Unlock Digest Editor for free
FT Editor Roula Khalaf picks her favourite stories in this weekly newsletter.
A Swiss court has sentenced two former PetroSaudi executives to long prison terms for their role in the collapse of Malaysia’s sovereign wealth fund 1MDB, in one of the biggest frauds of all time.
Tarek Obaid, the former CEO of Geneva-based oil producer PetroSaudi, and his right-hand man Patrick Mahony were found guilty on Wednesday of embezzling more than $1.8 billion from 1MDB Fund.
They were also convicted of nearly 600 money laundering acts, in which they sought to conceal the origin of more than $12 billion stolen by the alleged mastermind of the scam, Jho Low, and his co-conspirators.
Under Swiss law, a verdict from the country’s central criminal court does not take full legal effect until the defendant has exhausted his right to appeal.
The court in Bellinzona found the pair used their leadership positions at PetroSaudi to carry out three of the most brazen thefts in the long-running 1MDB looting campaign, working with Low as an informal but powerful adviser to the sovereign wealth fund.
Low, a close friend of former Malaysian prime minister Najib Razak and the alleged mastermind of the 1MDB fraud – described by the US Justice Department in 2016 as the world’s biggest corruption case ever – remains on the run.
Najib was jailed by Malaysian authorities for his role in the 2020 scandal.
Obaid, a Swiss-Saudi national, and British-Swiss Mahony helped steal large sums of money from 1MDB between 2009 and 2011, Swiss prosecutors said. They were was indicted last April..
The pair are said to have used the stolen money to fund a lavish lifestyle, buying gems and property in London and Geneva, and spending large sums on private jets and luxury yachts.
It was “the fraud of the century,” lead prosecutor Alice de Chambrier said. Obaid and Mahony were “calculating, manipulative and greedy beyond measure,” she told the court earlier this year, according to Swiss national news agency Keystone-ATS.
Judges heard how the two, along with Low, misled 1MDB trustees in 2009 into investing $1 billion in what they believed was a legitimate joint venture with PetroSaudi.
According to prosecutors’ indictment, a meeting was even arranged that August on a superyacht, the Alfa Nero, off the coast of Cannes with PetroSaudi founder Prince Turki bin Abdullah al Saud — who was unaware of the true nature of the transaction — to give the deal an appearance of legitimacy.
In a second heist, Obaid and Mahony withdrew another $500 million from 1MDB in 2010 for what they claimed was an Islamic loan.
In a third case, in May 2011, they took $330 million to fund a “nonexistent drilling project in eastern Saudi Arabia,” the indictment claims.
The judge sentenced Obaid to seven years in prison and Mahoney to six years.
“The court finds that a custodial sentence is necessary… given the very large sums of money involved, the seriousness of the criminal activity [and] selfish motives,” the court said in a statement.
Lawyers for Obaid and Mahony did not respond to requests for comment.
“We welcome today’s judgment by the Swiss Federal Criminal Court, which means Patrick Mahony and Tarek Obaid will face justice for their misappropriation and defrauding of the Malaysian people, and we commend the Swiss authorities for their efforts in securing these convictions,” said 1MDB management.
