Fall Of Malaysian Dynasty Puts Target On Alleged 1MDB Mastermind

The alleged mastermind behind one of this decade’s greatest global financial scandals was seen earlier this month relaxing on the Thai resort island of Phuket. A few weeks later, after his political mentor was felled in upset elections, authorities want to know more precisely: Where on earth is Jho Low? For almost a decade, the young Malaysian financier was at the centre of the 1Malaysia Development Bhd. sovereign-wealth fund and the disappearance of at least $4.5 billion, the U.S. Justice Department alleges. Although the agency named Mr Low as the ringleader, he remained confident he could beat the rap, say people who know him, and he blithely partied and yachted around Asia, trying to contain the fallout. Mr Low was so nonchalant he held a party in February with celebrity friends in the Chinese gambling enclave of Macau, say people familiar with the event. He was in Phuket this month in anticipation of a victory for Prime Minister Najib Razak, his ally, these people say. Then came the shock. Malaysian voters kicked Mr Najib’s party out of power for the first time in the nation’s history. The missing 1MDB billions played a heavy role in the election. With cover from Mr Najib, Mr Low had sent sovereign wealth around the globe, taking cuts for himself and paying off conspirators in the Middle East and Europe, the Justice Department’s civil suits allege. Parts of the scheme were detailed by the agency, which is seeking to seize, through more than a dozen civil asset-forfeiture lawsuits, mansions, artwork, a superyacht and some profits from Hollywood films including “The Wolf of Wall Street,” which Mr Low and others allegedly acquired with the proceeds.

Malaysia’s new government under Prime Minister Mahathir Mohamad, a 92-year-old who previously served in the office between 1981 and 2003, is seeking to prosecute Mr Najib and to claw back missing funds. With Mr Najib under effective house arrest, the focus is turning to Mr Low’s whereabouts. Malaysian Special Branch, the intelligence arm of the Royal Malaysia Police, is tracking him down, officials from the new government said. “I roughly know where he is,” said Daim Zainuddin, who heads a council of advisers set up by Mr Mahathir, which is looking into the 1MDB affair, in a news conference, “and I would like for him to come and assist me.” Mr Low’s lawyers say he declines to be interviewed or say where he is now. He has previously denied wrongdoing and said he was only an adviser to a fund that later became 1MDB. Lawyers for Mr Najib said he declines to comment. He has previously denied taking money for personal gain and has said he only knew Mr Low as an adviser to 1MDB. A statement from one of the lawyers criticises police raids on Mr Najib’s family residences in Kuala Lumpur in recent days and says the former prime minister and his family will “extend their fullest cooperation to the police.”

Malaysia’s new focus on investigating the 1MDB scandal has energised the Justice Department’s criminal investigation of 1MDB, according to a person familiar with the probe. The Justice Department declined to comment. After the election, the Switzerland Attorney General’s office, which had publicly criticised the Najib government as failing to cooperate on investigating the 1MDB affair, said it was “very much interested in renewing dialogue with the competent authorities in Malaysia.” Speculation about Mr Low’s whereabouts has run wild. A Chinese-language newspaper last week said it had reliable information that Mr Low was in Taiwan. Other rumours, apparently based on pre-election sightings, place him in Macau, Shanghai and Bangkok. Until the election, Mr Low remained in contact with Mr Najib directly and through people in his inner circle, say people familiar with their relationship. His proximity to Mr Najib, who had been in office for almost a decade, made him feel untouchable, the people say. Mr Low’s role, they say, was to help Mr Najib contain the fallout from the 1MDB scandal after it broke into the open in 2015, notably in articles published by The Wall Street Journal. To do so, Mr Low relied on allies in China, people familiar with his activity say, where he stayed at times, including at a luxury apartment at Shanghai’s Peninsula Hotel residences.

In China and around Asia, Mr Low appeared to enjoy a protected status even after the scandal broke, travelling with bodyguards he said were provided by Beijing, say people familiar with his movements. He carries more than six phones, using each for a different set of contacts around the world, the people say. China’s foreign ministry didn’t respond to a request for comment on Saturday. At a regular press conference last week, a foreign-ministry spokesman, asked whether Mr Low was living in China, said he had never heard the name. In mid-2015, as the Justice Department circled, Mr Low sought to sell his stake in New York’s Park Lane Hotel to a state-owned Chinese property developer, Greenland Group, which is based in Shanghai, according to copies of Mr Low’s emails the Journal reviewed. The Justice Department announced its lawsuits before the deal could be completed. Greenland Group didn’t respond to requests for comment. Mr Low’s cosiness with overseas countries, especially China, could cause diplomatic tensions with Malaysia’s new government, which is questioning some Najib-era arrangements. It believes Mr Low had a hand in a 2016 agreement for state-owned China Communications Construction Co., a Shanghai-based company, to build a 385-mile rail line in Malaysia’s east for 55 billion ringgit ($14 billion), says Tony Pua, an opposition lawmaker who is an adviser to Malaysia’s new finance minister. The finance ministry referred inquiries to Mr Pua. The deal’s value, Mr Pua says, was almost double the cost of construction, and the government believes the plan was for China Communications to help Mr Najib’s government settle some of 1MDB’s $13 billion debt. China Communications didn’t respond to requests for comment. “It’s an outrageous deal at vastly inflated prices,” Mr Pua says. “The new government will look at the contract, review, and perhaps terminate it.” After the elections, Geng Shuang, a spokesman for China’s foreign ministry, in a news conference, cautioned against any reversal of a friendship between the nations that had gained momentum under Mr Najib: “This needs to be cherished by both sides.”

Mr Low’s rise

After coming to power in 2009, Mr Najib allowed Mr Low, then a 27-year-old Wharton graduate with Middle East ties, to help run 1MDB, the Justice Department alleges. Mr Low promised the fund would raise money from global markets and make investments in property and energy sectors, while also providing political money for Mr Najib, say people familiar with the arrangement. Mr Low oversaw the funnelling out of at least $4.5 billion between 2009 and 2015, the Justice Department lawsuits allege. Malaysia’s new government says it believes the number is closer to $6 billion. He relied on Middle East allies, the Justice Department alleges. About $1 billion was misappropriated via a joint venture with a Saudi oil company, the Justice Department suits claim. Another $1.4 billion was taken in an arrangement with the head of a $70 billion Abu Dhabi sovereign-wealth fund, International Petroleum Investment Corp., or IPIC, which had guaranteed some 1MDB bonds, the suits claim. More was purloined under the guise of building an international financial centre in Kuala Lumpur in a joint venture with an IPIC subsidiary, the suits claim. Abu Dhabi officials decline to comment and say the Abu Dhabi officials named in this article declined to be interviewed. IPIC was folded into Abu Dhabi sovereign-wealth fund Mubadala Investments Co. in 2017. Abu Dhabi’s government and IPIC’s management said the Abu Dhabi fund didn’t receive money that 1MDB, in its financial statements, claimed to have sent to IPIC.

 

After the scandal broke, Mr Najib ordered Mr Low to stay away from Malaysia, according to people familiar with the episode, and instead, the financier travelled the world trying to contain the scandal, especially in Abu Dhabi. The 1MDB fund was supposed to have sent $1.4 billion to IPIC, but the money instead had flowed to an offshore shell company controlled by Khadem Al Qubaisi, the managing director of IPIC, the Justice Department suits allege. That money was divided by Mr Al Qubaisi, Mr Low and other conspirators, the lawsuits allege. Because he didn’t want a detailed review by authorities, Mr Low tried to keep the matter secret, according to emails the Journal reviewed between Mr Low and Abu Dhabi officials. In a September 2015 email to Khaldoon Al Mubarak, an adviser to Abu Dhabi’s rulers, Mr Low urged the state not to officially probe the 1MDB affair, which already was the subject of investigations in the U.S., Singapore and Switzerland. “There are enough reviews on 1MDB being done by various regulators,” Mr Low wrote. “There is a concern that an additional review done by an Abu Dhabi investigative team will open another unnecessary attack avenue for detractors.” The Abu Dhabi government had removed Mr Al Qubaisi from his position in April 2015. A year later, Mr Al Qubaisi was jailed without charges. A lawyer for Mr Al Qubaisi says his client, who is still in jail, declines to be interviewed.

Yacht trouble

One embarrassment for Abu Dhabi: A $500 million yacht owned by Sheikh Mansour Bin Zayed Al Nahyan, the brother of Abu Dhabi’s ruler, had been partly paid for with 1MDB money funnelled through a shell company owned by Mr Al Qubaisi, according to bank statements and financial documents the Journal reviewed. Mr Low leased the yacht multiple times between 2013 and 2015, according to Justice Department suits and people familiar with his activities on the vessel.

After Donald Trump’s November 2016 victory, an intermediary for Mr Low entered into discussions with a law firm owned by Robin Rosenzweig, the wife of Elliott Broidy, a Trump associate and Republican fundraiser, to lobby the U.S. government to drop its 1MDB probe, with the possibility of earning tens of millions of dollars if successful, according to a copy of a draft agreement viewed by the Journal. A spokesman for the couple didn’t respond to inquiries. For a previous Journal article on the episode, lawyers for Mr Broidy and Ms Rosenzweig confirmed they were hired by an associate of Mr Low to consult on his case and said they never contacted the Justice Department about the matter.

The U.S. in August said it was turning from asset seizure to focus on a criminal probe. Federal Bureau of Investigation agents have travelled the globe interviewing witnesses, and Mr Low is their probe’s main target, say people with knowledge of the probe. An FBI spokeswoman declined to comment. Mr Low remained unflappable before the election, say the people who know him. He held a birthday celebration for an associate, Eric Tan, who the Justice Department alleges were involved in the 1MDB scandal, in February at a Macau hotel, say the people familiar with the event. The hip-hop producer Swizz Beatz and singer Nicole Scherzinger flew in to attend, one of them says. Representatives for the artists didn’t respond to requests for comment. Attempts to reach Mr Tan, whose whereabouts are unknown, weren’t successful. Since the election, sensing the heat rising, Mr Low has left Thailand and struck a more careful posture, say the people who know him.

Credit: Bradley Hope and Tom Wright for The Wall Street Journal, 20 May 2018.