Jho says it ain’t so: Malaysian tycoon denies role in 1MDB ‘heist of the century’

Eric Ellis
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The saga of scandalized Malaysian sovereign wealth fund 1MDB has drawn in many high-profile figures from the country’s establishment. None more so than a flamboyant, Hong Kong-based tycoon. But the self-styled Jho Low denies all involvement in 1MDB. Now he’s ready to publicly defend himself – and point the finger of blame at others.

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Low Taek Jho’s high-rise lair in Hong Kong is the stuff of thrillers, appropriately enough for a young Penang-born tycoon cast by his countrymen as a mysterious villain whose shadowy dealings have exposed the secrets of Malaysia Inc.

The intrigues are felt the moment one steps inside the stylish foyer of Jynwel Capital, his family’s private equity investment house based in downtown Central. A receptionist purrs that “Mr Low is expecting you” as a wall magically slides aside to reveal a minimalist ante-room framed by a panorama of the city’s harbour and the promise of China beyond.

Once inside, the aperture silently glides shut behind. An immaculately dressed aide ushers the visitor to a single black leather armchair in the centre of the room. With the visitor seated, attention is diverted to a slick corporate video screening on a monitor emerging from a wall.

Low appears for the first time, starring in a tour d’horizon of his worldwide empire: Caribbean resorts, European fashion, Alaskan resources, Asian property, meetings with Gulf sheikhs, his philanthropic foundation with the UN. The aide reappears to serve coffee in exquisite porcelain. Of course, it’s exactly to taste.

The show over, another wall glides open and this time it’s Low in person, full of bonhomie and beckoning his visitor through another sliding wall.

With Malaysians from all sides urging his prosecution for alleged fraud and money laundering over his dealings with a scandalised sovereign fund, Jho Low, as he likes to be known, might be forgiven for wanting some extra protection after what he calls the most difficult time of his 33-year life.

However, low in the flesh doesn’t quite fit his detractors’ type. Young certainly, even geekily so, he is anxious to get his views across. At times, during a two-hour conversation, it almost seems the experience is cathartic.

“I’m just constantly being gunned down,” Low laments of the furore that has engulfed the government-owned fund, 1Malaysia Development Berhad (1MDB). “I’m very frustrated, but I haven’t said anything.”

In fact, since Euromoney sat down with him on March 6, Low has broken his silence in a series of carefully orchestrated interviews with Honk Kong-based newspaper South China Morning Post and television news channel CNBC.

Low is fighting back. “I feel it’s just gotten to a point where it’s just ridiculous,” he tells Euromoney. “There are all these guys with their arrows out on me. There seems to be a very, very coordinated attempt to say: ‘This young Chinaman, it’s all his fault, he caused the failure of 1MDB and apparently he advised the PM and everything is screwed up now’.”

Whether Low should bear the blame for 1MDB being ‘screwed up’ is a much-discussed point in Malaysia. But few disagree that 1MDB is in deep strife, becoming a financial scandal fuelled by a drip feed of embarrassing leaks that threatens Malaysia’s creditworthiness and the continued rule of prime minister Najib Razak, who as finance minister and 1MDB chairman is ultimately responsible for the heavily indebted fund.

To hear Malaysians tell it, Low got rich at their expense and spent their money on Cristal champagne and partying with the likes of Paris Hilton. But to hear Low’s version of events, he has been demonized because he is 1) young, 2) made a lot of money quickly and 3) – and perhaps most provocative of all given modern Malaysia’s sensitive racial cocktail – is an ethnic Chinese Malaysian dabbling in the preserve of the politically connected Malay business elite.

1MDB began its controversial life in 2009 after the federal finance ministry took over the Terengganu Investment Authority (TIA), a provincial sovereign fund that Low, then a green 20-something MBA graduate from Wharton, had set up with the royal family to channel royalties from the oil-rich Terengganu state in peninsular Malaysia’s east.

Malaysia already had a state investment house – Khazanah Nasional – created in the booming Mahathir Mohamad era that gave him a grip over the country’s key assets. But this new house would be different, claimed its government promoters, more dynamic – a brand-new national fund to mark a brand-new era – the Najib Razak era. It was renamed for his ‘One Malaysia’ initiative, which was conceived as a distinct break with Mahathir’s lingering legacy over the country. It also suited that a key source of cash was in federal hands, and not in states like Terengganu, which had been flirting with the opposition.

But 1MDB started out with problems. There was holdover debt, while provincial jealousies festered over Kuala Lumpur’s seizure of TIA.

The assets injected into the new entity were unremarkable; politically fraught land holdings at Kuala Lumpur’s fringes that yielded nothing, and a handful of ageing power stations in need of upgrading.

But actual cashflow has been rare, a problem because 1MDB has quickly accumulated debt now calculated at around $12 billion, some of it from a $3 billion state-guaranteed 2013 bond issued on very generous terms, led by Goldman Sachs. The US investment bank is believed to have made as much as $300 million in fees from that deal alone, although it disputes this figure.