Executives in the Oil Industry Found Guilty of Stealing $1.8 Billion from Malaysia’s 1MDB Fund

Switzerland’s federal criminal court made a ruling on Aug. 28, convicting two oil executives of embezzling over $1.8 billion from Malaysia’s state investment fund 1MDB.

The court in southern Bellinzona established that Swiss British national Patrick Mahony and Swiss Saudi national Tarek Obaid facilitated the creation of a joint venture with 1MDB by deceitfully portraying their company, PetroSaudi, as backed by the Saudi government.

The duo managed to convince 1MDB’s board to partake in the scheme in 2009 before proceeding to defraud the fund, enabling them to garner $1 billion through the false joint venture. They siphoned off an additional $830 million from the fund between 2010 and 2011, according to prosecutors.

The pair was directed to repay more than $1.75 billion to the fund. The variance in amounts accounts for the interest payments that the fraudsters made to 1MDB during the scam.

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The sovereign wealth fund 1MDB was initiated by the government of Malaysia to foster economic growth in the country through global partnerships and foreign direct investment.

Obaid and Mahony collaborated with Jho Low, a close associate of Malaysia’s then-Prime Minister Najib Razak and an unofficial consultant with no formal role within 1MDB.

Razak is currently serving a prison sentence for his involvement in the scandal.

Islamic Loan

The Swiss court determined that in December 2009, shortly after embezzling $1 billion, Obaid and Mahony transformed the joint venture into an “Islamic loan” solely to extract funds from the company.

Approximately $500 million was obtained in connection to an investment opportunity in a French energy group that turned out to be non-existent, as per prosecutors. Another $330 million was withdrawn from 1MBD to finance a fictitious drilling project in eastern Saudi Arabia, the court revealed.

Subsequent to the embezzlement, the defendants engaged in a multitude of actions aimed at obstructing the identification of the origin, tracing, or seizure of assets, the court specified.

Obaid and Mahony were instructed to return to 1MDB the diverted amounts.

In a statement, the Swiss court mentioned that the ruling is not finalized. According to Swiss criminal law, a judgment becomes legally binding after a specified period if no appeal is made, usually within 10 days, or following the determination of an appeal outcome. Both individuals indicated their intention to appeal, as confirmed by their legal representatives.

Mahony’s legal team expressed their astonishment at the verdict.

“The judgment attributes acts committed by various Malaysian individuals to our client without ever considering what he could have known,” cited Laurent Baeriswyl, Mahony’s defense attorney.

“During the trial, we substantiated that none of the criminal conditions were met, and we trust that the court of appeal…will take into account the compelling evidence that clears our client of wrongdoing.”

A representative from the Office of the Attorney General of Switzerland communicated to The Epoch Times via email that the case represents “an important outcome in a highly intricate criminal procedure with international implications.”

“Aside from numerous hearings in Switzerland and abroad, this extensive investigation demanded the scrutiny of hundreds of thousands of documents, including those obtained through international cooperation, as well as thorough forensic analysis of financial transactions,” the representative asserted. “Today’s verdict demonstrates that economic crimes are pursued regardless of their complexity and sophistication.”

Attorneys for the pair did not respond to The Epoch Times’ request for comment at the time of publication.

The Associated Press and Reuters contributed to this report.