Talking Points
- Big Tech CEOs defended their power in a Capitol Hill grilling
- Mackenzie Scott (formerly Bezos) donated $1.7b to charities
- The US passed 150,000 coronavirus deaths, 4.5m cases
- Ghislaine Maxwell lost another court battle over evidence
- World #1 tennis player Ash Barty withdrew from the US Open
- One quarter of Bangladesh was submerged by monsoonal floods
- Protests continued for a third week in Russia's Far East
- Horror stories emerged of Peru's disappeared women
- Wild tigers were found to have made a comeback in five countries
- One in three children has dangerous levels of lead in their blood
Deep Dive
It's a story that has it all: collapsed governments, 567 handbags, shadowy bankers, and Britney Spears jumping out of a birthday cake. The 1MDB scandal is drawing to a close, with the former Malaysian Prime Minister found guilty of corruption and Goldman Sachs agreeing to pony up $3.9 billion.
One for the record books
The start seems a wise place to begin this story. The 1Malaysia Development Berhad (Berhad is Malay for public limited company) was designed to change the country – not upend it. Back in 2009 the newly-minted premier Najib Razak had barely finished his victory lap before incorporating Terengganu state's public investment company into a sovereign wealth fund (and placing himself as its chairman). Furnished with the new name of 1MDB, it would act in the interests of all Malaysians by making strategic investments in real estate, the energy sector, and Saudi oil. Unfortunately, its actual list of beneficiaries was somewhat shorter – Najib Razak, his allies, and those who facilitated their plunder of least $4.5 billion from the fund.
What transpired was fraud, theft, and money laundering on a truly heroic scale. It may as well have been renamed the Development Berhad for 1 Malaysian. Goldman Sachs, arguably the world's most prestigious investment bank, is absolutely up to its neck in this scandal, having assisted 1MDB in raising $6.5b through a bond sale . $2.5b of those proceeds were immediately diverted to Malaysian officials. For its part, Goldman received a suspiciously handsome fee of $600m. The firm has, obviously, denied any wrongdoing.
Najib used the cash as a slush fund to bribe officials and as a personal piggy bank (he received an eye-watering $731m deposit just prior to the 2013 election). Meanwhile his wife, Rosmah, vied for Imelda Marcos's crown by shopped prodigiously: 1,400 necklaces, 567 handbags , 423 watches, 2,200 rings, 1,600 brooches and, yes, 14 actual tiaras. But even this purchase of several department stores worth of luxury items plays second fiddle to the profligacy of erstwhile 1MDB consultant - Jho Low.
A lynchpin in the story, Low's consultation included advice that it was in Malaysia's interests to buy him tens of millions of dollars worth of realestate in the fancy bits of Los Angeles and New York, the $260m yacht Tranquility , a $35m private jet, and to throw the kind of lavish Hollywood birthday party that is attended by the world's most-expensive rent-a-crowd. Britney did the honours. Elsewhere, in what might just be the most piquant morsel of this entire tale, Najib's nephew managed to funnel millions into the production of Martin Scorsese's film, The Wolf of Wall Street.
Bargains, billionaires, and vampire squids
Allegations of embezzlement spilled onto the front pages of newspapers in 2015 (thanks to the investigative work of the weight-class-defying Sarawak Report). Najib did as any leader caught with their hand in the till does: he denied everything and took the country to the edge of a political crisis by firing the Attorney General investigating him. A second, hand-picked AG subsequently declared there was nothing to see there. And Najib would've gotten away with it too, had he stayed in power long enough . But a loss in the 2018 election sealed his fate, with a succession of former allies-turned-rivals (Mahathir bin Mohamad and then Muhyiddin Yassin) taking office. The first of five cases concerning Najib's theft drew to a close this week. He was found guilty of laundering $10m through a 1MDB subsidiary, and sentenced to 12 years in prison – a result that will undoubtedly be challenged. And there are more upcoming charges, with significantly larger penalties.
Jho Low on the other hand was partying in Thai resorts like a billionaire right up until the 2018 election, at which point he made himself scarce. It's believed he is currently holed up in Macau . The only time Low has popped his head above the ramparts was to issue a statement decrying the "bargain" price ($120m) that Malaysian authorities placed on Tranquility, after seizing it off the coast of Bali. And that brings us to how Malaysia is recouping some of those stolen billions: going straight for the throat of Goldman Sachs.
Some of the bankers directly implicated in the scheme have been charged in a separate US Department of Justice investigation. A handful have been banned from the industry. But Malaysia's judicial system was lining up behind the DOJ to throw several more books at the bank. Even so, there remained one more delicate issue at play - disagreement between Goldman and the Malaysian government over how much was owed. The former said $1.75b, the latter insisted on $7b. After an intense five days of negotiations this week, a compromise was found: Goldman would cough up $3.9b in exchange for all charges being dropped. Fascinatingly, that sum is split between $2.5b in cash and a bespoke derivative which guarantees that at least $1.4b of the missing billions will be returned. Goldman would make up the difference if not. But it has already made it clear that the financial instrument bear negligible risk for its bottom line.
Back in the States, the investigation continues (slowly), led by the US Attorney General William Barr (whose erstwhile employer, believe it or not, happens to represent Goldman Sachs). But still, Goldman couldn't risk leaving a loose-end in Malaysia, just in case the Democrats win the US election in November and replace Barr. So it's a good thing they got the deal done.
Worldlywise
Fusion power approaches a threshold
In a recent edition of the Wrap we asserted that the flattering close-ups that the European Space Agency's Solar Orbiter took of the sun were as close as you could get to the sun without having your eyes vaporised. Consider this a formal retraction – you're soon to be much closer to the sun's power than you may have realised. The construction of a mega-project is underway in the sunny southern French town of Saint-Pauls-les-Durance. It has been funded by 35 countries and represents one of the most important scientific collaborations of the century.
The International Thermonuclear Energy Reactor (ITER) is slowly coming together, all one million components of it. When complete it will create a tiny sun. That process, nuclear fusion, is the bonding of atomic nuclei, and it releases a stupendous amount of energy. While fusion reactors have been around for some time, they are so inefficient as to be practically infeasible for energy generation. This new experimental tokamak reactor, however, is designed to receive 50 megawatts of thermal power and from that to create a plasma of 500 megawatts – which will hopefully prove the principle of producing more energy than is required to heat the plasma. To quote the consortium building it, "a pineapple-sized amount of this fuel is equivalent to 10,000 tonnes of coal".
The next step towards fusion becoming a viable technology, is for the ITER team to demonstrate that it can safely control a plasma that will be heated to 150 million degrees celsius. While there is no risk of a meltdown a la Chernobyl, the reactor does require a number of four-storey-tall superconducting magnets that weigh around 360 tonnes each, to control the reaction. And don't expect any electricity flowing back to the grid just yet – this is a purely experimental reactor. But if it is successful, you can bet commercial development won't be far away.
A growing hunger
We may need to revise the old complaint "we can put a man on the Moon but we can't..." to "we can build a tiny sun on Earth but we can't..." As tens of billions of euros are poured into the ITER project (and as no less than three rockets streak towards Mars), we are going backwards on global hunger. The spread of coronavirus, and the restrictions implemented to halt it, have together combined to dramatically worsen the hunger crisis across the world. The fundamental link between farmers, markets, and buyers has broken in many of the poorest countries – and aid groups are struggling to make up the difference. The headline number, a shocking one, is that 10,000 more children are dying of hunger every month during the pandemic.
Behind the deaths are another half million children 'wasting' every month. That is, they suffer from extreme malnutrition that makes their bodies brittle, distends bellies, and stunts growth. This is occurring all over the world: in Venezuela the economy has collapsed, in Burkina Faso the price of staples is soaring, and in Yemen and Afghanistan long wars have long since destroyed national food security. There is no one cause, but coronavirus is exacerbating all of it . A UN spokesperson said, "The food security effects of the Covid crisis are going to reflect many years from now. There is going to be a societal effect." At least $2.4b is needed immediately to make a dent in world hunger – less than the cost of the Nasa mission that blasted off from Cape Canaveral yesterday.
The Best of Times
Look familiar?
A team at the University of Reading has answered one of the many mysteries of stonehenge: where on Earth did these giant sarsen rocks come from? As it happens, core samples from the famous Neolithic site revealed that the original resting place was a patch of woods in Marlborough Downs , just 25km up the road. The sarsen boulders in this area are particularly interesting as they are both sizeable and completely unconnected from bedrock, making them somewhat easy to dislodge from the earth. Now for the big question, how did these early Britons get the boulders, some weighing 27 tonnes, up and down valleys to their current resting place?
Wake up
If scientists can now breathe life back into microbes that have laid dormant on the sea floor for 100 million years , you can get out of bed.
The Worst of Times
Kremlin disinformation efforts find a welcome audience
US intelligence services posit that Russia is behind a coordinated campaign to spread coronavirus misinformation on three English-language news websites. Or, to borrow a phrase, the laziest propaganda imaginable is winning the argument against America's leaders in the marketplace of ideas.
Do humans dream of Android devices?
A team at the Massachusetts Institute of Technology has developed a non-invasive device that can influence our dreams during the "trippy, loose, flexible, and divergent" hynagogia state of the sleep cycle. They've started by suggesting the concept of a tree (67% of the participants in the trial reported having dreams that referenced trees)! Advertisers must be licking their lips at the prospect of being able to intrude into our final private realm to sell us new phones.
Weekend Reading
The image
The quote
"I have always welcomed all points of view on my show and have consistently stood for free speech in my 15 years in media. In this case, admittedly I was caught off guard by some of Dr. Mikovits' claims."
– Sinclair Broadcasting Network's Eric Bolling provides some post-facto reasons as to why he filmed an interview with one Dr. Judy Mikovits who has worked a lot harder than the Russians to spread coronavirus disinformation in the States. Mikovits appeared on the documentary(?) Plandemic and has alleged that face masks "activate" COVID-19. Cable news is bad for you.
The numbers
$765 million
- The size of the federal loan that Eastman Kodak Co. will receive to start producing the ingredients for generic drugs in the United States. A big pivot for the former photographic film maker.
300%
- The increase in trading of Kodak shares the day before the announcement. We're sure there is some perfectly innocent not-insider-trading explanation for all this.
The headline
"Is it time to repatriate Africa's looted art?" – Foreign Policy . Pretty simple: yes!
The special mention
Our special mention this week goes to a pair of Indian teenagers who discovered an Earth-bound asteroid. Science nerds are cool.
A few choice long-reads
- Foreign Affairs on giving up the hegemony of the USD
- Bloomberg Businessweek climbs inside a private jet
- The Economist picks apart Boris's cunning plan
Tom Wharton
