Two executives from oil exploration company PetroSaudi, Patrick Mahony and Tarek Obaid, have been sentenced by the Swiss Federal Criminal Court to six and seven years in prison for their involvement in embezzling over $1.8bn from Malaysia’s state investment fund 1MDB. The court found that the two men had set up a joint venture with 1MDB, creating the impression that PetroSaudi was backed by the Saudi Arabian government when it was not. They then defrauded the fund, enriching themselves with millions of dollars.
The executives worked with fugitive Malaysian financier Jho Low, an adviser to former Malaysian Prime Minister Najib Razak, who is currently in prison over his role in the scandal. The accused used the money to buy real estate, jewellery, and maintain a lavish lifestyle. Prosecutors also alleged that they used the funds to develop the PetroSaudi business.
After investigations by Malaysian and US authorities, it was estimated that a total of $4.5bn was siphoned away from 1MDB since its inception in 2009. Last year, a former Goldman Sachs manager was sentenced to 10 years in jail for his role in laundering funds from the state investment fund. The US Department of Justice has helped recover an additional $156m in 1MDB funds for Malaysia, bringing the total returned to Kuala Lumpur to $1.4bn.
1MDB welcomed the verdict in Switzerland, stating that it brings justice for the people of Malaysia who were defrauded. The case is part of a broader international scandal involving corruption and embezzlement that has implicated high-level officials and financial institutions across the globe.
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