Top Executives Convicted in $1.8 Billion Malaysia Fund Fraud Case

Switzerland's federal criminal court convicted two managers of a Saudi oil company for fraud and money laundering in a scheme that took $1.8 billion from Malaysia's 1MDB fund. Executives Tarek Obaid and Patrick Mahony received prison sentences and were ordered to pay back $2 billion. The scandal has wide-reaching impacts, including Hollywood.

In a landmark decision, Switzerland's federal criminal court has convicted two top managers of a Saudi oil company on Wednesday for their roles in a vast scam that defrauded Malaysia's state-owned investment fund of at least USD 1.8 billion.

Tarek Obaid, a Saudi-Swiss dual national and executive at PetroSaudi, received a seven-year prison sentence. His British-Swiss associate, Patrick Mahony, was sentenced to six years by the Federal Criminal Court in southern Bellinzona.

Swiss prosecutors originally requested a 10-year sentence for Obaid and nine years for Mahony. Additionally, the court mandated that the pair pay $2 billion, plus interest, to the 1 Malaysia Development Berhad (1MDB) sovereign wealth fund, and cover various other fees.

The fraud, which spanned over six years starting in 2009, involved false claims that PetroSaudi had exclusive access to oil fields in Argentina and Turkmenistan. This deceitful scheme convinced 1MDB to invest substantial sums of money.

During the trial, prosecutor Alice de Chambrier denounced the case as "the fraud of the century," describing the executives as "calculating and arrogant manipulators, with no scruples, and obscenely greedy," according to Swiss newspaper Le Temps.

Defense lawyers denied all charges and sought acquittals, although it remains unclear whether they will appeal the convictions.

The 1MDB scandal and subsequent cover-ups led to significant political upheaval in Malaysia, culminating in Najib Razak's electoral defeat in 2018 and his imprisonment for graft in 2022. Razak allegedly benefited by over $700 million from the scandal.

The fraudulent activities reached as far as Hollywood, financing extravagant parties, high-end real estate, a superyacht, and even the production of the 2013 film "The Wolf of Wall Street."

Swiss prosecutors noted that Obaid allocated some of the illicit funds to a $7 million donation to the Mayo Clinic in Minnesota, made in honor of his parents.

(With inputs from agencies.)