Back in January, we speculated that the arrival of a new prime minister in Malaysia and China’s interest in repairing its relations with a key strategic country in the South China Sea had increased the odds for a deal over the fugitive fraudster Low Taek Jho (a.k.a. Jho Low, a.k.a. The Billion Dollar Whale).
Today, we heard from multiple sources that such an arrangement is being hotly debated inside the Malaysian government in the wake of PM Anwar Ibrahim’s trip to China in March. During that trip, Anwar met high-level government officials as well as representatives of China Communications Construction Company (CCCC).
Such a deal would involve wiping the slate clean over China’s involvement with deals structured by Jho Low to cover up the 1MDB fraud, China’s attempts to bolster Najib Razak’s political career (including in cash support), recalibrating Belt and Road Initiative projects in Malaysia to be economically feasible and beneficial to Malaysian infrastructure needs and handing over Jho Low himself (and all his plundered loot).
This would be huge, fascinating and mark the end of the main storyline of the 1MDB scandal – from its founding in 2009 to collapse amid scandal in 2015 and all the insane partying and spending along the way until 2023. It could also mean a big cash recovery for Malaysia, too, because Jho – by our estimates and sources who have followed the case closely – still controls a multi-billion dollar cash hoard.
Such a deal would involve wiping the slate clean over China’s involvement with deals structured by Jho Low to cover up the 1MDB fraud, China’s attempts to bolster Najib Razak’s political career (including in cash support), recalibrating Belt and Road Initiative projects in Malaysia to be economically feasible and beneficial to Malaysian infrastructure needs and handing over Jho Low himself (and all his plundered loot).
This would be huge, fascinating and mark the end of the main storyline of the 1MDB scandal – from its founding in 2009 to collapse amid scandal in 2015 and all the insane partying and spending along the way until 2023. It could also mean a big cash recovery for Malaysia, too, because Jho – by our estimates and sources who have followed the case closely – still controls a multi-billion dollar cash hoard.
Jho Low has been on the run since 2015 when global law enforcement began investigating the theft of billions of dollars from a Malaysian sovereign wealth fund, 1MDB. Against the odds, Jho and a coterie of hangers-on managed to cling on to much of the money and hide around Asia thanks to clever wheeling and dealing. But it increasingly looks like the jig is up and China is open to trading him for a return to good relations with Malaysia, according to our sources.
Rather than write out a long discussion, I’m going to discuss this development in the form of a Q-and-A after the jump.
Question: How sure are you that these discussions are underway?
Answer: We have been tracking this very closely since earlier this year. This development was the last thing we imagined would happen. We had always assumed that China would ultimately try to ignore the questions about Jho Low or … even worse, disappear him, rather than risk Jho spilling secrets about his work with Chinese intelligence. We have spoken to multiple sources about this and we are certain this is a serious discussion going on. How likely? Hard to say, but it’s feeling like 6 or 7 out of 10.
Question: Why is this a deal worth doing?
Answer: When Jho first went to China and struck up relationships with powerful people, including the intelligence tsar Sun Lijun, he seemed like an amazing secret weapon for extending influence and increasing China’s profitability. Najib’s government was ultimately in the hands of Jho because he had so much material to blackmail the entire Najib family – including his wife Rosmah, children and probably a whole range of related politicians. I imagine the Jho Low offer was attractive: “Help me protect Najib and cover up the missing billions and in return, I’ll help you lobby the US government, get you billions of dollars of profitable infrastructure deals and a Prime Minister willing to be compliant with anything China wants.”
But when Najib lost the election and Malaysian investigators powered up, suddenly Jho became a liability of the worst kind. Those same investigators found all the minutes of the Jho-Najib-China discussions in the house of one of Najib’s minions. Those same papers suggested Malaysia was asking China to spy on Tom Wright in Hong Kong.
Question: What about all the money?
Answer: One of the amazing things about the 1MDB scandal is how little of the money has been recovered. All of Jho Low’s US assets and a smattering of others around the globe were seized by the US Department of Justice as the proceeds of corruption and fraud. But Jho managed to move much of the cash – to the tune of billions of dollars – through a series of offshore paradises and into China.
To finance some of his big last-ditch efforts to lobby Trump to drop the case, his team would take boxes of actual cash from Macau to Hong Kong where it would be deposited in trading companies controlled by his cut-out and friend Phengphian Laogumnerd. Much of the 1MDB case has focused on the early days of Jho Low’s fraud when he was really a novice money launderer. But by 2015 and beyond, he had gotten quite good at moving huge amounts of money around the globe without being stopped.
An exciting part of this deal for Malaysia is the possibility of having China return him to Malaysia along with all that stolen money (and any other assets).
Question: What’s tricky about this? What could blow up the deal?
Answer: This is an incredibly delicate and challenging deal to work out. I’m just speculating, but I imagine both sides will want to make this a positive announcement. China does not want to have any coverage of how it’s cherished Belt and Roat program was riven with corruption and attempts to manipulate or coerce a sovereign govenrment. They don’t want anyone discussing Jho Low as a multi-year Chinese intelligence agent. Malaysia will want to repair its relations with China, but also trumpet the return of Jho Low and strike more economically reasonable terms with China on the Belt-and-Road projects. In a sense, both sides don’t want Jho to talk. How can they prevent that from happening?
That’s all for now, but we’ll keep you informed of any updates. If this happens, we’ll be giving you the blow-by-blow.
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