Swiss Court Convicts Two Executives in $1.8B 1MDB Embezzlement
Two executives from an oil exploration company have been convicted by the Swiss Federal Criminal Court for embezzling more than $1.8bn from Malaysia’s state investment fund 1MDB.
It is worth noting that a complex tale of international corruption has buffeted a slew of financial institutions and individuals across the globe since allegations of wrongdoing first surfaced in 2015. The verdict today marks the latest episode in the 1MDB scandal.
Prosecutors alleged that Swiss-British national Patrick Mahony and Swiss-Saudi Tarek Obaid had helped set up a joint venture with 1MDB by creating the impression that their company, PetroSaudi, was backed by Saudi Arabia’s government.
This was not the case, but the accused managed to persuade 1MDB’s board into signing up to the scheme in 2009 before going on to defraud the fund, prosecutors said.
The case revealed that the two executives carted away with the wealth fund of $1.8bn to enrich themselves with Obaid getting at least $805m and Mahony at least $37m.
While Obaid got seven years in prison, Mahony received a sentence of six years.
The case between the two men was on the establishment of a fraudulent scheme with fugitive Malaysian financier Jho Low, an adviser to former Malaysian Prime Minister Najib Razak, who is in prison over his role in the multibillion-dollar scandal.
Initially, $1bn from 1MDB was illicitly taken by the accused so it could buy a stake in their venture, after which was the sum of $830m from the fund from 2010 to 2011 as part of an Islamic loan that followed on from their tie-up, prosecutors said.
Reports from the prosecutors show that from September 2009 to at least July 2015, the accused arranged for bank accounts to be opened in Switzerland to help launder the money.
The money was used to purchase a real estate in Switzerland and London, jewellery and private equity as well as to develop the PetroSaudi business, from which they received a sizeable income, and to maintain “a lavish lifestyle”, prosecutors said.
This year, 1MDB filed a lawsuit against Mahony seeking the return of the $1.83bn.
The 1MDB board lauded the convictions. “We welcome today’s verdict in Switzerland’s Federal Criminal Court, which means that Patrick Mahony and Tarek Obaid will face justice for their role in embezzling and defrauding the people of Malaysia,” a 1MDB spokesperson said on Wednesday.
Since inception, the Malaysian and US investigators estimated that a total of $4.5bn has been stolen from 1MDB.
