What We’re Reading
Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World. Tom Wright & Bradley Hope (Hachette Books).
Reviewed by Larry Dougherty
These days the news is full of stories about young superstars whose business ideas turned out to be too good to be true. Sam Bankman-Fried of FTX and Elizabeth Holmes of Theranos are examples. But it’s hard to get the big picture from one day’s news, which is one reason why we enjoyed the book-length treatment of a colossal fraud. Billion Dollar Whale is the story of a brazen Malaysian businessman, Wharton business student, and compulsive gambler named Jho Low (pronounced “cho low”). By the time Low was 29 years old, he had parlayed a family friendship with the prime minister of Malaysia into colossal wealth. His biggest deal was building a sovereign wealth fund – an obscure investment vehicle typically owned by governments – into a global wheeler-dealer called 1MDB. Billions of dollars in Goldman Sachs financing provided the rocket fuel. As a student at the University of Pennsylvania, Low had dreamed about meeting celebrities like Paris Hilton. Now his company was paying appearance fees to Hilton and the actor Leonardo DiCaprio to party with Low at 1MDB extravaganzas. Low even helped finance the production of DiCaprio’s hit movie The Wolf of Wall Street.
The flaw in all this apparent success was that 1MDB’s deals generated little if any profit, and Low was diverting billions of dollars into the bank accounts of his clone corporations whose names closely approximated those of legitimate 1MDB companies. Indeed, one of Low’s true talents was identifying and manipulating vulnerable financial institutions whose officers would reluctantly make the huge wire transfers that Low demanded as part of his attempt to conceal his wrongdoing. This part of the story emphasizes the importance of financial compliance controls, and robust know-your-customer and anti-money-laundering procedures, for any financial institution that hopes to remain out of trouble. Low also had a knack for stagecraft. To persuade the prime minister on one key deal point, Low produced a Saudi prince to appear for a private audience on a yacht anchored off Monaco. All the while, Low kept his name in the background and kept 1MDB’s tame board of directors in the dark. A waterfall of criminal indictments, political investigations, and prison sentences followed, as well as censure for Goldman’s financing practices. Low is a fugitive, and, according to some accounts, hiding in China. The moral of the story of Billion Dollar Whale, like many before it, is that if something seems to good to be true, it probably is.