Will the development community face fallout from Malaysia's 1MDB corruption scandal?

By Michael Igoe 04 May 2016

Jho Taek Low, founder and director of the Hong Kong-based Jynwel Charitable Foundation. Photo from: Flickr

Late in 2014, just over a month before its financial relationship with the United Nations was set to expire, the humanitarian news agency IRIN found a new benefactor.

The Hong Kong-based Jynwel Charitable Foundation seemed to appear out of thin air. It did so in the form of its founder and director, Jho Taek Low, a young Malaysian financier and member of Prime Minister Najib Razak’s inner circle. Low joined U.N. officials and IRIN’s management team at a U.N. press conference to announce a gift that would secure IRIN’s future: $25 million from Jynwel to the news agency, to be delivered to IRIN over 15 years. The donation allowed the well-regarded news outlet, whose future had been in doubt, to spin off from the U.N. and relaunch as an independent, nonprofit organization.

Known for hosting lavish parties, buying luxury real estate and collecting expensive works of art, Low, through the Jynwel Charitable Foundation, has reoriented his public image around global development’s social calendar and attracted attention as an emerging-market donor and partner to high-profile development groups.

Low’s foundation sponsored the Social Good Summit in 2014 and 2015 and has given away millions of dollars, including to the United Nations Foundation, Panthera — which works to save big cats — and Keep A Child Alive, the AIDS-fighting organization co-founded by pop star Alicia Keys.

Behind Low’s charitable turn, trouble has been brewing — and now appears primed to boil over. Over the last year, media reports have drawn closer and closer links between Low’s personal finances and Malaysia’s “1MDB” government investment fund, now more than $11 billion in debt and the subject of the largest corruption investigation in Malaysia’s history.

The Wall Street Journal, among other publications, has reported extensively on investigations into Low’s apparent role, which he denies, in siphoning money away from 1MDB, into the pockets of Malaysia’s well-connected. The U.S. Department of Justice, the U.S. Federal Bureau of Investigation and Swiss authorities are all now reportedly looking into the 34-year-old’s finances, and a bank in Singapore has frozen millions of dollars held by Low, the Wall Street Journal reported. Low’s whereabouts are currently unknown, but many suspect he may be in Taiwan, a country known for its nonextradition policies, or aboard his 300-foot yacht “Equanimity.”

Organizations that have received donations from Low and the Jynwel Charitable Foundation are faced with the possibility that money they accepted for development projects might have been embezzled from the Malaysian people by their own political elite. While most recipients of Jynwel’s charitable donations are reticent about the details of their relationships with the foundation, many of their comments suggest the revelations about Low’s role in this developing story caused them to rethink the prudence of these partnerships.

Jho Taek Low at the Social Good Summit in New York. Photo from: Facebook

In response to an inquiry from Devex, IRIN’s Managing Editor Heba Aly provided this statement: “Jynwel Foundation supported IRIN with more than $2 million in 2015, allowing us to spin off from the United Nations. We no longer have any contractual agreement with this foundation.”

IRIN and Aly declined to answer additional questions about what happened to turn a $25 million pledge into IRIN’s receipt of just “more than $2 million.” Neither did IRIN comment on whether the contractual agreement with Jynwel Charitable Foundation came to a premature end.

In its 2014-2015 funding report, the Overseas Development Institute, the British development think tank, lists Jynwel Charitable Foundation as a donor of roughly $2 million. That money was received by ODI on behalf of IRIN during the time that ODI and the United Nations held a memorandum of understanding to house IRIN inside the British think tank while IRIN re-established as an independent organization, according to an ODI spokesperson.

“We agreed to support the transition because we recognised IRIN’s invaluable service as a news provider to the humanitarian sector,” the ODI spokesperson wrote to Devex in an email.

The spokesperson added that ODI performs due diligence on all funders, “including to those it acts as a host for. No issues came up to prevent us transferring funds from the Jynwel Foundation to IRIN. ODI reviewed that decision in the summer of last year, and decided it wouldn’t be a conduit for any further funding from the Jynwel Foundation on IRIN's behalf,” the spokesperson added.

The spokesperson also noted that the entirety of Jynwel Charitable Foundation’s contribution went to support IRIN’s transition. “The ODI recovered only the costs for the administrative services provided while IRIN set itself up as a legal entity,” the spokesperson wrote.

Jynwel Charitable Foundation has also partnered with the United Nations Foundation to create a news aggregation site called Global Daily, built to encourage more coverage of the Sustainable Development Goals.

“The U.N. Foundation received $3 million [from] Jynwel Charitable Foundation in support of these efforts, which concluded at the end of 2015, as well as additional funding and support from other partners,” a U.N. Foundation spokesperson wrote to Devex in an email.

“While we no longer have an active partnership underway, the Jynwel Charitable Foundation is among potential partners for the UN Foundation’s future work on global communications,” the spokesperson added. Asked to clarify, the spokesperson wrote, “While there are no commitments at this time, the U.N. Foundation would consider accepting additional funding.”

Panthera’s Media and Digital Marketing Director Susie Sheppard declined to comment on this story. Keep A Child Alive did not respond to an inquiry from Devex. An email to Jynwel Charitable Foundation’s media address returned a delivery failure message.

In response to an inquiry, Trevor Gibbons, senior vice president at Edelman, the public relations firm listed on the Jynwel Charitable Foundation’s website, directed Devex back to Jynwel and wrote, “we have not worked with them for a while.”

In March 2015 Devex published an interview with Low, in which he described his vision for charitable giving. Since the time of that interview, multiple reports have surfaced about Low’s role in structuring 1MDB transactions, calling into question the source of the funds he has pledged.

A number of news outlets have drawn attention to Low’s rapid rise as both investor and philanthropist. A February 2015 story in the New York Times detailed Low’s use of “shell companies” to secure luxury New York real estate properties. Bloomberg and the Wall Street Journal have both reported on the growing amount of evidence linking Low to Malaysia’s corruption crisis, and a July 2015 piece in the Wall Street Journal confirmed Malaysian authorities were examining Low’s role in the “misallocation” of funds from the 1MDB state investment fund.

Last month, a Wall Street Journal article confirmed Low’s “central role” at 1MDB. According to investigation documents seen by the Wall Street Journal, “Mr. Low himself was the recipient of 1MDB funds, with control over hundreds of millions of dollars.”

The Malaysia-focused watchdog publication Sarawak Report has been more critical of organizations that accepted funding from Low’s foundation. In a December 2015 letter to Kathy Calvin, president and CEO of the United Nations Foundation, Sarawak Report Editor Clare Rewcastle Brown admonished the U.N. Foundation for “turning a blind eye” to the possibility Low’s donations might be illicit in origin.

Meanwhile in Malaysia, 1MDB defaulted on a $1.75 billion bond last week, triggering defaults on two other Islamic bonds. Some have questioned whether the country’s ruling party — and its prime minister — will be able to weather the scandal. Jynwel Charitable Foundation has not posted a release or announcement to its website since June 2015. Amid growing calls for him to return to Malaysia and testify to the country’s Public Accounts Committee, Low has been conspicuously absent from global development’s podiums and parties — leaving others to pick up the check.

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About the author

Igoe michael 1
Michael Igoe@AlterIgoe

Michael Igoe is a senior correspondent for Devex. Based in Washington, D.C., he covers U.S. foreign aid and emerging trends in international development and humanitarian policy. Michael draws on his experience as both a journalist and international development practitioner in Central Asia to develop stories from an insider's perspective.


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