Billion Dollar Whale

by Tom Wright

  After the financial crisis, New York developers like Witkoff increasingly were taking minority stakes in projects, relying on deep-pocketed foreign partners to stump up the majority of financing costs. After Jynwel’s role in the acquisition of EMI Music Publishing, Low was scouting for a deal in which his company could take the lead and further embellish the story of family money. The Malaysian heard about Witkoff’s interest in the Park Lane from Marty Edelman, one of the United States’s top real estate lawyers, and he asked for an introduction.

  With a shock of curly white hair, Edelman had studied at Princeton and Columbia, before spending more than thirty years practicing law in New York, lately with Paul Hastings, a white-shoe U.S. law firm. He was fast-talking and likable, known for working all hours and developing personal relationships with clients. Over the years, he had built up contacts in the Middle East via multiple business deals. Edelman became an adviser to Mubadala, and Abu Dhabi’s Crown Prince Mohammed often sought his advice on cross-border real estate deals; he even weighed in sometimes on affairs of state. Executives at Mubadala had introduced Low to Edelman, and the lawyer set up a meeting with Witkoff.

  Yet again, Low had leveraged his powerful connections, and Witkoff saw him as the real deal. That he seemed to have bottomless financing didn’t hurt. Low agreed to fund 85 percent of the deal, with Witkoff’s investor group taking a 15 percent stake. In response to an emailed request for details about his funding from a Witkoff executive, Low responded: “Low Family Capital built from our Grandparents, down to the third generation now.” Another Witkoff executive told Wells Fargo, which was lending money for the project, that Low’s capital “derives from a family trust.”

  In the months ahead, the Witkoff group discussed how to develop the Park Lane. Due to New York’s zoning laws, part of the original hotel needed to be incorporated into the new structure. The investors hired Herzog & de Meuron, the Swiss architects, who envisaged an almost one-thousand-foot tower with an undulating facade and a raised podium. The architect’s sketches showed the sleek building, set for completion in 2020, towering over its neighbors on Central Park South. Low was excited. He suggested putting outdoor swimming pools on the exterior decks of the five penthouses, which the partners hoped would sell for more than $100 million apiece.

  The deal for the Park Lane closed in November 2013, and Low paid his initial $200 million investment with money taken from the latest Goldman bond and sent on a dizzying journey through shell companies, bank accounts of family members, and U.S. law firm trust accounts. Low was on his way to developing a high-profile property that could make his name. At the same time, he was playing another angle.

  Until now he’d seen corporate deals as a way to add credibility to his family-wealth story, but perhaps he’d been looking at it from the wrong angle; instead of an endpoint for stolen cash, maybe he could use corporate acquisitions as a way of moving money elsewhere. Once he bought a major asset, and then sold it, the money would be gold-plated—the respectable earnings from a deal. The Park Lane offered him a way of moving hundreds of millions of dollars in one fell swoop.

  In December, Low agreed to sell a minority interest in the project to Mubadala for $135 million. Most of the proceeds from this sale ended up in the private accounts of Low, his brother, Szen, and his father, Larry, at BSI in Singapore. Here were the proceeds from the sale of a stake in one of New York’s most ambitious real estate developments, hopefully rubbing out all traces of links to the $3 billion Goldman bond.

  Low still needed to reward Ambassador Otaiba for the latest deal involving Abu Dhabi. This was the least the ambassador expected for making all these connections for Low. In a meeting in December with Awartani, Otaiba’s business partner, Low promised to send the pair money by the end of the year. Then, he set about laundering the proceeds of his stake sale to Mubadala through yet another corporate acquisition, and Goldman, of course, would be involved.

  Low had been deepening his connections at Goldman, and had gotten to know Hazem Shawki, the bank’s Dubai-based head of investment banking, who heard pitches from the Malaysian. One of them involved a plan for Low to take over Coastal Energy, a Houston firm controlled by legendary Texas oilman Oscar Wyatt Jr.

  Low, informally advised by Goldman, approached Coastal in 2012 about a takeover, but the firm didn’t believe he could come up with cash and told him to find a bigger partner. Now armed with cash from the Park Lane sale, Low returned with none other than IPIC, the Abu Dhabi fund controlled by Khadem Al Qubaisi, who had helped funnel money out from the first 1MDB bonds sold by Goldman. IPIC’s Spanish energy unit—Compañía Española de Petróleos, SAU, or Cepsa—agreed to partner with a Low-controlled shell company to make a $2.2 billion offer for Coastal.

  Before an agreement with the U.S. energy company could be reached, Goldman’s compliance department told its bankers to stop working with Low or his entity on the deal, again citing concerns over his wealth. It was the same reason Goldman’s private bank had given to reject Low for an account a few years earlier. As a result, Goldman switched to advising Cepsa, the IPIC unit, even though its bankers were aware that Low was still involved. Eventually, Wyatt Jr. agreed to sell, and Low invested $50 million in the deal, with Cepsa funding the remainder of the purchase price. One week later, Cepsa transferred $350 million into Low’s shell company, ostensibly to buy out Low’s share in the partnership. He had made 600 percent on his money in a matter of days.

  Shawki, the Goldman banker, who was now working with IPIC, told executives at the Abu Dhabi fund that the payout to Low was to reward him for scouting out the Coastal deal. Unknown to Shawki, in reality it was nothing less than corruption, the spoils shared between Low and Al Qubaisi. In public, Goldman denied knowledge of any agreement between Cepsa and Low’s shell company.

  The Malaysian used some of the proceeds to buy an office in London’s Mayfair district, which became the headquarters of Myla, his lingerie brand. If anyone inquired, Low could say the money came from a sale of his stake in Coastal Energy, which he acquired after offloading a share in New York’s Park Lane hotel.

  His plans to build a corporate empire were on track. No one, from major New York real estate developers to bankers and lawyers, knew the truth about him. Low and Al Qubaisi continued to act as if the money in the firms they oversaw was their private property. But as Low closed the Park Lane deal, an unexpected development risked bringing his scheme to an abrupt end.

  Chapter 34

  140 Gigabytes

  Bangkok, Thailand, October 2013

  Since leaving PetroSaudi in 2011, Xavier Justo had tried to put the server out of his mind. He toured Southeast Asia with his girlfriend, Laura, a Swiss-French woman whom he later married on a secluded beach, and the pair were now developing a luxurious villa on the Thai resort island of Koh Samui, a short flight from Bangkok. The spacious main house and guest villas were nestled into a terraced hillside, with a lap pool and tennis court down below. Palm trees surrounded the property. It was Justo’s dream island, a place to start a new life. But plans for a financial consulting business had failed to bear fruit.

  As the villa’s construction costs mounted, Justo remembered the money PetroSaudi promised but never paid. He played his card.

  For over two years, Justo had nursed his grievances. The former PetroSaudi employee was bitter over how his former friend, Tarek Obaid, had thrown him out of the company without the payout he desired. What’s more, Justo had heard from friends that Obaid was bad-mouthing him around their hometown of Geneva.

  In the fall of 2013, Justo had contacted Patrick Mahony, PetroSaudi’s director of investments, by email, informing him that he had damaging information. In fact, he had a copy of PetroSaudi’s computer server. A 140-gigabyte treasure trove of almost five hundred thousand emails and documents from PetroSaudi, the server’s contents painted a picture of how Low, Mahony, and Obaid had worked to take money from 1MDB, including emails in which the PetroSaudi principals talked about how to cover the h
ole. For two years, Justo had sat on the server, fearing the consequences of making its contents public. Now, he was losing his patience and set up a meeting with Mahony, in Bangkok to negotiate.

  As he sat in Bangkok’s Shangri-La Hotel, waiting for Mahony to turn up, Justo knew he was about to make a very dangerous move. The hotel, set on the banks of the churning Chao Phraya River, had a resort-like feel, with palm trees and a laguna-style swimming pool, offering respite from the bustle of the chaotic Thai capital. When Mahony finally appeared, Justo’s heart jumped.

  Justo began by recounting how he felt duped by PetroSaudi, which had agreed to pay him millions of Swiss francs in severance but then had scaled back the amount dramatically. Now he wanted 2.5 million Swiss francs—money he believed was due to him. Mahony was cool to Justo’s demands. There was no evidence to suggest wrongdoing, he said. PetroSaudi would absolutely not pay him any cash. They parted without an agreement.

  Justo barraged Mahony with emails, trying to get him to agree to the payment.

  “The official side paints a nice picture but the reality is commissions, commissions, commissions,” he wrote in one email.

  For four years now, Mahony had avoided any blowback on the deal, perhaps believing the involvement of Prime Minister Najib and a Saudi prince protected him. He must have been rattled by developments but still felt untouchable. In one email, he issued a dark threat to his former friend and colleague.

  “What troubles me so much is the way I see this situation ending—with the destruction of you.”

  Rather than cow Justo, the dark threat emboldened him to look for a suitable buyer for his data trove. No candidate immediately sprang to mind. As he thought over what to do, a former British journalist with ties to Malaysia was just getting interested in Jho Low. Soon, their paths would cross.

  In December 2013, Clare Rewcastle-Brown sat at the dining room table in her fourth-floor central London apartment, tapping away on a MacBook Pro. She was preparing a piece for her blog, Sarawak Report. Born in the Malaysian state of Sarawak in 1959 to a young British police officer and nurse, Rewcastle-Brown spent her childhood years playing in the jungle and swimming in the warm sea, sometimes tagging along as her mother visited villages to work as a midwife. After returning to the United Kingdom for boarding school in the late 1960s, Rewcastle-Brown eventually got a job as a reporter with the BBC World Service, but she had never forgotten Sarawak. She’d started Sarawak Report in 2010 as an attempt to hold Taib Mahmud, Sarawak’s chief minister, to account for the environmental destruction and corruption in his state.

  Now fifty-four years old, with long brown hair and bangs, Rewcastle-Brown was married to the brother of former British Prime Minister Gordon Brown. Though connected to Britain’s establishment, Rewcastle-Brown believed strongly that politicians must answer for their actions. When Taib claimed Sarawak Report was part of a plot to recolonize the state, she reveled in taunting the powerful figure on her blog, with little fear about making enemies in high places. But this latest story was not about Sarawak.

  Weeks earlier, Rewcastle-Brown had started to hear rumors from sources in Malaysia about Red Granite, the film company run by Najib’s stepson, Riza Aziz. Few among Malaysia’s elite bought into Riza’s claims of Middle Eastern funding, and Rewcastle-Brown picked up on gossip in Kuala Lumpur that Malaysian state-owned entities might have financed the film company. Intrigued, she traveled to Los Angeles to gather more information about Red Granite. During her reporting, she came across a lawsuit, filed in Los Angeles over the summer by the producers of Dumb and Dumber, the 1994 comedy starring Jim Carrey and Jeff Daniels.

  Red Granite had bought the rights to a sequel—Dumb and Dumber To—but it had shut out the producers of the original film. In July 2013, Red Granite filed a lawsuit seeking to exclude the producers, Steve Stabler and Brad Krevoy, from involvement in the movie. Stabler and Krevoy countersued, claiming a contractual right to involvement in any sequel. Red Granite had only just settled with Alexandra Milchan, a producer who had sued after the firm booted her from The Wolf of Wall Street, and now it was involved in another legal tussle.

  McFarland and Aziz’s “misconduct and hubris will cause Red Granite to crash and burn,” Stabler and Krevoy claimed in the lawsuit. The pair lacked experience to successfully produce motion pictures themselves, the suit continued, and although Red Granite apparently had “family money” from Aziz, the venture would not succeed with cash alone. Then the producers hit home, summarizing what many in Hollywood were whispering about these upstarts behind their backs.

  The Red Granite executives’ “experience producing motion pictures during their short tenure in the industry consists of cavorting at nightclubs with Paris Hilton and making dinner reservations at posh restaurants in New York and Los Angeles.” (The following year, both sides withdrew their suits after an agreement that included executive producer credits on the film for Stabler and Krevoy.)

  To Rewcastle-Brown, something wasn’t right—it seemed greater than a squabble between a bunch of movie producers. She began to comb through interviews that Riza and Joey McFarland had given to the Hollywood Reporter and Los Angeles Times. As Red Granite had attracted notice—at the Cannes Film Festival in 2011 and now ahead of the U.S. theatrical release of The Wolf of Wall Street on Christmas Day 2013—the pair had been coy about their finances. They talked vaguely about money from the Middle East and Asia but declined to give more specifics. In one interview, Riza said how he had “skin in the game.”

  This made no sense to Rewcastle-Brown. How could a former junior banker, with Najib as a stepfather, have enough capital to launch a film company? It was a mystery she wanted to solve.

  Chapter 35

  Leo’s Wall Street Indictment

  New York, December 2013

  On December 17, a windy, subzero winter’s night, with a flurry of snow, the guests milled around outside the Ziegfeld Theater on Fifty-Fourth Street in Midtown Manhattan for the premiere of The Wolf of Wall Street. On the red carpet, McFarland and Aziz posed with DiCaprio, Margot Robbie, and Jonah Hill. McFarland was in his element, boasting about his gray Brioni suit on his Instagram account. Wearing a dark blue suit and maroon tie, Low couldn’t help but attend, despite his earlier efforts to keep out of the limelight. He had to be there to celebrate this extraordinary achievement.

  In just a few short years, Low had gone from being a low-tier Malaysian financier to effectively bankrolling one of the splashiest Hollywood films of the year—and one about a fraudster. Just as Belfort for a time had enjoyed the fruits of his scheme, Low couldn’t miss out on this evening. He wanted to share his success with those closest to him, and the business partners he yearned to impress. Low’s guest list included family members, his girlfriend Jesselynn Chuan Teik Ying (seated next to his mother), Jasmine Loo of 1MDB, Swizz Beatz, Khadem Al Qubaisi of IPIC, Steve Witkoff, and Martin Edelman.

  Low posed with the Red Granite founders on the red carpet, but he didn’t take part in the photos with the main cast. He was snapped with DiCaprio, though, milling around before the performance. The pair had remained close. A month earlier Low had attended the star’s thirty-ninth birthday party in TAO Downtown in New York’s Chelsea district. That night, McFarland had made Page Six of the New York Post for ordering bottle after bottle of champagne. Low’s parties, and DiCaprio’s attendance at them, were by now embedded in Hollywood lore, even getting a mention in a song on the soundtrack for the film 22 Jump Street. The party anthem, “Check My Steezo,” featured the lyrics:

  Jho Low! I see you Jho Low! / Got Leo at my party taking shots never solo / Grade-A chorizo followed by sea-bass Miso Miso, / Me so loco.…

  The Red Granite principals and Low had assiduously cultivated DiCaprio, whom they hoped would star in Papillon, or if not that, then another one of their upcoming movies. A few weeks after the Wolf of Wall Street premiere, Low, posing as Eric Tan, sent DiCaprio a $3.3 million painting by Pablo Picasso as a late birthday present. The oil painting—Nature Mo
rte au Crâne de Taureau—was accompanied with a handwritten note. “Dear Leonardo DiCaprio, Happy belated Birthday! This gift is for you,” it read. Then, Low told a Swiss gallery that was storing a $9.2 million Basquiat—a collage entitled Red Man One—to transfer ownership to DiCaprio. The order, made in a letter also signed by DiCaprio, indemnified the actor from “any liability whatsoever resulting directly or indirectly from these art-work.” The actor also got a photograph by Diane Arbus—cost $750,000—from Low.

  In private, DiCaprio was happy to accept these gifts. On the red carpet, he was in a more philosophical mood. Some critics of the film—including voting members of the Academy who heckled Scorsese at an official screening ahead of the Oscars—complained it glamorized Jordan Belfort’s fraud and was more likely to spawn financial malfeasance than serve as a cautionary tale. DiCaprio had carefully prepared his retort.

  “This is an indictment of all of Wall Street. But it’s an indictment about something that’s in our culture, this incessant need to consume and this incessant need to obtain more and more wealth with complete disregard for anyone except yourself,” he told one interviewer.

  Two days after the premiere of The Wolf of Wall Street, Rewcastle-Brown let rip in a post titled “Wall Street Greed / Malaysian Money—EXPOSE!” It was typical Rewcastle-Brown, a mix of speculation and reporting, spiced up with acerbic asides and tabloidesque headlines. The piece boiled down to asking one enormous question: Who had paid for the film? Skilled at rounding up interviews and photos available on the web, pointing out inconsistencies, Rewcastle-Brown noted how Riza and McFarland had suspiciously refused to detail Red Granite’s financing. Her piece linked to a story on a U.S. real estate website about Riza’s $33.5 million purchase of the Park Laurel apartment. Where was the money coming from?

  Perhaps Jho Low—whom Rewcastle-Brown described as a close friend of Rosmah and Riza—could have put up the money himself, she speculated. The little-known Malaysian financier was on the red carpet for the premiere, and seemed to be close to DiCaprio, attending his recent birthday event at TAO Downtown. Rewcastle-Brown’s piece, peppered with photos of Low—alongside Paris Hilton in Saint-Tropez, holding champagne in a nightclub, at the Wolf of Wall Street premiere—was the most intense scrutiny yet of his activities. She had a sizable following in Malaysia and was edging toward the truth. The post ended with an acute observation: