Two oil exploration executives have been convicted by the Swiss Federal Criminal Court for embezzling over $1.8 billion from Malaysia’s state investment fund 1MDB.
Swiss-British Patrick Mahony and Swiss-Saudi Tarek Obaid must repay more than $1.75 billion to the fund, with the difference attributed to interest payments returned during the scam.
This verdict is the latest chapter in the 1MDB scandal, a global corruption saga that emerged in 2015. Prosecutors claimed Mahony and Obaid deceived 1MDB’s board into a joint venture by falsely presenting their company, PetroSaudi, as backed by the Saudi government. They convinced the board in 2009 and subsequently defrauded the fund.
Court documents revealed the duo defrauded $1.8 billion, enriching Obaid with at least $805 million and Mahony with $37 million. Both were found guilty of fraud, criminal mismanagement, and money laundering in Bellinzona. Obaid received a seven-year sentence, while Mahony got six years, reflecting the extent of their gains.
Obaid’s lawyer, Daniel Zappelli, stated his client has appealed the decision, maintaining Obaid’s innocence. Mahony’s lawyer did not comment.
Prosecutors indicated the scheme involved fugitive financier Jho Low, an adviser to former Malaysian prime minister Najib Razak, who is already imprisoned for his role in the scandal. Initially extracting $1 billion from 1MDB to acquire a stake in their venture, the accused secured an additional $830 million through an Islamic loan between 2010 and 2011.
From September 2009 to at least July 2015, they laundered money through Swiss bank accounts, purchasing real estate, jewellery, private equity, and funding PetroSaudi while maintaining an opulent lifestyle.
Investigators estimate that $4.5 billion was diverted from 1MDB since its inception in 2009, implicating various high-profile individuals, including Razak and Goldman Sachs employees.
The former sovereign wealth fund, currently recovering its assets, welcomed the court’s decision, stating that Mahony and Obaid will now face justice for defrauding the Malaysian people.
What Other Media Are Saying
- AP News reports on a Swiss court verdict, convicting two PetroSaudi executives of fraud and money laundering, involving the 1MDB scandal. (read more)
- Punchng reports that two PetroSaudi executives, Tarek Obaid and Patrick Mahony, were sentenced to seven and six years in prison respectively for embezzling $1.8 billion from Malaysia’s 1MDB fund. (read more)
- Bloomberg reports on the conviction of two Geneva businessmen by a Swiss court for their roles in a $1.8 billion 1MDB fraud scheme, with sentences of seven and six years in prison respectively. (read more)
Frequently Asked Questions
Here are some common questions asked about this news
Who were the executives convicted in the 1MDB scandal?
Patrick Mahony and Tarek Obaid.
How much money did the executives embezzle from 1MDB?
What sentences did Mahony and Obaid receive?
Mahony was sentenced to six years, Obaid to seven years.
Why was there a difference in the sentences for Mahony and Obaid?
Obaid enriched himself more than Mahony.
What was the role of Jho Low in the 1MDB scandal?
He helped create the fraudulent scheme and was an adviser to former Malaysian PM Najib Razak.