Malaysia 1MDB scandal: Swiss court convicts 2 executives in USUS$1.8 billion embezzlement case

The Swiss Federal Criminal Court convicted on Wednesday two executives at an oil exploration company for embezzling more than US$1.8 billion from Malaysia’s state investment fund 1MDB.

Swiss-British national Patrick Mahony and Swiss-Saudi Tarek Obaid were also ordered to pay back more than US$1.75 billion to the fund, which was at the centre of an international kleptocracy scandal.

The difference between the two amounts was interest payments the fraudsters paid back to 1MDB during the scam.

The verdict was the latest episode in the 1MDB affair, a complex tale of international corruption that has buffeted a slew of financial institutions and individuals across the globe since allegations of wrongdoing first surfaced in 2015.

Prosecutors alleged that Mahony and Obaid had helped to set up a joint venture with 1MDB by creating the impression that their company, PetroSaudi, was backed by the Saudi government.

This was not in fact the case, but the accused managed to persuade 1MDB’s board into signing up to the scheme in 2009 before going on to defraud the fund, prosecutors said

“The accused deceived the members of the 1MDB board of directors into believing that Petrosaudi had links with the Saudi Arabian government and that Petrosaudi would contribute significant oil assets to the joint venture,” the court said.

“These statements were false, and the accused knew this very well.”

According to the indictment, the two executives defrauded the wealth fund of US$1.8 billion to enrich themselves, with Obaid getting at least US$805 million and Mahony at least US$37 million

They were both convicted of fraud, criminal mismanagement and money laundering by the court in the southern Swiss city of Bellinzona.

Obaid was sentenced to seven years in