Swiss Court Convicts Two Executives of Embezzling $1.8 Billion from 1MDB

Swiss Court Convicts Two Executives of Embezzling $1.8 Billion from 1MDB

The Swiss Federal Criminal Court has convicted two executives from the oil exploration company PetroSaudi of embezzling over $1.8 billion from Malaysia’s state investment fund, 1MDB. This ruling marks a significant development in the long-running 1MDB scandal, which has involved extensive international corruption and implicated numerous financial institutions and individuals globally since allegations emerged in 2015.

Patrick Mahony, a Swiss-British national, and Tarek Obaid, a Swiss-Saudi national, according to Aljazeera, were found guilty of orchestrating a fraudulent scheme that convinced 1MDB’s board to enter into a joint venture under false pretences. Prosecutors revealed that Mahony and Obaid had misled 1MDB into believing that PetroSaudi was backed by the Saudi Arabian government, which was untrue.

The court sentenced Obaid to seven years in prison and Mahony to six years. The fraudulent activities began in 2009 when the two executives persuaded 1MDB to invest $1 billion into their joint venture. Between 2010 and 2011, they extracted an additional $830 million from the fund through an Islamic loan, using Swiss bank accounts to launder the money. The funds were then spent on real estate in Switzerland and London, luxury items, and the expansion of the PetroSaudi business, all while the two lived lavish lifestyles.

Prosecutors allege that fugitive Malaysian financier Jho Low, an adviser to former Malaysian Prime Minister Najib Razak, who is currently serving a prison sentence for his involvement in the scandal, was also part of the fraudulent scheme.

The 1MDB board welcomed the convictions, emphasising that justice was served for the people of Malaysia. This case is one of many linked to the 1MDB scandal, which saw an estimated $4.5 billion syphoned from the fund since its inception in 2009. The scandal has implicated high-profile figures, including Najib Razak, Goldman Sachs staff, and other officials.

In related developments, last year, a US court sentenced former Goldman Sachs manager Ng Chong Hwa, also known as “Roger Ng,” to 10 years in prison for conspiring to launder billions of dollars embezzled from 1MDB. Additionally, in June, the US Department of Justice announced the recovery of $156 million in 1MDB funds, bringing the total amount returned to Malaysia to approximately $1.4 billion.