They are everywhere because their money is everywhere, but legally they are also nowhere and are hard to see. That is an extreme case because, among the groups of people I studied, it’s rare for the chairperson to appear anywhere. And even in cases where someone like Leissner pays huge fines, the people behind him rarely must turn over their profits. People who I interviewed related to him tremendously because they saw him-and by virtue of their positions, themselves-as the fall person, when there are charges of corruption. Take for example, Timothy Leissner-former managing director at Goldman Sachs and chairman of the bank’s Southeast Asia division-in the deal involving Goldman Sachs for the case of 1MDB. These ultra-high-net-worth individuals syndicate all legal and criminal risks involved with navigating highly corrupt markets to C-suite executives. Many of the C-suite executives I interviewed told me that while they are often the face of a deal in newspapers and in the media, they are just managing the money of others who are often invisible in these webs. This is where I uncovered the difference between the ultra-high-net-worth individuals and the wealthy financial professionals who manage their money. Your book quotes one source saying, “Behind every CEO is a chairman, who is so rich that they are nowhere and everywhere and are accountable to no one.” Tell us more about this. So the ultra-rich are hiding behind others. to avoid a very public scandal that would tarnish their reputations.” Most of the people I interviewed lay low, and they operate with a strategy of operating in a stealth manner hidden behind these capital webs.

He would have gotten away with it because Malaysia and Singapore would have written off the debt. This world is so vast and so mundane that I cannot think of companies or individuals who can honestly claim that they are above these webs or outside of these webs.Īs one of my interviewees said to me, “Jho Low was a greedy narcissist. This is the part that I think is most fascinating. How does the recent 1Malaysia Development Berhad scandal play into your book-and the fact that Goldman Sachs admitted to conspiring in a scheme to pay more than $1 billion in bribes to officials in Malaysia and Abu Dhabi to obtain lucrative business deals. They claim they’re imitating what slightly more developed economies are doing, and they keep moving it to more and more front-emerging markets. And then once they were in China, they took those practices to Vietnam and Myanmar. They took those transfer pricing practices and brought them to China. One example is business transfer pricing practices, where companies that are part of the same entity would charge themselves for services, consulting services, or intellectual property. The other legal but morally reprehensible practice is “front-running the law,” or taking strategies that were highly profitable pre-regulation in developed economies and them in frontier markets where they are getting ahead of formal regulations. Legally, they essentially claim liabilities or losses onshore where they have operations in Vietnam or Myanmar, and then they claim profits offshore in the vehicles that are sort of the holding companies of the onshore companies. They might only pay 5% taxes offshore in Hong Kong or Singapore, and 0% taxes in the British Virgin Islands or Cayman and Seychelles. One person I interviewed pointed out that I’m a professor on a W2, and that I pay more taxes than they do. They also enable the ultra-wealthy to conceal their identities by hiring other financial professionals to serve as the face of many of these deals. These offshore vehicles also allow them to set up legal firewalls to insulate their assets from all sorts of criminal and civil risks and to protect accumulated wealth from states wanting to charge investors with corruption or litigation with various business partners.

The ultra-wealthy often use offshore entities and shell companies to choose their legal jurisdictions and effectively legally avoid paying taxes both in the countries where they are making capital investments and where they reside. And the answer was to allow financial professionals to cowrite laws and policies around tax, transfer pricing, and other practices that allow foreign businesses to operate with little or no tax. I would go to conferences where government officials asked what they needed to encourage foreign investment.

Aws pinpoint