Billion Dollar Whale

Billion Dollar Whale is a fun, easy, fascinating read. It falls in the same genre as Bad Blood about Elizabeth Holmes and the fraud perpetrated by her company (Theranos) and Too Big to Fail about the 2008 financial crisis. Investigative journalists Tom Wright and Bradley Hope researched the story extensively and put it all together with excellent journalistic flair.

The book explores the story of a mysterious character, Jho Low, who was able to funnel billions of dollars from the Malaysian sovereign wealth fund 1MDB into his personal accounts in the Cayman Islands and the British Virgin Islands (among other places) through extremely complex financial and social manipulation. 

Jho Low, was not an investor, capitalist, or stock trader. He was a thief.

He came from a moderately wealthy family in Malaysia that had great aspirations. His family sent him to an extremely expensive and exclusive boarding school in England where many billionaires send their children. At this school Low learned about how the global elite live. He wanted that life too.

He began aggressively cultivating relationships with wealthy and powerful people at the boarding school and continued to do so in college and beyond. A key part of his modus operandi was making a show of being wealthier than he was and using his existing connections to provide legitimacy for new connections. It was like a ponzi scheme of relationships.

Low used his connections with wealthy middle eastern sovereign wealth fund managers, with the Malaysian prime minister and his family, with celebrities like Leonardo DiCaprio, and with various bankers and financiers around the world to vouch for him and to provide cover and sense of legitimacy as he transferred hundreds of millions of dollars out of 1MDB into shell companies and then from shell companies into legitimate bank accounts.

In Great Gatsby style, Low used his money to gamble, to spend millions of dollars on one-night parties he often spent more time observing than celebrating, to jet all over the world, to pay for the Malaysian First Lady to buy tens of millions of dollars of jewelry and high-end clothing and other accessories, to buy part of a large music company, to buy multiple houses in multiple cities around the world, and to form his own movie production company, Red Granite, which ironically enough produced The Wolf of Wall Street…

​The gall and arrogance of this heist is breath-taking. The way he wasted the money he stole is sickening. Billion Dollar Whale made me think harder about the global elite: who they are, how they live, and whether we should worry about them.

The global elite consists of celebrities, the uber-rich (those with hundreds of millions or billions of dollars), powerful government leaders, and their families who seem to live in a different world that runs on different rules. Should we ignore them and simply go about our lives? Should we criticize them? Try to emulate them? My initial answers are “yes,” “maybe,” and “most likely no,” but I have this unnerving yet common concern that how the global elite live, and what they do with their money, and more importantly with their political influence, significantly impacts our lives. 

What does it mean to live in a world where most people would be thrilled to have $2,000,000 saved by the time they retire while many others might drop that kind of money (or more) on a piece of art or a big party without batting an eye? The breadth and scale of wealth today boggles my mind. Let me share a few examples from the book of how Low spent his billions:

• Expensive Parties: thousand-dollar bottles of champagne, top shelf liquor and food, celebrities hired to attend or perform at his private events (which the authors say would sometimes run into six figures for one night!)
• Rental venues - Low would frequently book the most expensive venues possible. Apparently “Super-yachts” are a thing. They are like mini-cruise ships, but equipped for a much smaller group of people. Sometimes they have helipads and movie theaters in them. The opening chapter describes how Low rented The Chairman Suites at the Palazzo hotel for $25,000 per night, for the warm-up for his party! The actual party was held at “what looked like a giant aircraft hangar, specially constructed on a vacant parcel of land.” He literally built his own venue to celebrate his birthday with the rich and the famous. 
• And then there is the gambling - lots of nonchalant gambling of tens or hundreds of thousands of dollars.
• Using private jets to fly all over the world. One year he rented a private revamped 747 (at a cost of tens of thousands of dollars an hour) to fly himself and a bunch of friends (and attractive women) to Sydney, Australia to ring in the new year. They then re-boarded the plane and flew back to Las Vegas (crossing the international date line) to ring in the new year again; With huge parties and gambling on both ends.
• Buying multiple residences in multiple countries
• Not to mention showering pricy jewelry or other gifts on friends

The Wolf of Wall Street was based on the life and memoir of Jordan Belfort. Low invited Belfort to an extravagant party in Europe to celebrate the beginning (not the end) of production for the Wolf of Wall Street. While he was there, Belfort commented:

​“This is a f***ing scam--anybody who does this has stolen money...You wouldn’t spend money you worked for like that….These guys are f***ing criminals.”

As they say, it takes one to know one. 

Belfort knew something was wrong long before anyone else seems to have known. He rightly distanced himself from Low and his group immediately. But there are a few other points from the book to highlight.

​The former Malaysian prime minister Najib Razak and his wife Rosmah Mansor were astoundingly corrupt. Low sent hundreds of millions of dollars to unnamed bank accounts for Najib to use for reelection and/or personal expenses. Low also lavished gifts and perks on them. Besides being wined and dined, flown around the world, and having free use of many of Low’s real estate acquisitions,

“for more mundane purchases, those costing only a few hundred thousand dollars, [Rosmah] relied on Najib’s credit cards. In the Chanel store, her items selected, Rosmah turned to Najib to pay. The prime minister whipped out his platinum credit card, with a $1 million limit, and handed it to the cashier.”

I didn’t know they issued credit cards with million dollar limits!

Apparently Rosmah had a penchant for expensive things, especially jewelry, which Low showered on her. One particular jewel he bought for her cost $27.3 million. But after Low’s scheme was exposed and Najib and Rosmah were driven from power,

“Police raided Kuala Lumpur apartment units owned by Najib’s family and carted out $274 million worth of items including 12,000 pieces of jewelry, 567 handbags, and 423 watches, as well as $28 million in cash.” 

Unbelievable!

I was struck by how empty Low’s life was. Even when things were going well, people observed that he often didn’t seem to enjoy the lavish parties he hosted. He had significant health problems and as things came crashing down, he was constantly stressed, fidgety, and anxious. It reminds me of Plato’s story about the ring of Gyges.

In the story, Gyges has a ring that makes him invisible. He uses it to acquire wealth, power, and fame. Yet these things fail to make him happy. The moral of the story is that happiness is connected to living well. When people lack virtue, wealth cannot make them happy. In fact, wealth can easily destroy one’s life. A fool and his money are easily (or quickly) parted.

Adam Smith claimed that happiness consists of tranquility and enjoyment. It cannot be bought or sold. Nor is having wealth essential for flourishing because when you have tranquility, you can find enjoyment in almost any condition of life.

So I don’t envy Low and his conspirators. Nor do I really envy the non-criminal global elite he hobnobbed with. Yes, they live in a different world and spend money in ways that seem entirely frivolous to me, nor do they deal with the same kind of job, financial, retirement concerns I do, but I am confident that I would not be much happier than I am now if I were in their world. 

This leads me to wonder how helpful it is to classify people as “ordinary” or as “global elite.”

Of course people fall along a spectrum from those with significant negative net worth (lots of debt) to folks who have billions of dollars in net worth. Lifestyle also varies significantly. Sam Walton used to drive a beat-up pick-up truck even after making millions of dollars. Many celebrities, athletes, professionals, and businessmen who enter the ranks of the nouveau wealth elite live beyond their means and blow through their money. 

But this book has given me a glimpse into how many people in the U. S. feel about income and wealth inequality. The way I view the lives of the global elite may be similar to how a minimum wage worker with little or no savings views people with a couple million dollars of wealth. In both cases the other lifestyle is foreign or strange to us. And it seems like the folks in it live by different rules and often spend money frivolously or in ways we have a hard time understanding. The philosophers of the enlightenment had a lot to say about this. You may be interested in some of my lectures about luxury, corruption, and wealth in the works of Bernard Mandeville, Adam Smith, David Hume, and Adam Ferguson.

Obviously the analogy is not perfect and there is a lot of variation across all these “classes,” but the point is I can relate more to the feeling of “foreignness” and “suspicion” towards those who have massive wealth and/or political power. The disparities are pretty dramatic. And I think they call for reflection regarding what are just ways of gaining wealth and unjust ways, as well as how people can use their wealth well.

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