Billion Dollar Whale Read online

  With intelligent, piercing brown eyes and a closely shaved head that accentuated his angular features, Otaiba already had tasted more success by thirty than many men do in a lifetime. Yet his ambition, for power and money, was anything but sated. One of at least twelve children, from different wives, of Abu Dhabi’s former oil minister, Otaiba had a privileged upbringing, attending the Cairo American College in Egypt—his mother’s country—before studying at Georgetown (where he attended four years but did not graduate), and later, at Washington’s National Defense University. Eloquent and charming, he positioned himself back home as an interpreter of the West for the emirate’s royal family. At age twenty-six, he became an adviser to Abu Dhabi’s crown prince, Mohammed Bin Zayed Al Nahyan, and he assumed the role of national security liaison with foreign governments.

  Otaiba was always dressed impeccably in a Western business suit, and he had a perfect American accent, so officials in Washington often forgot he was a foreigner, and the young emirati became a trusted ally during the George W. Bush era. Over dinners, he expounded to journalists, diplomats, and White House officials about the need for the United States to take a hard line on Iran and Islamist militants, both of which he saw as an existential threat to Abu Dhabi’s authoritarian government. By galvanizing support among Arab nations for the escalation of Bush’s war in Iraq, Otaiba cemented his influence in Washington.

  A regular on nightly cable news programs, he exhibited poise and charm, which masked a stony self-belief and a tendency to curtness with those who reported to him. In an email exchange with Mohamed El-Erian, then-CEO of PIMCO, the giant U.S. investment firm, and one of the world’s most recognizable Arab businessmen, Otaiba warned him: “As you get to know me, you will find out that I’m brutally honest and blunt.”

  Otaiba was not as wealthy as many emiratis. His father, also a businessman with interests in finance and real estate, had accrued a fortune. But as one among so many children, Otaiba did not have the wealth to keep up with the royals, with their mansions, yachts, and other luxuries. The emirati led a second life that was costly to maintain, and he needed cash to compete with the princes of the Gulf. In conservative Abu Dhabi, Otaiba dressed in billowing robes and a gutrah, the traditional emirati headdress. But in the United States, like many senior Arab figures once they escape the strictures of life at home, he lived a decidedly more rakish lifestyle.

  Not yet married, he supplied a Florida modeling agency with lists of his preferred women, mainly brunettes. Professionally successful, he still had an interest in self-enrichment. While well versed in Arab politics, Otaiba was a novice at business. To make money, he became involved with a construction company set up by a partner. The pair co-invested in projects in the Middle East, but Otaiba remained in the shadows: His main contribution to the business was to provide wasta, or “connections” in Arabic.

  Here was just the kind of contact Low was seeking out: an influential figure, yet a striver, one who was still on the rise, knew nothing about business, and was amenable to a meeting with an unknown Malaysian. Over the lunch, Low held out the prospect of deals between the Middle East and Southeast Asia, especially Malaysia, which he talked up to Otaiba as a growing economy. It was mainly bluster—outside of throwing college parties, Low had no experience of brokering deals and, apart from his previous knack for borrowing money from family friends, no real special access in Malaysia. But Low did not let those facts stop him. As he listened to the persuasive Malaysian, Otaiba was intrigued by his talk of potential business relationships, and he began to open doors for Low in Abu Dhabi.

  Soon after their first meeting, Otaiba introduced the young Malaysian to Khaldoon Khalifa Al Mubarak, another young, ambitious emirati who ran an investment fund called Mubadala Development. With prominent, arching eyebrows and sleek, frameless glasses, Al Mubarak was a charming figure who spoke calmly and easily broke into a smile. The son of an emirati ambassador murdered on the streets of Paris by a Palestinian terrorist group in 1984, Al Mubarak was—like Otaiba—a trusted aide to Abu Dhabi’s most powerful sheikh, Crown Prince Mohammed Bin Zayed Al Nahyan.

  At Wharton, Low could be indolent, scraping through with the bare minimum of effort. Yet here in Abu Dhabi he was getting a genuine education in how the world worked. Abu Dhabi had formed Mubadala a year earlier, in 2002, to diversify its oil-dependent economy. The idea was to raise capital from international markets, plowing the money into industries like real estate and semiconductors. Low could see how Al Mubarak, only in his late twenties and a smooth talker, was in a position of considerable power, with control over big chunks of Abu Dhabi’s economy.

  Mubadala was part of a trend in which rich states were playing a greater role in the global economy. Sovereign wealth funds had been around since the 1950s, when Saudi Arabia and Kuwait set up entities to find ways to invest their oil wealth with a long-term outlook. Other examples followed, from Norway’s Government Pension Fund to the Abu Dhabi Investment Authority, the emirate’s main wealth fund. By Low’s visit, sovereign wealth funds controlled $3.5 trillion in assets, larger than the annual GDP of most Western nations.

  But Mubadala was novel: Rather than simply invest oil profits, securing them for future generations, the fund was borrowing from global markets and actively trying to move the economy in new directions.

  What Low saw in Abu Dhabi planted a seed in his mind. Malaysia had a sovereign wealth fund, Khazanah Nasional, but nothing like Mubadala. It would take six years for Low to establish himself as an Al Mubarak–like figure controlling his own fund in Malaysia. In the near term, he had a more achievable goal: to turn his newfound Arab contacts into business opportunities. Whatever Al Mubarak made of this cocksure young Malaysian, it would not be long before they found common ground on which to operate.

  Back at Wharton for his final semester, Low set up his first company, the British Virgin Islands–based Wynton Group. The name stood for “win tons” of money, he told friends, who were unsure if it was a joke. Ivy League schools draw students from across the globe, whose families pay the huge fees in return for the networking opportunities and the brand name. In their senior years, the best students compete for jobs at Goldman Sachs or McKinsey & Company. Low’s brother, Szen Low, who studied at Cambridge University in England, joined Goldman out of college.

  But Low had no time for the well-trodden path, figuring he could make more money without the constrictions of an office job, and he set about pitching Wynton as a vehicle for Middle Eastern investors to get involved in projects in Malaysia. It started small, with some seed capital from the families of friends from Kuwait and other countries, and bought some stocks, but it wouldn’t do any major deals until Low left Wharton for good.

  As his senior year ended, in 2005, Low had a plan in mind: to return to Malaysia and look for ways to do business with his Wharton and Harrow contacts. A young financier with his own company, Low was ambitious. But he needed to find an influential backer at home.

  Fortunately, from his father’s real estate investment in London, he had one: the powerful family of Najib Razak.

  Chapter 4

  We’re Going to Need a Bigger Van

  Hong Kong, China, December 2007

  In the lobby of Hong Kong’s opulent Shangri-La Hotel, perched on a steep hill with views over the city’s skyscrapers and the narrow harbor below, there was a commotion. The throng of handlers, security personnel, and assorted sycophants who clung around Malaysian Deputy Prime Minister Najib Razak and his wife, Rosmah Mansor, were trying to load the car taking them to the airport, but there was a problem. And Rosmah, her hair in a bouffant, the product of hours at the salon, and bedecked in expensive jewelry, was losing patience.

  Najib had spent the past couple of days meeting fund managers with Credit Suisse, the investment bank, aimed at drumming up foreign investment. Malaysia’s commodities-heavy economy was beginning to attract the attention of Wall Street banks. While Najib sat in conference rooms, Rosmah had indulged in Hong Kong’s plethora
of luxury boutiques. Now there was a problem. Rosmah’s towering pile of boxes and shopping bags would not fit into the car taking them to the Malaysian government jet that was on standby in the VIP hangar at Chek Lap Kok airport. Scrambling, Rosmah’s staff eventually found a van to haul the excess baggage. It took so long to make the arrangements and load the cargo hold, the jet did not take off for Malaysia until after midnight.

  As the heir to a Malaysian political dynasty—his father and uncle had both been prime ministers—Najib and his wife were accustomed to a retinue of handlers who looked after their every need. In his midfifties with thick red lips and a salt-and-pepper mustache, his face often wearing a look of happy befuddlement, Najib was the epitome of an entitled politician. His father, Abdul Razak, tried to instill an old-fashioned morality into Najib and his four younger brothers. When the boys asked for a swimming pool at the prime minister’s official residence, their father rejected the proposal, lecturing his children on how a public servant should not use state funds for personal pleasure. But Abdul Razak died young, when Najib was only twenty-two, and with him any restraining influence also vanished. From then on, the boys, and especially Najib, were enveloped in the privileged bubble of the ruling United Malays National Organization, or UMNO.

  Educated at Malvern College, an illustrious British boarding school, and the University of Nottingham, Najib preferred English to Malay. Like an English gentleman, he had a penchant for expensive cigars and watched English TV shows like Yes Minister, a sitcom about a bumbling government minister. On the back of his revered father’s name, he held a string of plum government positions. A deputy minister by his midtwenties, Najib didn’t bother himself much with the mundane details of governance, preferring to attend events and make speeches. From the outset, he was surrounded by yes men.

  UMNO had ruled Malaysia since its independence from Britain in 1957. Malaysia held regular elections, but the system was deeply flawed and corrupt. In the 1970s, Najib’s father ushered in policies whose effect was to help Malays, the majority ethnic group. The government reserved university places for Malays, gave special financial handouts to Malays, and even favored Malay-owned companies for state contracts. By 2007, these policies had spawned a thick web of graft in which businesses, many controlled by Chinese and Indian Malaysians, had to pay kickbacks to the likes of Najib and Rosmah in order to operate.

  Rosmah’s origins were somewhat more humble. Her parents were middle-class school teachers, but she had partly grown up on the grounds of the palace of a Malaysian sultan, who had adopted the family as his own. The experience had exposed Rosmah to wealth from a young age but also instilled in her a sense of insecurity, of not truly belonging to the aristocratic world she inhabited, according to people who know her. Fascinated by royalty, Rosmah reportedly eyed members of Brunei’s royal family for marriage before she met Najib in the 1980s. She was working for a property company and he was a chief minister. They married soon after, a second union for them both.

  When Rosmah first boarded a government private jet, she was enthralled by her new surroundings. To compensate for her common origins, she began to dress in fine silks and precious jewels. She could be humorous, but she also exhibited a draconian streak, yelling at aides and cutting off contact with a daughter from her first marriage because she disliked her choice of husband. Relationships for her appeared to be transactional. Foreign businessmen seeking government support for a new venture would often meet her first, and she’d set up a follow-up encounter with Najib.

  Grandees from the ruling UMNO party grew concerned about the deputy prime minister and his wife. Most politicians had made money through kickbacks for government contracts and property deals, and Najib was no exception. But by the mid-2000s Rosmah’s spending had reached new extremes, even for Malaysia. One story that made the rounds involved her breezing into a Hermès store and informing the clerks of the few items she did not want to buy, before ordering one of everything else.

  To finance her penchant for luxury items, Rosmah was pilfering the state coffers. One Malaysian businessman detailed how it worked: He would buy properties from state-owned companies before selling them at a markup to other state firms, sharing the profit with Rosmah. She was already an unpopular figure in Malaysia, having developed a reputation as a social climber and modern-day Imelda Marcos, whose penchant for high-end accessories, like Birkin handbags by Hermès, which cost tens of thousands of dollars apiece, seemed beyond the reach of Najib’s official salary.

  In late 2006, a Mongolian model, a girlfriend of a Najib aide, was shot dead, and her corpse was then blown up with C4 explosives. At the time she was killed, the dead woman’s boyfriend, an aide in Najib’s Defense Ministry, was facing accusations of accepting bribes worth more than $100 million from a French submarine company. A Malaysian court later convicted two police officers for the murder. At the time, the officers were part of Najib’s personal security detail. Najib denied any knowledge of the killing, but the sordid affair stuck to him like a rotting smell.

  By 2007, with Najib harboring ambitions for the nation’s top office, one once held by his father, the ambitious couple needed some good news. It arrived in the form of a friend of Rosmah’s son, a young man called Jho Low whom they had met in London.

  On his return to Malaysia, after graduating from Wharton in the spring of 2005, Low set up offices on the seventieth floor of the Petronas Towers in Kuala Lumpur for his company, Wynton. The pair of futuristic skyscrapers, the tallest buildings in the world in the late 1990s and early 2000s, were the premier address in Malaysia’s capital—a symbol of the country’s emergence from agrarian poverty within a generation. Encased in shiny chrome steel cladding, with a sky bridge linking the forty-first floors, the towers featured in the 1999 film Entrapment with Sean Connery and Catherine Zeta-Jones. In the lobby, iron bars inserted into the black marble floor traced a swirling Islamic-inspired geometric pattern.

  Only the best-known Malaysian firms could afford an office in the towers. Chief among them was Petronas, the state oil company, whose profits had fueled Malaysia’s economic transformation. Jho Low, his college graduation barely behind him, couldn’t really afford such a prestigious address, but managed to arrange a loan from a local bank. Using the bank’s money, he decorated the office, sparing no expense. The space featured an “island” boardroom in the center of the floor, with glass that frosted over at the touch of a button. A whiteboard inside printed out whatever was written on it. In the restrooms, the toilet seats adjusted automatically to the height of the occupant. There was even a wading pool for tired feet. For Malaysia at the time, this was more than cutting-edge technology: It was the most luxurious office space in the country.

  Low splashed money on staff, even though he had few investment deals in the pipeline. One of his first hires was Seet Li Lin, the Singaporean whom he had befriended at Wharton. Seet had a sound understanding of finance, having gone to work for Singapore’s central bank after college, before Low convinced him to join Wynton. Extremely young looking, with a cheerful smile, Seet acted as Low’s details guy. Often, Low would begin a negotiation before asking Seet to take care of the details. Like his boss, Seet was impatient to get ahead. The key to his success at Wharton, he once boasted, was turning in essays that were big on buzzwords and short on substance.

  Eric Tan—a Malaysian whom Low referred to as “Fat Eric”—also became a key member of Low’s entourage. A Malaysian who spoke heavily accented English, Tan would become Low’s de facto body man, a partner so trusting of Low that he would sign any document without question. Low had met Tan in the nightclub world in Malaysia, and they would travel everywhere together, for work and vacations.

  Now all Low needed was business. While at Wharton, he’d made contacts in the Middle East. Now, he wanted to bring rich Arabs to invest in Malaysia, perhaps making a fee for brokering a deal. To build allegiances, Low sent chocolates and flowers to prospective partners, and offered personal favors, securing appointments with s
ought-after doctors. But as a Chinese Malaysian, Low knew he needed a Malay protector if he were to really succeed in business. He had one in mind: the family of Najib Razak, whose stepson, Riza Aziz, he had gotten to know in London. The deputy prime minister himself was still out of reach, but a mutual friend introduced him to Nizam Razak, one of the politician’s four brothers, and Low offered him space for free in Wynton’s office. Low enticed Nizam to co-invest in a high-end condominium project near the Petronas Towers that some contacts from Penang were developing.

  The problem with the co-investment was that Low didn’t have any money—in fact, he had sizable debts from his bank loans. When it came time for the down payment, a businessman fixer of the Najib family came in to arrange financing and bail Low and Nizam out of the situation. Low was at a low ebb. After failing to pay the rent on the Petronas Towers office for several months, he had to give it up. Rather than getting him close to Najib’s family, his efforts appeared to be in vain.

  “They had disdain for him,” one close aide of Najib said of Low.

  But Low was tenacious and resourceful, using every failure as an opportunity. He had gotten to know executives from the Kuwait Finance House, an Islamic bank, which had come in on the condominium property deal. In 2007, he tried to broker a deal for the Kuwait Finance House to take over a Malaysian bank. He failed again, but had added to his contact book. Low was becoming adept at obtaining meetings with powerful figures, putting himself in the room even though he had no track record.

  Later that year, he heard Khazanah, Malaysia’s powerful sovereign wealth fund, was looking for partners to develop a gigantic construction project in the southern state of Johor, near the border with Singapore, to be known as the Iskandar Development Region. The project was an ambitious effort to create a financial and lifestyle center to rival wealthier Singapore, Southeast Asia’s financial and commercial hub.