The Swiss Federal Criminal Court has convicted two executives from the oil exploration company PetroSaudi for embezzling over $1.8 billion from Malaysia’s state investment fund, 1MDB. The verdict, delivered on Wednesday, marks a significant development in the ongoing 1MDB scandal, which has revealed extensive international corruption since allegations surfaced in 2015.
Prosecutors claimed that Swiss-British national Patrick Mahony and Swiss-Saudi Tarek Obaid misled 1MDB by falsely presenting their company as being backed by the Saudi Arabian government. They convinced the fund’s board to enter a joint venture in 2009, leading to substantial fraud.
The indictment revealed that the executives extracted approximately $1.8 billion from 1MDB, with Obaid receiving at least $805 million and Mahony at least $37 million. Obaid was sentenced to seven years in prison, while Mahony received a six-year sentence. The court ordered the confiscation of their assets, including properties in Switzerland and the UK and over $240 million in various bank accounts, to be returned to 1MDB.
Lawyers for both men, who denied any wrongdoing, could not be immediately reached for comment. The fraudulent scheme was reportedly orchestrated in collaboration with Jho Low, a fugitive financier and advisor to former Malaysian Prime Minister Najib Razak, who is currently imprisoned for his involvement in the scandal.
Between 2009 and 2015, Mahony and Obaid facilitated the opening of bank accounts in Switzerland to launder funds, which were then used to acquire luxury properties, jewelry, and private equity, maintaining a lavish lifestyle.
This year, 1MDB filed a lawsuit against Mahony for the return of the $1.83 billion. A spokesperson for 1MDB’s board welcomed the Swiss court’s decision, emphasizing the importance of justice for the Malaysian people and their ongoing efforts to recover stolen assets.
The total amount estimated to have been misappropriated from 1MDB is around $4.5 billion, implicating several high-profile figures, including Najib and executives from Goldman Sachs. In a related case, Roger Ng, a former Goldman Sachs banker, was sentenced to ten years in prison for his role in the scheme.
The US Department of Justice has also aided in the recovery of 1MDB funds, returning approximately $1.4 billion to Malaysia. The scandal sparked public outrage, leading to mass protests and the eventual defeat of Najib’s ruling party, UMNO, in the 2018 elections. Najib currently faces multiple trials linked to the 1MDB controversy.