painting ever to sell at auction. After eleven minutes of telephone bidding, Low dropped out. Along with the Nimes mansion in Los Angeles, this was another purchase that was beyond even him. It was hard to grasp how Low was even considering such purchases after the media stories about 1MDB.

  In December, he traveled to Courchevel, a ski resort in the French Alps, for his usual end-of-year party with his closest friends. In a villa on the slopes of the Alps, Low appeared calm, as if none of the news was fazing him. After days of skiing and snowboarding, the group partied back at the villa. It was a routine his closest friends—Joey McFarland, Swizz Beatz, Alicia Keys, Jasmine Loo of 1MDB, Fat Eric, and Low’s girlfriend, Jesselynn Chuan Teik Ying, had followed over several winter ski holidays around the world: Whistler, Aspen, Courchevel.

  Like the other holidays, the itinerary was carefully planned out to include private-chef dinners, snowmobiling, massages, and drinks. But Low’s business-as-usual mien was a facade, and aspects of the trip even took on a sinister undertone at times. Low confided in some of his gathered friends that he was even worried about assassination, although he never said by whom. As usual, Low continued to travel everywhere with his bodyguards. He instructed Catherine Tan, his personal assistant, to ensure no one on the Courchevel trip posted pictures to Instagram, Facebook, or other social media.

  His closest associates in the scheme—Eric Tan, Jasmine Loo, Yeo Jiawei, the former BSI banker, and Seet Li Lin, who worked at Jynwel—were too enmeshed in Low’s scheme to pull out now. But the decision of celebrities like Swizz Beatz and Alicia Keys to continue to fraternize with Low, despite stories in the Journal and Singapore’s probe into the Malaysian, was more surprising.

  The conversation during the skiing trip, and a subsequent few days in London, revolved around how to change the narrative on Low. Until the last, those who had benefited from his largesse seemingly refused to acknowledge the mounting evidence of wrongdoing. Perhaps Swizz Beatz and Alicia Keys did not read the media, or they just discounted the stories about Low, or maybe they simply didn’t care if the money funding the trip was stolen.

  Joey McFarland, who owed much of his Hollywood career to Low, was vociferous in the support of his friend. The coverage of Low was biased, a political hatchet job, he told the entourage. One evening during the vacation, he advised Low to publicize more of his charity work on Twitter to counter the negative stories. With the money still flowing, McFarland didn’t appear to have doubts. But he more quickly became angered, as the stress of the situation began to rub away at his normal happy-go-lucky persona.

  Red Granite’s latest movie, Daddy’s Home, starring Mark Wahlberg and Will Ferrell, had just premiered and McFarland wasn’t yet ready to let go of the Hollywood dream. For now, the news about Low and 1MDB had not yet penetrated Hollywood, and Red Granite was still a going concern. On Instagram, McFarland kept up the appearance of a successful producer, although there were signs of trouble.

  Some stars seemed to be distancing themselves. DiCaprio, for instance, had passed on taking the lead in Papillon, the company’s latest feature, which was in preproduction, with Charlie Hunnam playing the role instead. DiCaprio hadn’t even attended Low’s latest yacht party off the coast of South Korea, and was not present at the latest auction at Christie’s. Talk about Scorsese making The Irishman starring Robert De Niro with Red Granite also had gone quiet.

  It was a worrying sign; the slow peeling away of Low’s coterie of famous friends had begun. But the Malaysian had other—bigger—worries to contend with. The FBI’s probe was scaring his business partners. To save his empire, Low turned to China.

  Chapter 48

  China Connection

  Shanghai, China, April 2016

  From his residence in the Peninsula Hotel complex in Shanghai, Low’s life of exile from Malaysia was not too shabby. Situated near the Bund, the city’s old colonial heart, the hotel and residences boasted two Michelin-starred restaurants. From his rooms, Low enjoyed unbroken views across Shanghai’s Huangpu River to the modernistic skyline on the other side.

  It was here in Shanghai, China’s financial capital, that Low was fighting hard to keep hold of his businesses. With the FBI asking questions, Low’s empire in the United States was in peril. Major banks no longer wanted to touch him, and Wells Fargo was refusing to push through its loan to finance the purchase of the Park Lane, Low’s flagship development project with the Abu Dhabi fund Mubadala and the U.S. developer Steve Witkoff near New York’s Central Park.

  The project was all but scuttled, but Low had hatched a plan in Shanghai. Unwilling to give in, his latest maneuver involved enlisting the help of Shanghai-based Greenland Group, a Chinese state-owned developer. On April 26, Low fired off an email to Khaldoon Al Mubarak, the chief executive of Mubadala, outlining how he planned to sell his stake in the project to a minor Kuwaiti royal. The royal was simply another old friend of Low—a nominee to keep the Malaysian’s name off the books. The Kuwaiti would then sell
a part of his stake to Greenland Group, which would help fund the project.

  “In 2015, I have been faced with vicious, false and misinformed media attacks which resulted in challenges with respect to the [Park Lane] financing,” he told Al Mubarak. But this deal, he added, solved the problem.

  Low had again pulled strings with a state entity—this time in China—to solve a problem. His ability to enter the halls of power, getting to know the chairman of Greenland in Shanghai, held out a slim chance the project might not die—and he could get his money from the project out of the United States.

  Fearing an imminent FBI action, Low was taking other actions to sell assets for cash. In April, he ordered Sotheby’s to sell Dustheads, the Basquiat painting, which he had pledged as collateral for a loan. U.S. hedge fund manager Daniel Sundheim paid $35 million, almost $14 million less than it had cost Low three years earlier. The Malaysian began to sell other pieces of his art, also at fire-sale prices. When he’d bought art, it was exactly for this kind of emergency. The mansions and companies were harder to divest in a rush.

  As the Malaysian was trying to save his Park Lane deal, the Wall Street Journal published the most detailed story yet about Low’s involvement in Najib’s secret accounts and his behind-the-scenes role at 1MDB. After the story published, Malaysian Source, our secret contact involved in the scheme, stopped all communication. MS realized it was not so easy to influence our coverage.

  The Journal then tried to locate Low. Bradley Hope flew out to Shanghai, where a female receptionist at the Peninsula confirmed that Low was a longtime resident at the hotel. But when Hope showed up at the entrance to the hotel apartments, a burly security guard insisted no one by that name had ever resided there. When he returned to the receptionist, she looked at her computer again and noticed all records of Low’s stay had disappeared. Hope then flew to Hong Kong, where the Equanimity had berthed for repairs. The captain said the owner wasn’t on board. Low was nowhere to be seen.