PetroSaudi executives receive Swiss prison sentences for $1.8 billion 1MDB fraud | National

A Swiss court sentenced two PetroSaudi executives to prison on Wednesday after finding them guilty of embezzling $1.8 billion from Malaysian sovereign wealth fund 1MDB.

Tarek Obaid, 48, the Swiss-Saudi CEO of the oil exploration and production company, was sentenced to seven years in prison by the Swiss Federal Criminal Court.

His right-hand man Patrick Mahony, 47, a Swiss-British director at Geneva-based PetroSaudi, was sentenced to six years in prison by the court in the southern city of Bellinzona.

The verdicts can be appealed; the prosecutor's request for immediate detention was rejected by the court.

They were found guilty of their involvement in a huge embezzlement orchestrated by Jho Low, an adviser to former Malaysian Prime Minister Najib Razak, who was complicit in the embezzlement.

Prosecutor Alice de Chambrier pointed to the sums involved compared to Malaysia's GDP and called it the “scam of the century”. She branded the defendants “calculating, manipulative and obscenely greedy”, the Swiss news agency Keystone-ATS reported during the trial.

– “Selfish motive” –

The case was heard by three judges in April.

The court concluded that the defendants, in collaboration with individuals working for 1MDB, “orchestrated a fraud that enabled them to collect $1 billion to the detriment of 1MDB based on a purported joint venture partnership between PetroSaudi and 1MDB,” a court statement said.

After converting the joint venture into an Islamic loan, the pair helped embezzle two more payments of $500 million and $330 million by “falsely legitimizing them with purported investment opportunities – and then laundering the entire embezzled amount.”

“After embezzling the money, the defendants committed a number of acts aimed at thwarting the identification of the origin, tracing or loss of the assets,” the court said in its reasoning.

According to the report, Obaid was responsible for 370 cases of money laundering with a total value of over seven billion dollars, while Mahony was responsible for 220 cases of money laundering with a total value of over five billion dollars.

They were found guilty of fraud, aggravated money laundering and aiding and abetting serious mismanagement.

In setting the sentences, the court said it took into account “the very high amounts involved, the intensity of the criminal act, the selfish motive and – as a mitigating factor – the time that has elapsed”.

The allegations related to a period from 2009 to 2015.

The court also ordered the defendants to return to 1MDB the amounts diverted from the fund as well as “part of the seized assets” and ordered the confiscation of certain parts of their assets.

During the hearings, Chambrier said Obaid and Mahony squandered their loot on precious stones, private jets, rented yachts and real estate in London and Geneva.

– Investigations worldwide –

The multi-billion dollar financial scandal surrounding 1MDB has led to criminal investigations worldwide, including in the USA, Switzerland and Singapore.

It is alleged that a number of individuals stole billions of dollars from the 1Malaysia Development Berhad fund and used it to purchase everything from artwork to a superyacht.

The 1MDB scandal led to the fall of the Najib government in 2018.

In 2022, the former prime minister in Malaysia was sentenced to 12 years in prison for offenses related to embezzlement of public funds. In February, his sentence was halved to six years.

In a statement, 1MDB's board welcomed the rulings in Switzerland, particularly the order for the confiscation and restitution of funds and assets.

“We continue to take enforcement action against parties involved in the fraudulent misappropriation of Malaysian government funds around the world,” a spokesman said.

“Today's ruling is another step towards repairing the harm done to the Malaysian people. We will continue to pursue those responsible for the looting of 1MDB and recover our country's rightful assets, wherever they may be.”

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