Latest / Follow the Lies: Fraud & Deceit Uncovered / Episode 11: $4.5 Billion Stolen from a Nation — Malaysia’s Sovereign Fund Heist
Transcript
- Kevin Barrows: It's twenty thirteen. Game of Thrones shocks fans with the Red Wedding. Cronuts are the latest craze and Lord is singing about royals. Off the coast of Monaco, a two hundred and fifty million dollars super yacht named Equanimity lights up the harbor. On board, a young Malaysian financier named Joe Lowe is throwing one of his legendary parties. Leonardo DiCaprio, Paris Hilton, Jamie Fox, and Britney Spears are among the guests. Cristal flows. Fireworks explode in perfect sync with the music. One night alone reportedly cost over five million dollars. Just a few years earlier, Joe Lowe was a relatively unknown Wharton graduate. Now he's living like a modern day Gatsby, private jets, a world class art collection with Picasso and Monet's, and close friendships with Hollywood royalty. None of it came from legitimate business. This was money stolen from the people of Malaysia. More than four point five billion dollars allegedly siphoned out of the country's sovereign wealth fund, one MDB. in one of the largest cryptocurrency schemes in modern history. Today, we follow the lies from glowing promises of economic transformation to a nation robbed blind. Welcome to Follow the Lies, Fraud and Deceit Uncovered. I'm Kevin Barrows. I'm a former special agent who led two of the largest white car investigations in U.S. history. I also co-hosted the Smithsonian Channel docuseries Sports Detectives, where we chased down stolen artifacts. Throughout my career, I've followed money trails that people went to extraordinary lengths to conceal. But cases involving public funds, especially sovereign wealth or development money meant for ordinary citizens, are on an entirely different level. When leaders steal from their own people, Particularly in nations still striving to reduce poverty, they're not just taking dollars. They're stealing futures, opportunity, and of course, trust. The one MDB scandal is one of the most disturbing I've examined because it wasn't the work of a solo operator or a greedy CEO quietly embezzling. This was an alleged multi year, multi continent enterprise that reached the highest levels of government and one of the world's most prestigious investment banks. It shows how political power, Sophisticated financial engineering and weak oversight can combine to hollow out public institutions on a massive scale. I've investigated cases where executives stole from shareholders and cases where organized crime skimmed from businesses. But when the victims are entire populations, especially in developing nations trying to climb out of poverty, more than just money is lost. You're not robbing bank accounts. You're robbing generations of opportunity. That's the scale we're talking about in this case. If you're enjoying these deep dives into real cases of fraud and deception, I'd really appreciate it if you'd hit subscribe, leave a rating and review, and turn on notifications so you never miss an episode. And if you want a practical, field tested guide to help you spot lies in business deals, investments, or everyday conversations, I created a free resource called Seven Proven Strategies to spot lies and uncover the truth in any interview. You can download it right now at Follow The Liespodcast dot com. No sign up required. Now let's go back to two thousand nine in Kuala Lumpur. In july two thousand nine, just months after becoming Prime Minister and Finance Minister, Nahib Razak officially launched one MDB. On paper, it was an ambitious sovereign wealth fund meant to drive Malaysia's economic transformation. A sovereign wealth fund is a state owned investment vehicle that manages a government's surplus funds. Foreign currency, reserves, or revenue. The fund would pursue strategic investments in energy, real estate, tourism, and infrastructure to create jobs, reduce poverty, and position Malaysia as a high income developed nation by twenty twenty. The vision sounded inspiring and patriotic. Almost immediately, however, the fund took a different path. The fund was given unusually broad powers and minimal oversight, a lethal combination. Now he himself served as both prime minister and finance minister, effectively controlling the board that was supposed to supervise the fund. This concentration of power would later prove critical. A pivotal figure was Joe Lowe, then in his late twenties, a charismatic Oxford and Wharton educated Malaysian with extensive family and political connections, but no official government position. According to investigators, Lowe became the de facto mastermind. using his network of proxies to orchestrate the movement of funds through an elaborate web of offshore shell companies, nominee directors, and accounts in Singapore, Switzerland, the British Virgin Islands, and other secrecy havens. What made Lowe especially dangerous was his ability to operate in the shadows. Despite having no government position, he allegedly had direct access to the highest levels of power. Investigators later discovered he reportedly maintained multiple passports This informal coalition allowed money to flow with minimal paperwork. In one instance, investigators traced funds moving through accounts linked to relatives of high ranking officials in Abu Dubai and Saudi Arabia, turning what should have been a national development fund into ⁓ the into an international slush fund. The scheme unfolded in carefully orchestrated phases. The first major transaction occurred in 2009 with a joint venture between OneMDB and Petro Saudi International, a company with ties to Saudi interests. One MDB committed one billion dollars to the partnership. Prosecutors alleged that nearly the entire sum was quickly diverted through shell companies into accounts controlled by Lowe and his associates. Documents were allegedly falsified to create the appearance of legitimate investment returns when, in reality, little to no economic activity took place. According to U.S. court filings, the deal was structured so that $700 million was transferred to a shell company called Good Star Limited, which had no real connection to Petrosauti. That money allegedly went straight into accounts controlled by Lowe. The investment generated almost no legitimate returns. Yet the funds books were manipulated to show healthy profits. The scale escalated dramatically between 2012 and 2013. Goldman Sachs helped one MDB raise approximately six point five billion dollars three large bond issuances. These deals generated nearly six hundred million dollars in fees for the bank, an extraordinarily high percentage. US prosecutors later alleged that more than four point five billion dollars of the total funds were misappropriated and laundered. through complex layers of transactions involving offshore entities. Money flowed from fund accounts into shell companies, then into personal accounts linked to Lowe, Nahib, family members and associates. The personal spending was astounding. Lowe allegedly used the diverted funds to finance the two hundred fifty million dollar super yacht, complete with helicopter pad, submarine garage and lavish interiors. Multiple luxury properties, including a thirty nine million dollar penthouse in Manhattan, Beverly Hills Mansions and high-end real estate in London and Hong Kong. A world-class art collection featuring works by Claude Monet, Vincent Van Gogh, and Pablo Picasso, among many others, some purchased for tens of millions each. Millions in jewelry and gifts, including pieces given to supermodel Miranda Kerr and other celebrities. Extravagant parties across Las Vegas, Saint Tropez, and New York, often featuring performances by major artists. Financing for Hollywood films through his company Red Granite Pictures, most notably Martin Scorsese's The Wolf of Wall Street, Leonardo DiCaprio even publicly thanked Lowe during a Golden Globe speech. Meanwhile, inside Malaysia, one MDB was borrowing heavily on international markets, saddling the country with massive debts that carried high interest rates. Yet very little of the promised benefit reached ordinary citizens. Many government projects either never materialized or delivered far less than advertised. The entire operation relied on forged documents, inflated asset valuations, and a network of bankers, lawyers, and intermediaries who either actively participated or looked the other way. By 2014, the fund had accumulated over eleven billion dollars in liabilities, while delivering very few of the promised projects. Independent auditors started raising quiet concerns. But those concerns were allegedly brushed aside or met with political pressure. It was an industrialized system of deception, one that combined political protection at the highest levels with sophisticated financial camouflage that fooled regulators and auditors for years. The first major public cracks appeared in early 2015 when British journalist Claire Rucastle-Brown's investigative outlet, Sarawak Report, published explosive documents. Showing nearly $700 million had flowed into personal bank accounts linked to Prime Minister Razak. Rue Castle Brown, the sister-in-law of former UK Prime Minister Gordon Brown, became a thorn in the side of the Malaysian government. Her reporting was so explosive that the Malaysian authorities tried to block her website and even issued arrest warrants. But the information kept coming. The story detonated globally. Investigations erupted in Malaysia, the United States, Singapore. Switzerland, United Kingdom, and beyond. The United States Department of Justice launched one of its largest ever kleptocurrency probes under its Kleptocurrency Asset Recovery Initiative. This initiative focused on halting, forfeiting, and repatriating the proceeds of foreign official corruption and returning the stolen funds to help the people harmed. The 1 MDB case was described as one of the largest kleptocracy cases in history, involving systemic looting on a nationwide scale. The DOJ filed sweeping civil forfeiture actions seeking over a billion dollars in assets purchased with allegedly stolen funds. The complaints read like financial thrillers. They meticulously traced how money was moved through show companies into personal accounts linked to Lowe and others. One filing detailed how $49 million was used to buy a painting called Dust Heads, which was later seized from a New York storage facility. Another traced funds used to purchase equanimity. FBI agents and federal prosecutors painstakingly traced the money as it moved through the U.S. financial system. Key figures at Goldman Sachs came under intense scrutiny. Tim Leisner, former Southeast Asia Chairman, pleaded guilty and cooperated with authorities. Leisner admitted in his guilty plea that he and others at Goldman had helped facilitate the misappropriation of billions from one MDB. He confessed to paying bribes to Malaysian government officials. And concealing the true nature of the bond deals from compliance officers at the bank. Prosecutors alleged that Leisner even received millions in kickbacks for his role in the scheme. Roger Eng, Goldman's former head of investment banking in Malaysia, was convicted in a Brooklyn federal court after an eight-week trial and sentenced to ten years in prison. Eng's trial was particularly dramatic. Prosecutors presented evidence that he and Leisner had deliberately bypassed Goldman's internal compliance controls. Eng was accused of receiving approximately thirty five million in bribes for helping arrange the massive bond deals. His conviction marked one of the most significant victories for the U.S. government in prosecuting senior executives from a Wall Street giant in a foreign bribery case. Goldman Sachs itself paid nearly two point nine billion dollars in global settlements, one of the largest penalties in the bank's history. In addition to the nearly three billion dollars paid to the U.S. Department of Justice, The bank reached separate settlements with regulators in Malaysia, Singapore, and other countries. Internal Goldman emails and messages presented in court revealed that some bankers had referred to the one MDB deals as money printing machines, while ignoring multiple red flags about the source of the funds. While the bankers faced justice in American courts, the consequences hit home dramatically inside Malaysia. The Malaysian raids were especially dramatic, and coordinated operations. Police swept through multiple luxury properties linked to Nahib and his wife, Rosma Mansor. They uncovered what became known as one of the largest halls of luxury goods in the country's history. Over one thousand four hundred designer handbags, many Ermays Birkins still in dust bags, five hundred sixty seven luxury watches from Rolex, Richard Mill, and other high end brands, hundreds of rings, necklaces, earrings, and millions in cash. Photos of tables piled high with jewelry and handbags went viral and became lasting symbols of the scandal for ordinary Malaysians. Rosmond Mansur herself later faced separate charges related to the scandal. The scandal triggered massive street protests in Malaysia. In may twenty eighteen, Nahib's long ruling coalition suffered a shocking electoral defeat after more than six decades in power. The new government under Mahathir Mohammed reopened aggressive investigations. Nahib faced dozens of charges across multiple trials for corruption, money laundering, and abuse of power. He was convicted in his first major trial and sentenced to twelve years. Appeals are ongoing. Joel Do remains a fugitive, widely believed to be receiving protection in China or elsewhere, despite international arrest warrants. Now let's go inside the investigation to see what was really happening behind the scenes as the prosecution unfolded. This was a case where the evidence became abundant. Once the scheme was exposed. But having investigated international money laundering cases, I know the real challenge was gathering that evidence. It required analyzing hundreds of bank accounts scattered across the world and extraordinary coordination between multiple countries and agencies. The DOJ can't simply issue domestic subpoenas overseas. They often have to go through the Office of International Affairs and use tools like mutual legal assistance treaties, called MLATs. if they even exist in the country in question, were file former letters rogatory, which are court to court requests sent through diplomatic channels. This process is slow, complex, and often extremely frustrating. Fortunately, in the one MDB investigation, international cooperation was remarkable. Singapore froze accounts worth hundreds of millions. Switzerland and Luxembourg returned significant assets. The FBI collaborated with at least eight different countries. In total, Malaysian authorities and international partners have recovered or are actively pursuing several billion dollars. The case became a textbook example of how determined journalism, whistleblowers, and cross-border law enforcement can eventually catch even the most sophisticated kleptocrats. It also exposed serious weaknesses in global banking compliance. Weaknesses that allowed billions to flow through some of the world's most respected financial institutions with far too little scrutiny for far too long. The probes revealed not only the scale of the theft, but how allegedly stolen funds to help sustain political power, financing campaigns, buying influence, and silencing critics. By 2018, the human and economic toll had become painfully clear. Malaysia was left carrying enormous debts from the fund, with billions still outstanding years later. The country has recovered significant amounts through international asset seizures and settlements. The US alone has returned well over one point four billion, but the full recovery process continues and the opportunity cost remains enormous. Public money intended for development instead funded a lifestyle of unimaginable excess. while many ordinary Malaysians continued struggling with rising living costs and limited job opportunities. Families who hoped for better schools, health care, and economic mobility saw their government's promises evaporate into yachts, parties, and other luxury purchases. In rural Sabah and Sarawak, promised electrification and water projects were delayed for years while funds disappeared. One village head later told reporters his community waited over a decade for basic infrastructure That one MDB was supposed to deliver. Meanwhile, hospitals in some areas lacked essential equipment and schools operated with outdated facilities. Over the years, Malaysians have described a deep sense of national embarrassment and anger. Parents who struggled to pay for the children's education watched as billions vanished into private art collections. The Goldman Sachs involvement highlighted how even the world's most prestigious financial institutions can become enablers. When massive fees are on the line. Internal bank communications later revealed that some employees had raised concerns about the one MDB deals, but those concerns were allegedly overruled in the pursuit of profit. On the deception spectrum, this case ranks at the extreme high end. It combined high level political corruption, complex international financial structures, complicit enablers in global banking, and personal greed on an immense scale. The lies were embedded not just in forged documents, but in official government narratives about national progress. The scandal also highlights how persistent investigative journalism and cross border law enforcement cooperation can eventually pierce even the most sophisticated illegal schemes. Nahib's defeat in twenty eighteen ended more than sixty years of continuous rule by his coalition, a turning point that many Malaysians still call the most important in the country's modern history. Today's lie detector tip is about one of the most dangerous situations in both government and business lack of separation of duties. When one person or a small group controls both the authorization and the execution of financial decisions, the risk of fraud skyrockets. In the one MDB scandal, Nahib Razak served as both prime minister and financial minister. That single point of control gave him unchecked power over a sovereign wealth fund. That was supposed to benefit the entire nation. I've seen this pattern repeatedly in the private sector. A bookkeeper should never be the one who both writes the checks and reconciles the bank statements. A CFO should not be the only person approving large wire transfers. When one individual holds too much unchecked control over the money, bad things almost always happen. In one case I investigated after leaving the FBI. A bookkeeper at a small construction company was solely responsible for approving payments, issuing checks, and reconciling the accounts. Over five years, she funneled hundreds of thousands of dollars to fake companies owned by her husband and relatives. My rule as an investigator is simple. If someone has the power to both approve and execute a transaction without independent oversight, treated as a major concern. No matter how trustworthy they seem. Real integrity is built on checks and balances. When you see power highly concentrated over large sums of money, dig deeper. The absence of separation of duties is rarely an accident. From ambitious promises of national development to one of the largest financial heists in modern history, the one MDB scandal stands as a powerful cautionary tale about what happens when unchecked power meets unchecked. Greed. Sadly, Malaysia is not alone. We've seen similar looting of sovereign wealth funds in Angola, where the president's daughter allegedly used state oil assets to build a personal empire, and in Libya, where regime insiders treated national oil billions as their private fortune. These cases show a repeating pattern. When political power and financial control are concentrated in too few hands, ordinary citizens always pay the price. If you've ever encountered an investment fund, charity project, or a once in a lifetime opportunity that seemed impressive on the surface but felt off underneath, I'd genuinely like to hear about it. Send your story to Kevin at Follow The Lives Podcast dot com. It could become the foundation for a future episode. If you want practical tools to better spot deception and protect yourself in business, investments, or personal dealings, download my free guide seven proven strategies to spot lies and uncover the truth in any interview. at Follow The LiesPodcast dot com. While you're there, join our growing community on Substack at follow the lies dot substack dot com for deeper dives, additional case notes, and exclusive lie detector tips you won't hear in the episodes. If you're enjoying this series, please hit subscribe, leave a rating or review, and turn on notifications so you never miss a new one. Thanks for listening. Until next time, follow the lies.