Switzerland convicts 2 oil executives in 1MDB graft scandal
August 28, 2024
Switzerland's Federal Criminal Court on Wednesday convicted two executives at an oil exploration company for embezzling more than $1.8 billion (over €1.6 billion) from Malaysia's state investment fund 1MDB.
The two men, Swiss-Saudi Tarek Obaid, 48, and Swiss-British national Patrick Mahony, 47, were sentenced to seven and six years in prison, respectively. They were also ordered to reimburse the fund with most of the money taken, with a slight reduction for interest payments already returned.
What is 1MDB?
The Malaysian state investment fund 1MDB, or the "1Malaysia Development Berhad" — with Berhad the Malaysian suffix for a public limited company — was a massive government investment project that rapidly degenerated into an international corruption case after the first allegations of wrongdoing started surfacing around 2015.
The most prominent person jailed as a result of the scandal is former Prime Minister Najib Razak, whose 12-year jail sentence was halved earlier this year after previous failed appeals.
What was the Swiss case about?
The men worked in Switzerland for the PetroSaudi oil exploration company.
Prosecutors alleged that they helped set up a joint venture with 1MDB by creating the impression that the company had Saudi government backing.
Prosecutors said that while this was not the case, the accused convinced members of the 1MDB board of their story before going on to defraud the fund.
"The accused deceived the members of the 1MDB board of directors into believing that PetroSaudi had links with the Saudi Arabian government and that PetroSaudi would contribute significant oil assets to the joint venture," the court said. "These statements were false, and the accused knew this very well."
The indictment found that both men had enriched themselves after defrauding the fund, Abaid to the tune of at least $805 million and Mahony at least $37 million.
The judge said the difference in the amounts they personally sought to profit was one reason for Abaid's longer prison sentence.
"The court took into account the very high amounts involved, the intensity of the criminal activity, [and] the selfish motive," the court said in a statement on the sentencing.
Both men had denied any wrongdoing during the trial. Obaid's lawyer said his client immediately filed an appeal against the verdict.
"Mr. Obaid has always contested the commission of any offense," lawyer Daniel Zappelli told the Reuters news agency. "The reasoning of the court has not taken into consideration very numerous factual and legal aspects that we had brought before it."
An estimated $4.5 billion embezzled in total
Prosecutors said the two men worked with fugitive Malaysian financier Jho Low, an adviser to former Prime Minister Razak.
The executives allegedly used an array of Swiss bank accounts to launder the funds, at least in a period stretching from 2009 to 2015.
They used the money to buy real estate in Switzerland and London, jewelry and private equity, and to develop the PetroSaudi business from which they were well paid, prosecutors said.
Malaysian and US investigators estimate a total of around $4.5 billion was siphoned away from 1MDB after its 2009 launch. The case has implicated figures including Razak, Goldman Sachs staff, Deutsche Bank in Germany, and high-level officials elsewhere.
The present-day management of the fund itself, which is still trying to recover the stolen assets, welcomed the news.
"We welcome today's verdict ... which means that Patrick Mahony and Tarek Obaid will face justice for their role in embezzling and defrauding the people of Malaysia," a spokesperson said.
msh/ab (dpa, Reuters)