Swiss court convicts Petrosaudi duo over 1MDB fraud

The Swiss Federal Criminal Court has convicted Petrosaudi International Ltd executives Tarek Obaid and Patrick Mahony for their roles in embezzling Malaysia’s state investment fund 1MDB.

They were accused of creating the false impression that the Saudi government backed their company, in their bid to convince 1MDB’s board to set up a joint venture with their company in 2009.

They then proceeded to defraud 1MDB of US$1.8 billion (RM8 billion).

A Reuters report today quoted their indictment stating that Obaid got at least US$805 million, while Mahony (above, right) got at least US$37 million.

The report said Obaid was sentenced to seven years in prison, while Mahony was sentenced to six years.

In a separate statement, 1MDB said the court has also ordered the duo’s assets totalling more than US$240 million to be confiscated and restored to 1MDB.

This includes real estate in Switzerland and the UK and money held in numerous bank accounts.

“We welcome today’s verdict in Switzerland’s Federal Criminal Court, which means that Patrick Mahony and Tarek Obaid will face justice for their role in embezzling and defrauding the people of Malaysia, and we commend the Swiss authorities for their work securing these convictions,” said a spokesperson for 1MDB’s board.

The pursuit continues

The spokesperson said 1MDB will continue to work with authorities around the world to bring enforcement action against those involved in the misappropriation of 1MDB funds, which is estimated to total US$4.5 billion.

“Today’s judgment is a further step towards recovering the harm done to the people of Malaysia.

“We will continue to pursue those responsible for the looting of 1MDB and recover our nation’s rightful assets, wherever they may be,” the spokesperson added.

Apart from criminal action in Switzerland, 1MDB is also suing Mahony and the UK-based law firm White & Case LLP in Malaysian courts for allegedly misleading and defrauding 1MDB.

Its civil action demands the Mahony to repay US$1.83 billion to 1MDB, and for a court declaration that White & Case is liable to account for the same sum as a constructive trustee for 1MDB.

READ MORE: DOJ traces three phases of money-laundering through 1MDB

Previously, it was reported that Obaid, Mahoney, and the fugitive businessperson Low Taek Jho had conspired in what was dubbed the “Goodstar Phase” of the 1MDB scandal.

They had supposedly set up a joint venture for a fake project and convinced the 1MDB board to transfer US$1 billion for the joint venture, of which US$700 million was diverted into a Swiss account beneficially owned by Low.

Portions of the money diverted to Low were subsequently channelled to Obaid and Mahoney.

Swiss prosecutors claimed that the remaining US$300 million had been channelled to Petrosaudi for the company’s benefit.

Further, it said, the two accused also helped Low defraud 1MDB of another US$830 million between September 2010 and October 2011 as part of an Islamic loan that followed the fake joint venture.

Obaid’s name had been mentioned on multiple occasions during the 1MDB trial against former prime minister Najib Abdul Razak.

During a hearing in January, for example, an MACC investigating officer told the Kuala Lumpur High Court of a supposed meeting between Najib and PSI representatives including Obaid, aboard the yacht RM Elegance in the waters of southern France.

As for Low, he has claimed innocence and is still at large despite arrest warrants against him.

1MDB sues Petrosaudi's chief investment officer for return of US$1.83b

1MDB-linked legal action against Petrosaudi postponed to Nov 23

Najib told me to focus on 1MDB-Petrosaudi deal: Ex-chairperson

New judge for 1MDB-linked US$340m suit against Petrosaudi