Malaysia’s Prime Minister, Najib Razak, appeared to get a lifeline when Donald Trump became President of the United States. In 2016, Razak was on the ropes. He had successfully squashed a Malaysian investigation into his billion-dollar heist from one of the nation’s sovereign wealth funds, but the US government remained a problem. Money laundering connected to his crimes extended into the United States. Under Obama, the Justice Department was ramping up enforcement of white collar crime making it difficult for Razak to tamp down news of his theft inside Malaysia.
Obama had shunned his old Malaysian ally after news of his thefts emerged. Warrants and asset seizures led by US investigators kept his case roiling even after his local critics had been harassed into silence or arrested. Trump’s victory was a get out of jail free card for kleptocrats all over the globe.
Less than a year after the election, Trump invited the Malaysian Prime Minister to the White House. Justice Department scrutiny faded. Gary Cohn, the Goldman Sachs partner who had aided Razak’s scam was now the president’s senior economic advisor. Though the FBI continued enforcement efforts already in progress, initiative faded. Razak’s friend, Jho Low, who architected the fraud and may have pocketed more than $3bn himself, was able to breathe a little easier, at least for a while, leaving his Chinese bolthole to tour Southeast Asia again.
An American political disaster should have left Razak free and clear, but something remarkable brought him down – the rise of democracy in the developing world. When the United States abdicated its role as the world’s leading voice for freedom, voters in Malaysia took matters into their own hands. For the first time in the country’s history, the ruling party in 2018 was defeated in a free election. The result was a stunning surprise and Razak was unprepared.
Three days after the election Razak attempted to flee to Indonesia with his family. Mobs blocked access to the airport after immigration officials leaked the family’s flight plans. Razak was trapped like a rat. The next day police raided their properties, seizing more than 10,000 pieces of jewelry, hundreds of designer handbags, $28m in cash, a total haul worth roughly $200m. Cut off from access to his stolen funds and trapped inside the country, Razak had few political levers left to pull. A formal investigation into his crimes resulted in his arrest in July. He is free on bail pending a trial set to begin next spring.
A new book, The Billion Dollar Whale, outlines the fraud surrounding Malaysia’s 1MDB fund and the flamboyant character, Jho Low, who engineered the heist for Razak. Low remains in hiding, probably in China, most of his assets seized. It’s a darkly amusing story of the global reach of financial fraud, with troubling implications for our own democracy.
Though a brief wave of US enforcement efforts contributed to Razak’s ouster, it was our financial system that enabled the heist in the first place. The book is careful to mention Mark Rich, the 90’s financial huckster in the mold of Jho Low who bought a pardon from Bill Clinton. The global money laundering empire that enabled the 2016 Russian campaign to destroy our democracy was born in our own financial deregulation. Eight years of the Obama Administration was not enough to undo twenty five years of organized global graft.
Jho Low executed his fraud in broad daylight, with the assistance of US based accounting firms like Deloitte, and washed his transactions with US real estate and business assets. He built a film business that ironically produced The Wolf of Wall Street. He bought a stake in EMI. His lavish Las Vegas parties featured stars like Leonardo DiCaprio and Jamie Foxx. Then a man who used the same methods to get rich was elected president. We have a problem that will not yield to gentle remedies.
If you remember the old post on the Trump Endgame, you’ll see its outline in the fall of Razak. The book should also make clear why I think Trump will flee before the end comes. It’s the only way for a kleptocrat to preserve his wealth and some semblance of power. The story is also a warning about the storm ahead, especially after Trump’s fall.
A machine of global graft initiated and enabled by the Clinton and Bush administrations gave us President Trump. Dismantling that machine, even after Trump’s departure, will be no simple task. When Malaysian Prime Minister Mahathir Mohamad described the path ahead for his country, he was also delivering a warning for us:
“Certain people were aiding and abetting a prime minister who the world condemns as a kleptocrat. Certain heads must fall.”
When Trump is gone we’ll hear a loud chorus crying for reconciliation. Shout them down. Block efforts to protect these criminals by any means necessary. Instead, we must leverage the outrage from this administration toward comprehensive reform, and that kind of reform will not be possible without serious consequences for collaborators. No authentic reconciliation is possible without disclosure and justice. If we want to avoid a path from Trump I to Trump II, heads must fall.