Illustration: Lazaro Gamio/Axios

"Billion Dollar Whale," the gripping new book from the WSJ's Bradley Hope and Tom Wright, details the way that Jho Low, grifter and social climber extraordinaire, managed to steal billions of dollars from the people of Malaysia.

Why it matters: He couldn't have done it alone. Foremost among the names listed: Goldman Sachs. The bank, currently under investigation by federal prosecutors, is featured on no fewer than 87 of the book's 379 pages.

The bank facilitated the 1MDB fraud, earning almost $600 million in fees on 3 bond deals from the deeply corrupt Malaysian fund. That's about 200 times more than the normal amount a sovereign issuer would pay. Each time, as soon as Goldman provided the money to 1MDB, Low would steal it.

Goldman executive Tim Leissner has a central role in the book. He has now been barred from the securities industry and is reportedly facing federal criminal charges in the Eastern District of New York.

  • Leissner became a Goldman partner in 2006. That was a big year for Goldman in Asia: CEO Lloyd Blankfein gave the region more than one-fifth of all new partnerships, in a clear sign that he was looking for aggressive growth there. By 2014, Leissner had been promoted to chairman of Southeast Asia for the bank.
  • He "was prone to go off the reservation," write Hope and Wright. But he kept his coveted position as partner, and, according to the book, "Goldman bosses in the region allowed him a very long leash."
  • Leissner hired the 25-year-old daughter of Malaysia's ambassador to the U.S. as an intern, risking prosecution under the Foreign Corrupt Practices Act. He also had an affair with her.
  • He was working with Low from the very beginning — early 2009, when the two men persuaded the sultan of Terengganu, Mizan Zainal Abidin, to create a new investment fund.
  • Leissner also worked closely in Hong Kong with Andrea Vella, the Goldman banker who previously oversaw the bank's notorious relationship with the Libyan Investment Authority.
  • Between them, Leissner and Vella perfected the art of making outsized profits from seemingly normal bond deals. They made $50 million in profits (about 50x the usual) from a relatively modest $800 million bond deal from the Malaysian state of Sarawak. Then there were three 1MDB bonds, totaling $6.5 billion, on which Goldman made almost $600 million.
  • Leissner helped to orchestrate what the book calls "the second heist." He and Low persuaded Sheik Mansour bin Zayed Al Nahyan of Abu Dhabi to guarantee a $3.5 billion bond issue from 1MDB. The guarantee, write Hope and Wright, was "an artificial construct, purely aimed at creating an excuse to divert more than a billion dollars from 1MDB."
  • Leissner also helped Low by writing a letter of reference — falsely claiming Goldman had conducted due diligence on Low's family wealth— for the Malaysian who helped him open a bank account at Banque Havilland in Luxembourg.

The big picture: Goldman's involvement wasn't limited to the Hong Kong office.

  • Goldman president (and future Trump appointee) Gary Cohn set up a sovereign wealth fund unit known inside the bank as "monetizing the state."
  • "The backing of a domineering and powerful personality like Cohn accorded significant cover to those involved in the 1MDB business," write Hope and Wright.
  • Cohn also fought to keep Goldman's fees at artificially elevated levels on the 1MDB bond issues.
  • Another Goldman banker, Roger Ng, took part in a dinner where Low tried to use the Goldman imprimatur to help override the concerns of a smaller bank's compliance department.
  • Goldman's head of investment banking in Dubai, Hazem Shawki, helped to put together a deal that allowed Low to make a profit of $300 million in just a few days.
  • A key early conspirator, PetroSaudi's Patrick Mahony, was a Goldman alum.

The other side: Goldman spokesperson Michael Duvally says, "Goldman Sachs had no visibility into whether some of the funds we helped raise for 1MDB may have been subsequently diverted to other purposes."

  • He adds: "What we earned from the debt transactions reflected the risks we assumed at the time, specifically movement in credit spreads tied to the specific bonds, hedging costs and underlying market conditions. Comparisons to 'fees' from plain vanilla underwritings, which involve far less risk, are not relevant."

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