Switzerland’s federal criminal court convicted two oil executives on Aug. 28 for embezzling more than $1.8 billion from Malaysia’s state investment fund 1MDB.
The court in southern Bellinzona found that Swiss British national Patrick Mahony and Swiss Saudi national Tarek Obaid helped set up a joint venture with 1MDB by creating the false impression that their company, PetroSaudi, was backed by the Saudi government.
The pair persuaded 1MDB’s board to sign on to the scheme in 2009 before defrauding the fund, allowing them to collect $1 billion through the false joint venture. They took a further $830 million from the fund between 2010 and 2011, according to prosecutors.
The pair were ordered to pay back more than $1.75 billion to the fund. The discrepancy between the amount taken and the amount owed back represents the interest payments the fraudsters made to 1MDB during the scam.
The sovereign wealth fund 1MDB was created by the government of Malaysia to promote economic development in the country through global partnerships and foreign direct investment.
Obaid and Mahony acted in concert with Jho Low, a confidant of then-Malaysian Prime Minister Najib Razak and an informal consultant holding no official position within 1MDB.
Razak is serving a prison sentence over his role in the scandal.
Islamic Loan
The Swiss court found that in December 2009, shortly after embezzling $1 billion, Obaid and Mahony converted the joint venture into an “Islamic loan” aimed solely at cashing out funds from the company.Some $500 million was collected in connection with an investment opportunity in a French energy group that “did not exist,” according to prosecutors. Another $330 million was withdrawn from 1MBD to finance “an alleged—non-existent—drilling project to be carried out in eastern Saudi Arabia,” the court said.
The court said that once the money had been embezzled, the defendants then carried out a large number of acts aimed at “frustrating the identification of the origin, the tracing or the forfeiture of assets.”
It ordered the defendants, Obaid and Mahony, to return to 1MDB the amounts diverted from it.
In a statement, the Swiss court said the ruling is not yet in effect. Under Swiss criminal law, a judgment becomes final after a specified period has lapsed without an appeal being lodged, usually 10 days, or after the outcome of an appeal is reached. Both men said they plan to appeal, according to their lawyers.
Mahony’s lawyers said the judgment was shocking.
“The judgment accuses our client of acts committed by various Malaysian individuals without ever examining what our client could have or might have known,” Mahony’s defense lawyer, Laurent Baeriswyl, said.
“We clearly demonstrated during the trial that none of the conditions of the crimes were fulfilled and we are confident that the court of appeal ... will take into account the overwhelming evidence that exonerates our client.”
A spokesman from the Office of the Attorney General of Switzerland told The Epoch Times by email that the case is “an important result in a highly complex criminal procedure with international ramifications.”
“In addition to numerous hearings in Switzerland and abroad, this vast investigation required the examination of hundreds of thousands of documents, including those obtained through international mutual assistance, as well an extensive forensic analysis of the financial transfers,” he said. “Today’s judgment shows that economic crimes are prosecuted regardless of their complexity and sophistication.”
