24-5-2024 (KUALA LUMPUR) Malaysia’s insolvent sovereign wealth fund, 1Malaysia Development Berhad (1MDB), is seeking US$1.83 billion in a lawsuit against a senior oil executive, Patrick Mahony, over what it describes as a “sham” joint venture.
In a May 7 filing to the Kuala Lumpur High Court, 1MDB accused Mahony, who was the chief investment officer of PetroSaudi International (PSI) at the time, of aiding various individuals, including former prime minister Najib Razak, in the misappropriation of state finances in one of the world’s biggest financial scandals that came to a head in 2015.
The fund claimed it was misled into believing a Saudi king owned PetroSaudi, which led to it agreeing to a 2009 joint venture, according to local media reports. However, it later stated that the joint venture “was a sham which resulted in 1MDB suffering a complete loss of its investment” of US$1.83 billion.
1MDB claimed Mahony is liable for the sum on the grounds of “dishonest assistance,” alleging that he helped not only Najib but also PSI director Tarek Obaid, 1MDB executive director Casey Tang Keng Chee, and fugitive businessman Low Taek Jho (Jho Low) in defrauding the fund.
The lawsuit also named UK-based law firm White & Case LLP as a defendant, claiming that it acted on Mahony’s instructions to prepare purchase and loan agreements on behalf of PetroSaudi to deceive 1MDB, according to the Malaysian news agency Bernama.
Mahony, a British-Swiss citizen, and Saudi-Swiss national Obaid, were both on trial at Switzerland’s Federal Criminal Court in April, facing accusations of embezzlement. Prosecutors sought a 10-year sentence for Obaid and a nine-year jail term for Mahony.
The trial, which began on April 2, is set to last until the end of May, according to The Edge Malaysia.
During the Swiss trial, Mahony was described by local media as apparently struggling to remember certain details surrounding dealings between PSI and 1MDB, including a purported US$700 million fake loan, which was generated by PSI into the joint venture company.
The loan was apparently “repaid” into an account allegedly owned by PSI but in fact belonged to Low, who was controlling decisions at 1MDB at the behest of Najib, according to media reports.
Malaysia lost an estimated US$4.5 billion in the 1MDB scandal, which involved the widespread embezzlement of state funds. Former prime minister Najib was sentenced to 12 years in jail for his involvement in the saga, found guilty of several charges, including the laundering of funds from SRC International, a former 1MDB subsidiary.
Following a Pardons Board meeting in January, his jail sentence was halved from 12 to six years. In April, he made a bid to serve the remainder under house arrest.
