Tom Wright & Bradley Hope (2019) Billion Dollar Whale.

Tom Wright & Bradley Hope (2019) Billion Dollar Whale.

Few economics books top the New York Times Bestseller list. Billion Dollar Whale fits into another category of True Crime. Twenty-seven-year-old Jho Low stole around seven billion dollars—give or take tens of million—with the aid of a Malaysian investment fund. Nobody was really accounting. Low had supermodels on tap and celebrity parties included the A-list of Leonardo DiCaprio, Jamie Foxx, Britney Speirs and Miranda Kerr. Robert Di Nero put in an appearance in a party in the South of France. His son sold Low some high-end real estate in New York. Low created a Hollywood production company, acted as producer and helped finance the Wolf of Wall Street. Ironically, the film made around $400 million at a cost of $100 million costs. Jordan Belfort spotted the scam, he’d perfected. Low was a serial loser, but acted like a serial winner.

Wright & Hope inform the reader ‘a whale’ in casinos in a big spender, by which they mean a big loser, who gets the treatment of freebies like accommodation, drink and entertainment. Low left the staff a tip of a million dollars, after he’d lost another few million on the tables.

John Kenneth Galbraith famously intoned: ‘I have nothing to say about the definition of money’.

A bystander watching Low losing big noted that was the price of my college tuition. That was the price of a house.

Bernie Madoff’s Ponzi scheme was a straightforward embezzlement of around $18 billion. Take from the rich and giving the rich double-digit return on their investment. Taking the money from the bottom of the pot and paying the top of the pot.

Sir Fred Goodwin took a small Scottish bank, the Royal Bank of Scotland, and used the potential earnings from companies acquired to leverage capital acquisitions that in terms of assets created one of the biggest companies in the world. April 2008, RBS lost £24 billion and was bailed out by the British government. But what Goodwin did was not deemed criminal. He kept his full pension (but lost his knighthood).

Shadow banks follow the same principles of banks. Their objective is also super profit. But they also seek to keep confidential who, what and where. Tax havens are a given. Lho faced two problems the creation of money and the movement of money. His Ponzi scheme relied on gaining leverage and control of other people’s money.

His cultivation of friendship with Malaysian Prime Minister, Najib Razak and his wife Rozmah Mansour through bribes (around $70 million worth of jewellery) and deference was a cog in acquisition. Lho’s scam involved creating a self-fulfilling prophecy that Saudi Royalty was willing to invest in the Malaysian economy. The Saudi Wealth Fund is one of the biggest in the world with triple A-status. A guarantor recognised by all major rating agencies of having the means to pay its debt. Prince Turki was not connected to the Saudi Wealth Fund, but he acted the part that he held the key to Middle East investment.

Prime Minister Najib was quick to announce the creation of a Malaysian wealth fund called 1Malaysia Development Berherd  (1MDB). The initial tranche of $1.4 billion in Islamic bonds. Goldman Sachs made a $600 million killing in helping set up the scheme, which was regarded as super profit (similar schemes could be set up for around $1 million) by other envious bankers.

The movement of money was a carousel. Jho Low had already arranged much of the infrastructure, buying services he needed. Taking control of the new money, he diverted around $175 to his personal account. He began to spend like a billionaire, buying yachts and property and bamboozling Hollywood and American’s elites with tales of inherited wealth. He was the next big thing. Rich because he was rich. Paradix fiscaux, beyond the reach of mere mortals.        

Low’s shadow banking was zombie banking, unless he could show auditors an on-paper balance they would sign off. But his only real investment was two drilling derricks leased to the Venezuelan government. Even inflating their value—in the same way the moron’s moron, rapist and former President Trump, inflated his property portfolio—couldn’t fill the metaphorical black hole. Low’s trump card was the Malaysian Prime Minister was re-elected. More money, tranche two, was coming his way. Liquidity was no longer such a pressing issue. Partying continued.

Kleptocracy, Transparency International listed these countries in 2004, more would be added.

Indonesia, Suharto (amount stolen) around $15 - $35 billion.

Philippines, Marcos $5 - $10 billion.

[Lho and Malaysia would come in here with about $7 billion.]

Nigeria, Abacha $2 - $5 billion.

Yugoslavia, Milosevic $1 billion.

Haiti, Duvalier $300 - $800 million.

Peru, Fujumori $600 million.

Ukraine, Lazarenko $114-200 million.

Nicaragua, Aleman $100 million.

Philippines, Estrada $78-80 million.

Theft by the richest and more powerful. China. Russia. South Africa. Brazil. America. Britain. Most modern nations have developed models that take from the poorest and give to the richest. Jho Low’s excess made me squirm, but he didn’t see his riches as being excessive. His wealth, his fortune, was a trick of money. Trickle-down economics suggests we all benefit from such spending power. All we need in neo-liberal-economic dogma is more de-regulation. Buyers beware. I’m sure the moron’s moron, is the very man for the job. Lho, of course, tried to buy his way out of the scandal. For now, like Russian oligarchs, who were once the lifeblood of the London property market, his money is hidden in the dark web. Read on.