In a landmark decision, the federal criminal court in Switzerland has found two top executives of a Saudi oil company guilty of fraud and money laundering in connection to a scheme that siphoned off a minimum of $1.8 billion from a Malaysian state-owned investment fund. Tarek Obaid, a Saudi-Swiss dual national and executive at PetroSaudi, has been sentenced to seven years in prison, while his British-Swiss associate, Patrick Mahony, received a six-year prison term from the Federal Criminal Court in Bellinzona. The court also ordered them to repay $2 billion, plus interest, to the 1 Malaysia Development Berhad (1MDB) sovereign wealth fund.
Over a period of six years starting in 2009, the convicted executives, along with an adviser to Malaysia’s then-Prime Minister, concocted a joint venture with 1MDB based on false claims that PetroSaudi had access to oil fields in Argentina and Turkmenistan. This misinformation led to substantial investments from the fund. The prosecution described the scam as “the fraud of the century,” highlighting the defendants as “calculating and arrogant manipulators, with no scruples, and obscenely greedy.”
The court revealed that the defendants used deceptive tactics to convince 1MDB directors that PetroSaudi was linked to the Saudi government and would contribute assets to the venture, which turned out to be untrue. Prosecutors stated that the embezzlement primarily occurred through a false joint venture where $1 billion was collected in 2009, followed by another $500 million and $330 million in subsequent years for non-existent projects.
The verdict was met with approval from the Malaysian wealth fund, which expressed gratitude for the justice served and the anticipated recovery of funds. The 1MDB spokesperson suggested that the ruling marked progress in rectifying the damages inflicted on Malaysia. The Swiss attorney general’s office commended the outcome as a significant achievement in a complex international criminal investigation that involved meticulous scrutiny of numerous financial transactions and extensive documentation.
The repercussions of the 1MDB scandal extended beyond legal ramifications to influence the political landscape in Malaysia, resulting in a change of government and legal action against prominent figures involved. The scandal also had far-reaching implications in Hollywood, where illicit funds were used to finance extravagant lifestyles and film production. One of the convicted executives, Tarek Obaid, was implicated in illegally acquiring significant wealth through the Saudi oil company, while his associate, Patrick Mahony, was reported to have received substantial sums. Another key figure in the scandal, Low Taek Jho, is currently evading international law enforcement.
Overall, the pursuit of justice in the 1MDB scandal underscores the unwavering commitment to combat economic crimes irrespective of their intricacy and global nature.