Two managers from a Saudi oil company were convicted this week in an alleged fraud scandal from the 1 Malaysia Development Berhad, or 1MDB.
On Wednesday, Switzerland’s federal criminal court convicted Tarek Obaid, an executive at PetroSaudi and Patrick Mahony, an associate on charges including a fraud and money laundering scheme that swiped $1.8 billion from the Malaysian state-run investment fund, 1MDB.
Obaid, a Saudi-Swiss dual national, received a seven-year sentence and British-Swiss associate Mahony was handed a six-year sentence by the Federal Criminal Court in southern Bellinzona.
Swiss prosecutors sought a 10-year prison sentence for Obaid and nine years for Mahony. The court also ordered them to pay $2 billion, plus interest, to the 1 Malaysia Development Berhad (1MDB) sovereign wealth fund, along with additional fees, according to officials.
Prosecutors alleged that in a six-year period beginning in 2009, the two executives and an adviser to former Malaysian Prime Minister Najib Razak, created a scheme for 1MDB to funnel money to PetroSaudi, over false claims that the oil company was working on oil fields in Argentina and Turkmenistan.
Swiss prosecutor Alice de Chambrier said during the trial that this incident was “the fraud of the century.”
She also said that the two individuals involved were “calculating and arrogant manipulators, with no scruples, and obscenely greedy,” the Swiss newspaper, Le Temps, previously reported.
A picture taken on Aug. 28, 2024 shows the Swiss Federal Criminal Court in Bellinzona during the verdict in the trial of two PetroSaudi managers accused of embezzling $1.8 billion from the Malaysian sovereign wealth fund 1MDB. On Aug. 28, 2024, the two individuals were convicted by a Swiss court.
FABRICE COFFRINI/AFP via Getty Images/Getty Images
Defense lawyers for the two individuals disputed the charges against their clients, and sought an acquittal. It is currently unknown if the lawyers are planning to appeal the conviction.
Matteo Cremaschi, a spokesman for the Swiss attorney general’s office said in a statement that the conviction was “an important result in a highly complex criminal procedure with international ramifications” The Associated Press (AP) reported.
“Today’s judgment shows that economic crimes are prosecuted regardless of their complexity and sophistication,” Cremaschi said in an email to the AP.
The 1MDB scandal and subsequent cover-up efforts shook the Malaysian government, leading to a stunning defeat for Najib in the 2018 elections. In 2022, he began serving a prison sentence for corruption, having allegedly pocketed over $700 million.
The scandal’s impact extended to Hollywood, where stolen funds were used to finance extravagant parties, a superyacht, luxury real estate, and even the 2013 film The Wolf of Wall Street. Swiss prosecutors revealed that Obaid also used part of the money to donate $7 million to the Mayo Clinic in Minnesota in honor of his parents.
The joint venture required 1MDB to invest $1 billion, while PetroSaudi was supposed to contribute $2.7 billion worth of oil fields in Turkmenistan and Argentina. However, court documents revealed that PetroSaudi didn’t actually own those assets.
This article includes reporting from The Associated Press
