Verdict in the trial of the Swiss part of the 1MDB scandal

The Swiss justice system will deliver its verdict on Wednesday in the trial of two PetroSaudi executives accused of embezzling $1.8 billion from the Malaysian sovereign wealth fund 1MDB.

The two men, who appeared free at the trial held in April before the Swiss Federal Criminal Court in the southern city of Bellinzona, are accused of participating in a vast embezzlement operation orchestrated by Jho Low, an adviser to former Malaysian Prime Minister Najib Razak with the latter’s complicity.

The total amount of the embezzlement is estimated to have reached several billion dollars, including at least $1.8 billion owed to the two men on trial in Switzerland: Tarek Obaid, 48, and Patrick Mahony, 47, against whom prosecutor Alice de Chambrier has requested 10 years and 9 years of imprisonment respectively.

The defense pleaded for acquittal, arguing that there had been no fraud. The federal prosecutor’s office also requested that the assets sequestered in Switzerland be returned to 1MDB.

The hearing is scheduled to start at 2 p.m.

The representative of the Office of the Attorney General of Switzerland (OAG) had requested that the two men be imprisoned after the trial, citing the risk of them fleeing before the verdict, but the court refused.

Holder of dual Swiss and Saudi nationality, Tarek Obaid, head of the Saudi-Swiss company PetroSaudi, based in Geneva, was tried for fraud, aggravated dishonest management and aggravated money laundering, as was his former right-hand man, the Swiss-British Patrick Mahony.

The alleged facts extend over a period from 2009 to at least 2015. During the trial, Tarek Obaid’s hearing was held behind closed doors due to the threats that were said to weigh on him and his relatives, reported the Swiss press agency Keystone-ATS.

The MPC accuses them of having, “with the aim of enriching themselves and third parties, embezzled at least 1.8 billion dollars paid by the Malaysian sovereign fund 1Malaysia Development Berhad (1MDB) on the basis of a joint venture with PetroSaudi, an operation subsequently converted into an Islamic loan, then of having laundered these amounts.”

According to the MPC, the money embezzled from 1MDB allowed the two men “to acquire, among other things, buildings in Switzerland and London, jewelry, private equity, to develop the activities of PetroSaudi and to maintain an expensive lifestyle.”

Prosecutor Alice de Chambrier had called the defendants “calculating, manipulative and obscenely greedy” and characterized the crime as “the scam of the century,” Keystone-ATS reported, while the defense tried to situate the case in the context of the relations between PetroSaudi and 1MDB.

In 2005, Tarek Obaid was serving as a private advisor to the Saudi crown and Prince Turki – the seventh son of King Abdullah – was his best friend, according to a long investigation published in June 2018 by the Swiss daily Le Temps.

PetroSaudi, co-founded with Prince Turki, was based within the royal palace and the implicit backing of the crown opened doors for it in the world of oil, Le Temps points out.

In 2009, Tarek Obaid approached Najib Razak, who had become Prime Minister of Malaysia, and the latter then proposed to him to do business. PetroSaudi and 1MDB then created a joint venture in Geneva.

The scandal surrounding the 1MDB fund, which is supposed to contribute to Malaysia’s economic development, has led to the opening of proceedings in several countries, including the United States.

According to the American justice system, more than $4.5 billion was embezzled from the fund between 2009 and 2015, in a fraud with global ramifications. In Malaysia, it cost former Prime Minister Najib Razak victory in the 2018 elections and led to his 12-year prison sentence, reduced to six years last February.

The scandal has already led to the conviction in Switzerland of a former BSI banker – a six-month suspended sentence – as well as the bank itself – 4.5 million francs – for money laundering, the Gotham City website revealed in March. The investment bank Pictet was fined 40,000 francs for not reporting a client involved, according to the same source.