PetroSaudi execs get Swiss jail terms over $1.8 bn 1MDB fraud

A top Swiss court sentenced two PetroSaudi executives to jail terms on Wednesday after finding them guilty over the embezzlement of $1.8 billion from the Malaysian sovereign wealth fund 1MDB.

Tarek Obaid, the Swiss-Saudi chief executive of the oil exploration and production company, was sentenced to seven years in prison by the Federal Criminal Court, Switzerland's Keystone-ATS news agency reported.

Patrick Mahony, a Swiss-British director at PetroSaudi, was given a six-year sentence, the agency said.

Prosecutor Alice de Chambrier had sought a 10-year sentence for Obaid and a nine-year term for his right-hand man.

Obaid, 48, and Mahony, 47, were seen arriving separately at the court in the southern city of Bellinzona ahead of the verdict hearing.

The trial was heard by three judges at the court in April.

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Obaid and Mahony were accused of involvement in a vast embezzlement orchestrated by Jho Low, an advisor to former Malaysian prime minister Najib Razak.

Noting the sums involved compared to Malaysia's GDP, Chambrier called it the "scam of the century" and branded the defendants as "calculative, manipulative and obscenely greedy", Keystone-ATS reported during the trial.

The defence pleaded for acquittal, arguing that no fraud had taken place.

'Lavish lifestyle'

According to the original indictment, "the two accused are alleged, with the aim of enriching themselves and others, to have misappropriated at least $1.8 billion", transferred by 1MDB in connection with a joint venture with PetroSaudi, "and then to have laundered the amounts involved".

"The allegations cover a period at least from 2009 to 2015 and constitute the offences of fraud on a commercial basis, aggravated criminal mismanagement, and aggravated money laundering."

The indictment said the defendants "used money misappropriated from 1MDB" to acquire real estate in Switzerland and in London, jewellery and private equity.

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They were also accused of using the money "to develop PetroSaudi activities from which they received substantial income, and to maintain a lavish lifestyle".

The multi-billion-dollar 1MDB financial scandal has led to criminal investigations around the world, including in the United States, Switzerland and Singapore.

It is alleged that billions of dollars were pilfered from the 1Malaysia Development Berhad fund by a number of people and used to buy items ranging from artwork to a superyacht.

The 1MDB scandal led to the fall of Najib's government in 2018.

In 2022, the former prime minister was sentenced to 12 years in jail in Malaysia for offences linked to the misuse of public money. In February, his sentence was halved to six years.

Gems and jets claim

During the Swiss trial, Chambrier said Obaid and Mahony squandered their loot on precious stones, private jets, rented yachts and property in London and Geneva.

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She accused them of "extraordinary criminal activity and tenacity" over 10 years between 2009 and 2019, if alleged acts of concealment are included, Keystone-ATS reported.

The defence lawyers tried to set out the context of relations between PetroSaudi and 1MDB.

Nicolas Rouiller said the Swiss attorney-general's office had "adopted a radically wrong approach", ignoring the nature of Saudi Arabia's absolute monarchy.

He said individuals, especially those belonging to very high-ranking families like Obaid, were not free in their actions.

As for the use of an Islamic loan, Rouiller said it was a common practice in Muslim countries and could not therefore be seen as a dishonest manoeuvre aimed at cheating 1MDB.

"There is no injury in this operation. This is exactly what is wanted" by the partners, he said.

Lawyer Daniel Zappelli said several allegations had been dropped by the prosecution, highlighted the absence of Najib and Low and said there were variations in the amounts that the defendants allegedly laundered, Keystone-ATS reported.

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The defence also said Riyadh and Kuala Lumpur wanted to strengthen relations following Najib's election in 2009 and claimed the Malaysians wanted a joint venture between 1MDB and PetroSaudi wrapped up quickly.

Source: AFP