Thread by @dunkhippo33

Today's thread is a quick recap of the audiobook I listened to this week called Billion Dollar Whale.

This one was astonishing to listen to. It's not really a business book or a how-to book. It's much more akin to Bad Blood, the story about Theranos.

Read on >>

1) What is the book?

Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World

amazon.com/dp/B079XZFPKR

2) The tl;dr is that this is a story about a guy named Jho Low who is sought for by a variety of government authorities in relation to the 1MDB scandal. (en.wikipedia.org/wiki/Jho_Low)

3) In this audiobook, Jho Low grows up with upper middle class and upper class elites and eventually through massive networking is able to befriend the future PM of Malaysia Najib Razak

4) After Najib takes power, Malaysia spins up a Malaysian sovereign wealth fund called 1MDB and raises $1b+ from essentially the Malaysian people.

According to the audiobook, Jho Low takes (steals) $700m and transfers it into a variety of overseas shell accounts.

5) This is astonishing to me for a variety of reasons. For many funds -- such as a traditional VC fund -- you don't get all the money right away.

A $1B VC fund doesn't mean that $1b is sitting around in a bank acct. The $1B gets called over time.

https://twitter.com/dunkhippo33/status/1348718374696599555

6) But in this case, $700m goes missing right away. However, very few people have access to notice. And those that do are paid off.

In fact, later Najib Razak becomes the 1st PM of Malaysia to be convicted of corruption because of these kickbacks of hundreds of millions of $$.

7) It was not uncommon for Jho to spend millions in one night throwing lavish parties. It was through these parties, he was able to befriend famous people everywhere -- famous actors in Hollywood (like Leonardo DiCaprio) and business people. He also buddies up to Goldman Sachs.

8) In fact, 1MDB was the primary investor in the Wolf of Wall Street, which is one of the few investments that was done out of the fund (as opposed to just plain spending) (and that made money).

9) One of the most interesting things about this story is how large sums of money were moved around. A lot of it was moved through multiple banks literally worldwide.

10) Even though banks have a KYC process and can trace money, if you buddy up with the right ppl, KYC can be easy to pass. Moreover, if you set up enough accts and enough shell companies, following the money becomes so complex that no one bothers.

11) Eventually, though, sending money through banks started to become challenging, so a lot of the money was then moved through jewelry and art.

12) In jewelry and art, no one does KYC. And jewelry and art hold value, so it's easy to move money around.

(It made me think about the NFT market and what is propping that up...)

13) In addition, although $700m might sound like a lot, with all the ppl who needed paying off and the lavish parties, the initial stolen tranche actually didn't go far.

So, 1MDB raised more money from the people. (it's not like the people really had a say in this)

14) But when all was said in done, eventually there were so many people who knew what was going on that it got harder to get people to stay quiet even after paying ppl off. Things began to unravel at 1MDB and with Jho Low.

15) The Malaysian ppl and political opposition started demanding audits. And eventually Jho went into hiding, first getting a passport with St. Kitts and Nevins. (which allows you to go almost anywhere in the world without a visa and you can get this by making a small investment)

16) And these days, he's in hiding, supposedly somewhere in Macau and is protected by a Chinese gov official. He was never caught despite a variety of governments searching for him!

17) Lastly, the Malaysian government is still trying to recover the money (~$4.5B in total!)

It's crazy to me that $4.5B could be stolen from a fund in plain sight.