28-8-2024 (BELLINZONA) In a landmark ruling, the Swiss Federal Criminal Court today found two oil executives guilty of embezzling over US$1.8 billion from Malaysia’s state investment fund 1MDB. The verdict marks another significant chapter in the sprawling 1MDB scandal, which has sent shockwaves through the global financial community since 2015.
Patrick Mahony, a Swiss-British national, and Tarek Obaid, a Swiss-Saudi citizen, were convicted of orchestrating a sophisticated fraud scheme involving their company, PetroSaudi. The court heard how the pair fabricated connections to the Saudi government to lure 1MDB’s board into a joint venture in 2009.
Prosecutors successfully argued that Mahony and Obaid, in collusion with fugitive Malaysian financier Jho Low, systematically defrauded the wealth fund to line their own pockets. Obaid reportedly pocketed at least US$805 million, whilst Mahony received no less than US$37 million.
The court handed down a seven-year prison sentence to Obaid, with Mahony receiving a six-year term. These punitive measures reflect the gravity of their offences and the staggering sums involved.
The fraudulent scheme initially extracted US$1 billion from 1MDB under the guise of purchasing a stake in their venture. Between 2010 and 2011, the convicted duo managed to siphon off an additional US$830 million through an Islamic loan tied to their partnership.
This case forms part of a broader investigation into the misappropriation of funds from 1MDB. Malaysian and US authorities estimate that approximately US$4.5 billion was illicitly diverted from the fund since its establishment in 2009. The scandal has implicated a diverse array of individuals, from former Malaysian Prime Minister Najib Razak to employees of Goldman Sachs.
