A (3:18)

Powerful. And I guess one of the interesting questions is, um, is he. Slash, was he ever incredibly rich? Is he, slash, was he a billionaire? Because I wrote about him once and I called him a fake billionaire. I called him like a quacks, like a duck billionaire. Someone who spends lots of money and looks like a billionaire, but actually isn't. And his lawyers then wrote me a wonderful, nasty gram, which I still have somewhere, basically saying, no, no, no, he's a genuine billionaire. So which.

B (3:55)

Well, he was definitely a billionaire. I'll tell you a funny story in a second. But, I mean, there's a philosophical question. If you steal all the money, are you a billionaire? Right. He actually met a reporter of ours in 2014, and his banker from a Swiss private bank called BSI. Now, Jho Low took over this bank. He had almost everyone there working for him. It subsequently has been shuttered by Swiss authorities. He had that banker meet our reporter in the lobby of the Wall Street Journal's offices on Sixth Avenue. And he wouldn't come inside, and he had a bit of paper that said, $1.7 billion. This was what Jho Low was worth. Because at that time, they were trying to create this fake narrative. He was trying to buy Reebok from Adidas, and they were trying to create this fake narrative that he really was a billionaire. Because all these stories in the Malaysian media were starting to percolate that where the hell did this guy get his money from? His family were probably worth millions, tens of millions. From Penang in Malaysia. They had a garment company. They weren't poor. He went to Haro. But he certainly didn't have billions of dollars.

C (4:57)

Can you. Can you just back up a little bit and maybe tell listeners sort of how he pulled off that first? I mean, I call them heists. I mean, he basically.

A (5:05)

You call them heists?

C (5:06)

I call them heists.

A (5:07)

We all call them heists.

C (5:08)

And maybe just explain to readers sort.

A (5:10)

Of like what he did. This is the most amazing robbery. Like, you know, we talk about, like, bank robbers stealing millions of dollars or sometimes some great drain robbery, which is tens of millions. These are robberies of billions. And he does more than one of them.

B (5:26)

Well, we make the comparison in the book to Bernie Madoff, right? Where it took him 40 years of a pyramid scheme to lose $18 billion in investor money Jho Low took in 2009. We break it into the three heists and the first one was in 2009, he, he took $700 million overnight. So he had liquid cash. And that's why he became so important to the nightclub world where he spent a lot of it. But just to back up on how he did it, so I started to say earlier he put himself between powerful people. He got to know a guy who's still ambassador to the US for the United Arab Emirates called Yusuf Al Tayba. And that guy connected him to a lot of powerful people in the uae, the Persian Gulf state. That state had an investment fund called Mubadala which was a sovereign wealth fund, but it didn't invest sovereign wealth. It raised money on markets. And obviously interest rates were very low after the global financial crisis. And so it was very easy for these funds to go out and raise billions of dollars overnight. Jho Low persuaded the Prime Minister of Malaysia to let him run a similar fund in Malaysia. From behind the scenes, he got to know this Goldman Sachs banker called Tim Leissner, who was a partner and became chairman of Southeast Asia. And this fund, 1mdb, went onto public markets with Goldman's help and raised $6.5 billion in bonds. And then Jho Low just stole it. And the way he did that was he had partners in sovereign wealth funds in the Middle East, a fund called IPIC run by a guy called Kadim Al Kabezi. And what Kadim Al Qabaizi did was he set up a sovereign wealth fund, a fake sovereign wealth fund. He ran a real one and he set up a fake one.

A (7:04)

With the same name.

B (7:05)

With the same name with a limited on the end. The real one didn't have a limited on the end. And then they put the set up a bank account in the BVI and they moved $1.4 billion into that divvied up. And that's how it worked.

D (7:19)

And in terms of how this money was used, it was certainly used by Jho Low to spend a lot of money on gaining celebrity friends and, and that kind of thing. But it was also used by the Malaysian state and. Or specifically by the leader of the Malaysian state.

B (7:32)

Exactly. So the way he had cover to run that fund from behind the scenes was it was a political slush fund for Najib Razak who lost power in May and is now arrested for all of this. So that's why he was able to do it on that side. And then he had his friends on the other side. But the amazing thing in this story is that the financial system allowed it to happen. Goldman didn't ask. For example, the One MDB Fund asked one $3 billion bond to be deposited in a Swiss bank account. Why would a sovereign wealth fund have a Swiss bank account? Makes no sense. There was internal dissension about this in Goldman. Goldman's own lawyer said why are you putting this into a Swiss bank account? But the reason that they didn't do anything about it was because they made $600 million or 10% on these deals which also made no sense. It was one of the biggest paydays in the world.

C (8:22)

For Goldman it seems like it was the post financial crisis just hunger to get out into emerging markets, find money wherever they could, sort of. What was the strategy? Monetizing the state.

B (8:36)

We call that bilking the state in our book.

A (8:38)

So one of the things which confuses me about this is that there's this term sovereign wealth fund which you know, we are all used to in say the Saudi context or the Singaporean context or the Norwegian context which is basically where a country has a bunch of wealth and then goes out and invests it. And now there's this other weird creature which makes much less sense where a country doesn't have a lot of wealth but borrows a bunch of money on the capital markets and then goes out and invests it. And it's like this weird long short debt for equity. Something something play. Is there any good reason for these things to even exist?

B (9:18)

I mean I don't think so. I mean Mubadala which was the model for one mdb. So Jho Low got to know the head of Mubadala through Yusuf Olla Taiba, the ambassador. They said well the rationale for it was you could leverage cheap money and you could help a country develop. But in one MDB's case they used the money to just buy some pre existing coal fired power plants. So it wasn't exactly a thing that was going to vault Malaysia into the 21st century.

D (9:46)

But I think this is an instance where this is very much something that would happen post financial crisis because you had such incredibly low rates. So you have investors who are so hungry for yield that if you're going to offer them this to us now it looks insane that you would buy these bonds.

A (10:05)

Well at the time I don't even think it's insane to buy into bonds. These are sovereign bonds. You buy the sovereign bonds or they all have sovereign guarantees like the people buying the bonds. It makes Perfect sense. The thing which doesn't make any sense to me is the sovereign itself borrowing money not to, you know, spend on the state, but just to like buy stocks and bonds assets around the world.

D (10:27)

Isn't the point though, that partly when you have some of these, they're actually supposed to be borrowing against other energy assets that they could develop, and then they're supposed to be using that money to invest in things like green energy or somewhat it's a little different than a normal sovereign wealth on which is growing to then be able to support the state long term. And this is more the idea of we are just taking money from foreign investors and using it to invest in industries in our state. In that sense, it's not actually that different from just regular sovereign bond issuance.

B (10:58)

I mean, I think there could be an argument to do it if you had a business plan in place or executives that had ever done anything like this. I mean, there was the president of Goldman's Asia business, David Ryan. He said that he in internal meetings that he was concerned with this because the executives had never run a fund and they had no investment. At one point in the board minutes, they're talking about what are they going to invest in? And they say, let's buy an island off of Peninsula Malaysia and we can turn it into a tourist spot. I mean, this is the kind of things they're doing. I think the question is it's an issue about kleptocracies, right? There are sovereign wealth funds and there are sovereign wealth funds. You mentioned earlier, the Norway oil fund. Right. Or there's CalPERS in California. Then there's these funds that are just sort of set up to be huge pots of money that can be misused. And I think some of those Middle Eastern funds fall into that as well. And after the crisis, it wasn't just one mdb. I mean, Morgan Stanley, Goldman and others were making tons of money advising and helping ipic, which was the fund that JHO Low interacted with to steal money. IPIC were doing things like buying Daimler Benzion, buying Richard Branson's space company after the crisis. But they weren't doing it with their own money either. They were doing it with leverage plays, what Wall street was helping them with. And a lot of that money was also lost.

A (12:20)

And remember that the guy who basically created this whole scheme along with Tim Lysner at Goldman Sachs was the same guy who built the Libyans out of like, what was it, $1.5 billion?

B (12:34)

Well, we should be careful to not say that Tim Leistner created the scheme. I think that important. I mean Joe Low is the only person in this story who has the 360 degree view of what's going on. Leisner's really interesting. So we should talk a little bit about what's going with Goldman.

A (12:48)

Right, let's go back very quickly since we're just quickly on the subject of sovereign finance here. So let's start with what did Goldman do in Libya?

B (12:57)

Okay, well the banker who structured these bonds is a guy called Andrea Vela who's currently the co head of of investment banking for Goldman in Asia.

A (13:08)

He's still there.

B (13:09)

He's still there. Tim Leissner was the relationship banker, the guy on the ground who was very close to Jho Low and wasn't really the structuring whiz that was Vella and they teamed up together to make this happen. Vella had a history of doing deals with big sovereign wealth funds that didn't turn out so great for Goldman, including with the Libyan Investment Authority in 2008. They saw the financial crisis, they saw the Libyan Authority, they saw how the Middle Eastern funds would be buying up big stakes in US banks after the financial crisis and they wanted to do the same. So Goldman helped the Libyan Investment Authority do a leverage play for Citibank shares which ended up in a $1 billion loss for the authority and lawsuit which Goldman actually won because the Libyan Investment Authority claimed that they hadn't really understood the risks in the trade. It was one of these collared trade had huge downside risks for them.

A (14:05)

In any case, Goldman did get large fees from this deal. Yes, and then the guy who structured the deal in Libya then gets on a plane, flies to Hong Kong and then structures another deal for some obscure Malaysian state. Was it Sarawak?

B (14:21)

Yes, exactly.

A (14:22)

And then after having structured the Sarawak deal, he then goes on and structures what are ultimately pretty plain vanilla bonds for one mdb.

B (14:33)

Yes. I mean the way that Goldman defends itself in this is to say, well, this was a huge risk for them. They used a desk called the Forgotten what it's called. It was a proprietary trading desk that they used to buy the bonds. So they say they took on huge risk. But the thing that made a few things make no sense. Why was a sovereign wealth fund in Malaysia doing a private placement when it could have got the money much more cheaply on public markets? Well, sorry, over the public placement, why did they need the money so quickly and so secretly? You couldn't even get hold of the documents for this bond. When we started Reporting on it, you had to really go through sources just to get a prospectus. The prospectus said things like we've got no idea what they're going to do with the money, we don't know what the business plan is. And then stuff like the money getting put into Swiss bank accounts, these huge red flags. Goldman also had pre sold a bunch of it to funds around the world because the rates were so, the yields were so good. So the idea they were taking on huge risk also didn't really hold up.

D (15:30)

Right. Because they had already pre sold maybe one thing, if they were buying all these bonds and they had no, there was no certainty that they'd be able to place them, which is seemingly what they were suggesting. But then that's just not true. Yeah, I mean, appears to be not true.

A (15:43)

They were sovereign bonds, right? They were sitting on the sovereign yield curve. They were sovereign, they had a sovereign guarantee and none of them have defaulted, right?

B (15:50)

No. Goldman made its money because it got them for like, you know, 92 on 100. Right. And then they sold them. That was, that was, that was how it got. So they say it was. These were not fees, these were profits.

A (16:01)

Important difference. Okay, so let's widen this out a bit because what we have is this culture where banks and countries and individuals like Jho Low can conspire effectively to keep or to steal money, to siphon huge amounts of money from, for themselves. I mean, in the Middle east you kind of don't need to steal the money because there really is no distinction between personal money and state money. In, in Malaysia they do have that distinction. So if you take it for yourself then you are stealing but talk a little bit about this kind of version of capitalism.

B (16:49)

So I think that's a fascinating point. There's this great email between Jho Low and some of the scamsters. There's too many to mention in a 40 minute podcast, but they talk about how Jho Low's gonna get the Prime Minister of Malaysia to write off $500 million. And this gets to the question of did Jho Low ever have an endgame? Right. And he seems to just steal through the first heist, second heist, third heist, and never think about how he was going to fill the hole. And I think the answer why he didn't worry about it was this was sovereign wealth in a kleptocratic state. And that he wouldn't really have to worry about. It's not like a bank heist where, sorry, a pyramid scheme where you have to keep it going. This was money that he could just get the Prime Minister to write off. And I think what it says about capitalism today is that there are so many states that are basically mafia like organizations and they still have the access to huge amounts of capital. And they are enabled by Western financial institutions, not just banks. Auditors in this story, auditors, lawyers. Jho Low moved tons of money via Sherman and Sterling here in New York, using these arcane structures to move money around. Auditors were Deloitte's head of its Malaysian practice, offered to deal with the media on behalf of the fund, the Swiss banks that basically became Jho Low's plaything.

A (18:34)

And don't forget Christie's auction house.

B (18:37)

Right, the auction house. I mean, the auction houses also wouldn't have known where the money was stolen.

A (18:43)

But what happened? But I mean, like, so Joe Low bought a bunch of very expensive art at Christie's, including famously a Jean Charles Basquiat called Dust Heads. And as you write in the book, one of the reasons he did that, I mean, partly it was because he wanted to show off how much money he had, because that seemed to be like this compulsion he constantly had. But another reason was that when he found himself in a bit of a sticky situation and a bunch of banks wouldn't release his money and he needed some liquidity in a rush, he could just take it straight back to Christie's. He didn't sell it for as much as he bought it for, but he didn't care. Like Suddenly he had $30 million of liquid wealth from Christie's Way.

C (19:26)

I was really disturbed by how the global financial system and the institutions of the system help people. Actors like Jho Low, bad actors, steal money and move money around the world and evade taxes and everything. But the bits about the art market are just so delicious and appalling. Just the way people like Jho Low, and maybe not outright thieves, buy these pieces of art for ridiculously inflated prices. And then you describe this basic putting them in storage basically in Switzerland in these temperature controlled units and just beautiful pieces of art.

B (20:02)

You said, like the Geneva Freeport has better art than the Prado.

C (20:07)

I mean, and they're just sitting there, you know, just waiting for the day they need to be, you know, sold.

B (20:11)

Again, it's a metaphor for lots of things.

C (20:14)

Oh yeah, I mean, it was just.

B (20:15)

I should say that he got into Basquiat, probably not because of money laundering. It's because he was very close to a guy called Swizz Beats, who's a hip hop producer, who's Alicia Keys. Husband and Swizz Beats was a big fan and collector of Basquiat paintings. So Jolo was kind of tutored by him, I think, and started to wear Basquiat baseball caps and this kind of thing.

C (20:35)

But then, man, he puts the Basquiat in storage. It's just sitting there.

A (20:39)

Even though he had all of these, like crazy.

D (20:41)

He had lots of wall space.

A (20:43)

Yeah, exactly. He had wall space in Time Warner Center. Time Warner Center.

C (20:47)

And that's the other piece of it, right.

A (20:49)

He. You put a bid in for a house in Los Angeles but didn't buy it.

B (20:53)

Well, there was a crazy part of the book where he is. So he's become close to Leonardo DiCaprio because he's off, which we haven't talked about yet. After the theft, he offered DiCaprio 400 million in film financing at a time when Warner Brothers were pulling the plug on the Wolf of Wall Street. So he goes on to finance that with the money from this, from this heist. And we got hold of some emails in which Leonardo DiCaprio's property broker is used to show a guy called Joey McFarland, who was running this film company for Jho Low around this. I think it was a. They were asking for 170 million or something like that. It was a play, a place in, In Los Angeles.

C (21:32)

It's a compound, right?

B (21:33)

Yeah, but they never, they, they never completed that purchase. But I think he was. I think that was going to be his sort of ultimate purchase.

A (21:40)

But he did spend his 50 million on a yacht.

B (21:43)

He did. And that was, that was good for him. That's probably peak.

D (21:47)

What I do think is interesting, if you're looking here, whether you're talking about real estate, whether you're talking about jewelry, whether you're talking about art, whether you're talking about film financing, whether you're talking about fees for issuing bonds, it appears that if the money is coming in, it doesn't appear to be in anyone's interest to figure out where it's coming from.

B (22:03)

That's 100%, right? There's no, there's no. I mean, if you or I tried to move $10,000 across international borders, we're going to get asked a lot of questions. Right.

C (22:12)

Seems that I literally can't pay for a can of soda with a $50 bill in this city. But he stole billions of dollars and no one asked any questions.

B (22:20)

Well, they were moving. They were moving hundreds of millions. And there's a great part where Otaiba, I mentioned, is the ambassador, the UAE ambassador to Washington. He is discussing with his business partner on email about Jho Low, and his business partner is saying, well, look, the banks have been a bit, sort of are asking. Jho Low's told me that the banks are starting to ask questions about his. Hundreds of. Hundreds of millions of dollars are getting moved. But it never. In all the research we did for this book over three years, we find one instance where somebody said, well, we're not. We're not allowing that money to move because we've got no idea. There's this great transcript in the. So the Department of Justice is investigating all of this now. Right. And in a classic case of, well.

A (23:00)

Now that the horse is bolted, let's go, like, lock that stable door.

B (23:04)

I don't know. I'm going to give the doj. They're doing something in this case. In the summer of 2016, they filed these asset forfeiture lawsuits, which are attempts to get the assets back.

A (23:17)

And they got the yacht back. Right. That's now been seized.

B (23:20)

It's been seized by the Malaysians. Yes, but none of it has. Jho Low is actually. He's on the run, and he's actually using lawyers to challenge this. But they're trying to claw back the assets. And I don't know if it's gonna be successful, but that's their first step. And then there's gonna be a criminal investigation. Well, there is a criminal investigation.

A (23:39)

Can I just clear one thing up? When you're saying that Joe Lowe is using lawyers and he is sending out lots of. He's still, like, lawyered up.

C (23:46)

He's sending letters to Tom.

A (23:47)

He's sending letters to Tom.

B (23:48)

Not. Not directly to me, but to our. To our. His lawyers are sending letters to our lawyers.

A (23:53)

And his people are talking to your.

B (23:54)

People and to independent bookstores around the world.

A (23:56)

Um, but the. But just to clear this one thing up on his legal team, does his legal team include Chris Christie?

B (24:04)

It does. Chris. Chris. Chris Christie is representing Jho Low in jholo in Jho Low's attempts to argue against the assets. He is.

A (24:19)

Emily. Emily cannot believe this.

C (24:22)

Are you serious? Chris Christie represents.

B (24:24)

It's not in the book, but we've reported it in the Wall Street Journal a couple of weeks ago.

C (24:28)

Yeah, I think this has not been reported widely enough. This is astonishing.

B (24:33)

Nick Carraway says of Gatsby and the Great Gatsby. He's the most optimistic person that he's ever encountered, or paraphrasing, I think that's Jho Low. Right. Jholo in 2015.

C (24:44)

Chris Christie.

B (24:47)

We reported in the Journal, you know that in 2015 about Jho Low for the first time and I think most people would give up. Right. Jho Low is living in China in exile from Malaysia. Obviously the Malaysian government has changed. His protector has fallen and is now arrested. He's in China where he's got some modicum of protection from the government there. It's a long story but after all this came out, he did some seemingly corrupt deals with Chinese state owned companies, infrastructure deals to try to fill the hole and get more money. He's there. He can't access the international financial system because his name would be on all kinds of compliance lists. Now he was using a Thai friend of his called Feng Phiyan Lau Mongnud, which was a friend of his from Haro to pay shillings, the UK lawyers or the UK reputation firm to go after a book to send legal letters all around the world to try to stop publishers from. It's not widely available in the uk. I don't think it's available at all in the UK because of this.

A (25:44)

And you haven't managed to sell the foreign rights to like anyone, right?

B (25:48)

No, that's not right. This book has gone gangbusters in Malaysia because it's become part of their.

A (25:53)

But that's, that's the US edition of the book.

B (25:55)

No, there is an export trade paperback.

A (25:57)

Right, but it's exported from the us.

B (26:01)

Correct.

D (26:01)

So one thing we were, we were talking about this a little earlier and I do think is interesting and maybe a possible upside is saying that this is so popular in Malaysia and actually is seeing, seeing what happened after this scandal came out in Malaysia. The fact that Naja Brzek actually was pushed out of power.

B (26:19)

Yeah, well, I mean, you know, to be honest, we wrote the book like he was going to stay in power. You're right. I mean we had to hassle. I learned in the process that there is a real deadline for authors and there's a fake deadline for authors. You know, the fake one was a long time before the real one but we were allowed to go right up against the real one because this story is playing out in real time. I mean, not only is what's going to happen to Jho Low, what's going to happen in the Goldman case? And like you said, what's happening in Malaysia, the people of Malaysia are more sophisticated than perhaps people gave them credit for. People were saying, oh, nobody understands this one. Mdb, what's a sovereign wealth fund? You know, they don't care about this, they just care about inflation. Cost of food, all of this. That's not true. The Wall Street Journal became a household name in Malaysia because of this. I don't think we sold many more subscriptions because of it, but people were reading it, right? It was getting stuff we would write would get taken and reposted on local news sites. So people knew about this. And that's why he lost the elections in May. And it's had huge repercussions because he was. Najiya was not working with the Department of Justice. So the Department of Justice was not able to move ahead very fast. And there's also. Singapore and Switzerland are looking into all of this. And now that he's fallen, there's all this cooperation and it's moving ahead much faster.

D (27:35)

And I think it's interesting if you're looking in a global context as well, because it's easy when you have these type of scandals come out to be like, oh, these places are so corrupt. But I think what is different, it's what we're seeing now in Malaysia, what we saw with Zuma getting pushed out in South Africa, what we've seen with the Lava Jato investigations in Brazil is that people care. People are actually pushing, people are going to jail. People are having massive fines. People are getting pushed out of power. And I actually think in a way this is a good thing.

B (28:02)

Totally agree.

A (28:02)

If only there was a kleptocratic administration which needed pushing out.

C (28:07)

I was just going to make that point. Reading the book, reading about Malaysia and Najib just really drove home for me how lucky we have been in the United States in terms of not having a kleptocrat in charge and how worrying it is that when I read about Najib and his wife who collected what, like hundreds of millions of dollars in jewelry from Jho Low, thinking like Donald, the whole time I'm thinking Donald Trump would do this. Like, the only reason he's not doing it is we have slightly more checks and balances. Yes.

B (28:38)

Not slightly more. I mean, I think Americans should be proud of what's going on here. Not only do you have, like, when the stories about Najib first came out and he was going to be arrested, he kicked out his attorney general because. Yes. I mean, you should mention that, but ours is holding. No. Well, I mean, and there's actually a link to the billion dollar wealth story because Jho Low tried. Jho Low hired Eliot Broidy, the Trump associate, and offered him $75 million to try to stop the. It's in the book. But it's only sort of right at the end. And we didn't. It was close to publication to lobby to get Trump to stop the DOJ investigations into all of this. And in December of last year, Jeff Sessions gave a speech, sort of out of nowhere, talking about one MDB and saying, this is the biggest, one of the biggest financial heists ever. And it was read and seen as an attempt to ward off people who are trying to.

A (29:38)

All the swamp types, basically giving a speech again to an audience of one in the White House saying, keep your hands off my MDB investigation.

B (29:45)

I think so.

C (29:46)

Holding the line, we have the checks, thank God.

B (29:48)

And you know, the US Is.

A (29:50)

Oh, my God. Yeah, the check is Jeff Sessions.

C (29:53)

I know. And like Gary Cohen, as we said, Gary Cohen from Goldman Sachs, who was then in the Trump administration, in this book, comes across as pretty dodgy, but lately has been painted as the hero of the resistance for stealing documents off Donald Trump's desk, allegedly, according to Bob Woodward. But this book brings home a reminder of, like, where Cohen really came from.

B (30:17)

Well, yeah, I mean, there is. Cohen was a huge defender of the business internally at Goldman. I guess that's what you're getting at. That's what I'm getting, yeah. Yeah. He. When people inside Goldman said, well, not people. The president of the Asian business who later left because of this, said, look, we probably shouldn't be doing this and charging so much. I mean, ripping off clients, red flags. Cohen was a big defender of it because it fit into this monetizing the state, this doing deals with sovereign wealth funds. And there was a guy who's now, I think, a British parliamentarian called George Jabbour, who we mentioned in the book, who had worked at Goldman on the Libya deal. And we quote him in the book as saying, look, the reason they like doing these deals is because if you're going to do derivative trades, you don't want them, the other side of the trade, understanding it too well. Right. Otherwise you don't make all the money you want to make. So that's, I think, the context of it. But yeah, I mean, it doesn't look great for Goldman. I mean, whether it's missing red. If it's about missing red flags, they're going to get fined under the Bank Secrecy Act. And that could be like, that's how JP Morgan got fined in the Bernie Madoff case. And that could be a couple of billion dollars that. You know, there was a book last year, the Chicken Shit Club, about how that kind of stuff doesn't work because it's just an operating cost for the banks. Right. So what we're really looking at now is, and I think will help the book, because it's going to be ongoing, is what's going to happen in the criminal case with Tim Leissner, the banker who was very close to Jho Low. He, after leaving Goldman in 2016, did some pretty interesting stuff, including marrying Kimora Lee Simmons. He married Kimora Lee Simmons, but he also. He.

C (31:53)

Wait, he proposed to her on a plane, having just met her hours before. Do I have that story correct?

B (31:58)

You've read the book very closely.

C (32:00)

That was an interesting part. I was like, what is happening right now?

B (32:03)

I feel like this. On every page, there's something like that. This is not like how it really should work in normal life. Right.

C (32:09)

When Jho Low. One more thing. I swear we can get back to finance, but Jho Low, at one point starts dating Miranda Kerr, who's like a supermodel. And he also becomes engaged to her as well.

D (32:20)

Right.

B (32:20)

And it was just like, no, they don't become engaged.

A (32:23)

They don't become engaged to date.

B (32:24)

They do.

A (32:25)

D $8 million worth of diamonds, which she then has to, like, give up to the department.

B (32:29)

Voluntarily gave up.

D (32:30)

She wanted funding for her skincare company.

B (32:33)

Well, they met. I actually, I actually, obviously I'm not from New York, so I went down to a new wonjo restaurant in Koreatown where they met and I. I had lunch there the other day. It's not. It's kind of nice food, but it's not that posh.

C (32:43)

No.

A (32:44)

So. So we just have to hope that Evan Spiegel, the founder and CEO of.

C (32:49)

Thank you for adding that. Yes, that was my thought.

A (32:52)

Doesn't wind up, you know, losing all of his money because he is now the person funding the Miranda Kerr lifestyle. They are married, they have kids.

C (32:59)

Amazing.

B (33:00)

But I just wanted to get back to the Goldman. The Goldman angle.

A (33:03)

Okay, let's finish with Goldman.

B (33:05)

So. So Leissner, after leaving the bank, helped Jho Low buy a bank in Mauritius along with the Thai. Along with the Thai guy I mentioned earlier, who was the frontman to pay the lawyers, who, who recently we've written about. So the. There's a lot of unanswered questions about what exactly was the relationship between Leicester and Joel and what was he doing and what did he know? And that's going to play out in the American court system.

C (33:29)

So a banker might go to jail.

B (33:31)

Maybe, maybe, maybe, maybe. That's. With a rising question.

A (33:37)

You know, I really would love to spend this entire episode just Talking about the complete crazy that is one MDB and JHO low. But there is also some complete crazy going on which affects real people who aren't Malaysian taxpayers, but everyone, which is we are now in a fully fledged trade war. And I feel like no one is paying enough attention to this that China exports about $500 billion a year of stuff to America and now fully half of that stuff is being hit by American tariffs at 10%. And then the minute that the Christmas shopping season is over on the 1st of January, those tariffs are meant to go up to 25% and the entire global supply chains, you know, are going to come across and I feel like, whoa. And everyone's like, oh look, the stock market is hitting new highs. Doesn't matter, no big deal. Am I, am I missing something or is this not actually like a big deal?

D (34:42)

I think it's important to think about when you're talking about the stock market, you're talking about the US equity market where right now we still have such incredibly robust corporate earnings. We have so many good signals coming out of the US you have such inflows of capital coming in to the U.S. so I think that's part of the reason one, why you're not seeing quite the impact on the U.S. stock market. Also in terms of how the stock market immediately reacted partly was because they had actually a lot of people thought that this was going to be more extreme, that tariffs were going to come into effect earlier. So that's why.

A (35:14)

But it's a big deal.

D (35:15)

It is a big deal. No, I mean, I think long term, of course it's a big deal. Even medium term, it's a big deal. The problem is that right now, not the problem, but the reason you're not seeing more of an impact in the US is just because right now the US is like the only game in town.

A (35:30)

So where are we seeing an impact if anyway? Because I spent a bunch of time on, on a sort of my fact set terminal this week looking at various.

C (35:42)

You figured out how to use it?

A (35:43)

I'm still working out how to use it. I'm using the help function a lot, trying to work out, trying to find an indicator, trying to find a market somewhere on the planet that I could point to and say, look, this has gone down and that shows how important the trade deal is and I basically failed.

D (36:01)

Well, durable goods orders were down and if you look, no, I mean that's, it's not.

A (36:04)

Emily's like is now officially fallen asleep.

D (36:08)

Just say, hey, look, we talked about celebrities.

A (36:12)

So it's like, look at the Baltic dry index.

D (36:15)

But. But if you are looking at what we've seen in the Chinese stock stock market, if you are looking at what we're seeing in the yuan, you are definitely seeing an impact of this. It's just going to take a little while for this to fully feed down into US Prices. And then at the same time, we have inflation for other reasons, which makes it a little bit complicated as well. But I would say, yes, we're certainly seeing this in other markets.

A (36:36)

Yeah. And one thing we should say about the yuan is that if you have a Chinese currency which is 8 to 10% weaker on the year, and you slap a 10% tariff on Chinese goods which stay constant in local currency terms, then the amount the importers pay actually remains more or less constant.

D (36:58)

Yeah, it's still. It's a little complicated. It's true to a certain extent. I mean, I think that a lot of people think they have allowed a little bit of devaluation, but they need to keep. They can't allow a tremendous amount of devaluation when people think like, oh, they're just gonna, you know, massively cut the value of the want to help exports. That doesn't make any sense for the medium term. Does it make any sense in terms of what China is trying to do now with their economy?

A (37:21)

So we don't need to worry about the trade war becoming a currency war?

D (37:24)

No, almost certainly they're not going to massively start selling Treasuries. That also makes absolutely no sense.

A (37:29)

But that's. That's a different question.

D (37:31)

It is, yeah. I'm saying those are the two things you hear all the time, and neither of those make a lot of sense. What you're probably going to see is China playing the long game and saying, look, a, we're not going to try to do much of anything before the midterms, because we know Trump's doing a lot of this simply to try to gin up support before the midterms. So he's probably gonna be in a better negotiating position post the midterms. And I think right now they're just like, look, this guy's gonna be out of office eventually. So I think that they're gonna.

B (37:56)

Sorry, do you buy that China's got a lot more to lose than the US has to lose because it exports more than.

A (38:03)

Yeah, the U.S. exports like $100 billion.

D (38:05)

Well, it's not even just that. It's that if you're talking about the state of the Chinese economy, they're, they've been trying to pull back in terms of leverage in, in the, their entire economy and they've had to actually kind of stop doing that because.

A (38:18)

Stop doing what?

D (38:20)

Of reducing credit, reducing debt in the system and making debt harder to access because you've seen slower growth because of tariffs. And so they need to offset that. So now this is actually really affecting their economic policy.

A (38:31)

So basically the, the, the big problem that people worry about with non performing loans in China, they were trying to deal with that problem, but now they can't deal with that problem anymore because they have to keep the liquidity coming because they're facing all of these tariffs.

C (38:46)

I just called my friend Mark at Bloomberg to talk about China because it's complicated and so I wanted someone to easily explain it to me so I don't have to read a bunch of stuff.

A (38:56)

What did Market Bloomberg say?

C (38:57)

He said a few things, but one of the more interesting things he told me he read Bob Woodward's book and I didn't. But apparently in Bob Woodward's book, Trump is reading some document about trade and he writes in all caps on the document, trade is bad.

A (39:13)

This is the official policy of the.

C (39:16)

President of the United States. I mean, I think that sums up the reason A, I was having trouble understanding what's going on with the US China trade war. Because at the bottom of it is this one man who doesn't understand what trade is, who just de facto thinks it's bad, enacting a truly dumb policy that's having global implications and disrupting geopolitics in this like way that no one really understands what's gonna happen. So far nothing is happening, but maybe things are happening.

A (39:43)

But the other thing is that when Trump writes trade is bad in capital, let's speech, he's not talking about the Chinese trade deficit, he's talking about trade globally. And so he is talking about Canada. Like, what people are forgetting is we are in the middle of a really important negotiation with Canada right now to try and keep NAFTA alive. And the general overriding principle that the White House brings to these negotiations is trade is bad. And we have never had a trade negotiation where one side believes that.

C (40:18)

And let's just step back and acknowledge to listeners that no one agrees with him except maybe Peter Navarro and his and his base trade is good. We're all benefiting from trade. It's okay to have a deficit with China if they make cheap stuff. We buy the cheap stuff.

B (40:34)

We love the, I love the way that he sort of makes it difficult to trade but then he has to pay off the soybean farmers in the US because they.

A (40:42)

The problem here is that Donald Trump, for all that he went to Jho Low's alma mater, Wharton define went to, has utterly failed to turn up to the class where they taught Ricardo's principle of comparative advantage. And if he did turn up to that class, he certainly didn't understand it. And that's really depressing because you kind of need to understand that in order to be able to do trade negotiation. But more to the point, the American public never went to that class either. And so what he's doing is he's abusing the ignorance of Americans when it comes to relatively unintuitive concepts.

C (41:24)

It's dumb and dumber because when people.

D (41:26)

Hear that we have a deficit, they think, oh well, a deficit, that must be a bad thing. Nobody talks about the capital account surplus.

B (41:33)

Jolo also didn't go to that class. He, he spent the whole time networking and he actually wrote a Wharton newspaper article where he stole, he was stealing stuff from brokerage, brokerages research and just passing it off as himself. That's what he did when he was there.

D (41:49)

Can I just say, if you've ever had to read a lot of those brokerage reports, you're like, if you're gonna.

A (41:53)

Steal, can you steal something which is readable?

B (41:57)

Well, he also stole one which was about Enron being a great company just before Enron collapsed.

C (42:02)

And the other thing that Mark told me, which maybe Tom and Anna you can address, is that Trump is late to the game because China is transitioning to more consumer economy.

D (42:13)

No, that's what I was trying to kind of say in terms of their economic policy in relation to devaluing their currency, that they've been shifting more like less focused on an export driven economy and more focused on consumer consumption. It's. So yes, what your friend said is exactly correct. That this actually would cause China to have to change the policy of what they want to do now would not be good for them.

A (42:36)

Okay, let's have a numbers round. Why don't we start with Tom? Because I feel that like many of the book authors that come on this show, you're going to have a book related number.

B (42:48)

Oh, yes, you've caught me out.

A (42:50)

I've caught you up.

B (42:51)

Okay, it's 7.45 trillion. Can you guess what it is?

D (42:55)

It's the amount of money in sovereign wealth funds.

B (42:57)

Is that because I emailed it around? Yes, it's the amount of assets held by sovereign wealth funds globally. And that is More than hedge funds and private equity combined, which is 3 trillion and 3 trillion and 6 trillion. So that's why we were talking earlier about Jho Low and sovereign wealth funds. And why did he, when he went off to the Middle east as a student at Wharton and he met these young guys running sovereign wealth funds in the Middle east, why did he want to run one in Malaysia? Well, because it's a crap ton of money and he could be in control of it.

C (43:26)

Can I ask you one question, though? Sometimes sovereign wealth funds are really good for the people who live in the places. Like someone, I think, Matt Stoller, someone just wrote a paper suggesting the US have a sovereign wealth wealth fund, for example. I mean, Alaska has a fund you mentioned.

B (43:39)

Yeah, I mean, they can be good.

A (43:40)

I mean, the Norway fund is arguably good.

B (43:43)

Yeah, yeah. I mean the Norway fund. Well, I mean, I'm no expert on sovereign wealth funds, but the Norway fund is an attempt to conservatively hold the oil wealth of Norway for future generations.

D (43:55)

So they're like, let's underperform with our investment strategy.

B (43:58)

But yeah, no more make less in the market.

C (44:00)

Any duke would like that.

B (44:01)

But, but that's one thing. But most of the new sovereign wealth funds, there's been a huge increase of these assets. Five years ago, that was not the case, that sovereign wealth funds were greater than private equity and hedge funds. And the increase in the new funds has happened in places in emerging markets with poor governance standards.

A (44:21)

Yeah. And it feeds into the weirdest places. The Saudis give a bunch of money, so. Softbank. Softbank. There's a bunch of money to Uber. It's all. Anyway, my. I'm going to jump in with my number because it's also vaguely related. I kind of half thought this was going to turn up in the conversation, but didn't. $234 billion is the amount of money that Danske bank laundered through its Estonian subsidiary.

B (44:49)

You know who broke that story? My co author, Bradley Ho.

C (44:52)

Amazing.

A (44:54)

Another, like, you know, undercovered story. Like this is, you know, a pretty important Danish bank which happens to have a subsidiary in Estonia. And they just sit there and launder 200 billion euros. Like, how does that even happen? And yes, and we don't, we still don't really know like, whose money it was or where it went from where it went to any of that stuff. It's bonkers.

B (45:21)

Small, small institutions are more willing to, to move that kind of money.

A (45:26)

Emily.

C (45:27)

Okay, so I'm going to use a numbers round to promote my own story, which I Almost never. Do I swear?

A (45:32)

As often as you like. We love your stories.

D (45:34)

Oh, great.

C (45:35)

Okay, so My number is 8. 8 is the number of female law clerks from Yale Law School that a professor there, Amy Chua, placed to clerk for Judge Brett Kavanaugh, who is right now, his nomination hangs in the balance for the Supreme Court. So I reported this week that Amy Chua was going around telling her female law students that Brett Kavanaugh liked his law clerks to dress in a certain way. And not great. Not a great look for Amy Chua. And her husband, Jed Rubenfeld, was giving similar advice. And the one woman I talked to that I cover in this article, Rubenfeld said, as we head into clerkship season, which is very important at Yale, this is like, these people are incredibly ambitious. Not enough to get, like, a good job at a law firm when they're done. It's like they want to get a clerkship at the Supreme Court, and then, you know, golden ticket. But first they have to get these clerkships with the federal judiciary. So Jed Rubenfeld says to her, as you approach your interviews, you should know about two judges. One is Alex Kaczynski in the 9th Circuit. He sexually harasses women. And she was like, yeah, I know. Apparently a lot of people knew. And the other is Brett Kavanaugh, who is now again under consideration for the Supreme Court. And he said he doesn't sexually harass, she was assured, but he likes women to have a certain look. And then subsequently, the Guardian reported more detail. And the look, as you probably have guessed by now, is like, attractive model. Like, so that's just. And this is Yale Law School. And I'll say one more thing, and I'm sorry, I'm totally promoting myself, but, like, these women are very smart. Like, they worked really hard to get to Yale Law School. And they're like, this is going to be great. And I'm going to work really hard, I'm going to succeed, and I'm going to get that clerkship, and then I'm going to get to the Supreme Court. And because I'm so smart and successful, and then they're told by these professors who are like, the connection to that job, like, this is very important. They're told, yeah, do all that. But also, you gotta look good. Really good. You know, it's kind of gross.

A (47:45)

Yeah. I mean, I'm gonna jump in here with another number. Why not? We'll have a five numbers round, which is 95%, which came out also this week. 95% is the percentage of female newscasters who have straight hair. Like, you're not allowed. There's basically an unwritten rule in television that no female newscaster is allowed to have natur. Curly hair.

C (48:13)

Do the men have curly hair?

A (48:14)

I think the men can. No, I don't think they do. I'm not sure about the men.

D (48:20)

Yeah, it does. That's what I was thinking.

A (48:21)

I mean, they were talking, they looked. This. This was black newscasters as well, who all felt the need to.

B (48:25)

Don't the men have to have hair like, from a Lego?

C (48:29)

It's so interesting. If you look at pictures. I looked at a lot of pictures of Kavanaugh's clerks and I'd say like 90% have pin. Straight hair, long hair.

D (48:39)

My number is going to seem really boring. My number is $5. That is how much it costs to ship a four and a half pound package from Beijing to the United States. If you want to ship a package from through the postal service from New York to California, it costs about $20. So I'm. This has to do with these kind of universal postal rates, and there's the Universal postal union, which sets some of these. And this is bizarrely part of our current kind of trade war with China, which is that the Trump administration is trying to change these postal rates and arguing that essentially the postal service is being kind of taken advantage of by the Chinese and taken advantage of by this international organization because these. These rates were set years ago when China was still considered like a lease developed country. And it's. I actually think it's kind of interesting because it really does affect E commerce, because these were all set before the real development of E commerce.

A (49:41)

So one of the reasons why when I go onto Instagram and I click on one of those Shopify links and I buy a pair of shoes which says that it's made in Italy, but in fact is made in China. One of the reasons I can get those shoes so cheaply is because it costs the vendor almost nothing to ship those shoes to me from China. Just in the post.

D (50:01)

Exactly. And to me, I actually think we can just keep these because I think as someone who buys everything online, I'm like, I'm good with it. Good with it. But I thought it was kind of interesting.

A (50:10)

Okay, I think that's it for the main show. We are going to talk a little bit more about the partying of Jho Low in Slate plus because that's a kind of awesome part of the show, which we haven't really touched on. Other than that if you are a Slate plus member, listen to that. If you're not, thank you for listening. Tune in next week when we're going to be talking to the one and only Annie Duke, the poker player who also has a book out. Many thanks to Max Jacobs for producing Keep the Emails Coming slate money@slate.com and we will talk to you next week on Sleep Money.