Verdict expected in Swiss trial over $1.8 billion Malaysian 1MDB fund “fraud”

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The Swiss Federal Criminal Court was due to announce its verdict on Wednesday in the case of two PetroSaudi managers accused of embezzling $1.8 billion from the Malaysian sovereign wealth fund 1MDB.

Swiss prosecutors called for heavy prison sentences for the two men during the trial, which took place in April before three judges in a court in the southern city of Bellinzona.

PetroSaudi's 48-year-old chief executive Tarek Obaid and 47-year-old Patrick Mahony, a director of the Saudi oil exploration and production company, are accused of involvement in a major embezzlement scheme masterminded by Jho Low, an adviser to former Malaysian Prime Minister Najib Razak.

Prosecutor Alice de Chambrier pointed to the sums compared to Malaysia's GDP and called it the “scam of the century.” She branded the defendants “calculating, manipulative and obscenely greedy,” the Keystone-ATS news agency reported during the trial.

She called for a ten-year prison sentence for Obaid and nine years for his right-hand man.

The defense pleaded for acquittal on the grounds that there was no fraud.

Obaid holds dual citizenship of Switzerland and Saudi Arabia, while Mahony holds Swiss and British citizenship.

The public prosecutor's office requested that the two men be taken into custody at the end of the trial because there was a risk of them fleeing before the verdict was announced. However, the court rejected this request.

The verdict is scheduled to begin at 2:00 p.m. (12:00 GMT).

According to the original indictment, the two defendants are alleged to have “embezzled at least $1.8 billion” that 1MDB had transferred as part of a joint venture with PetroSaudi “with the aim of enriching themselves and others, and subsequently laundered the amounts in question.”

“The allegations cover a period from at least 2009 to 2015 and concern the criminal offenses of commercial fraud, serious breach of trust and serious money laundering.

“The two defendants used the money embezzled from 1MDB to, among other things, acquire real estate in Switzerland and London, jewelry and private equity, expand PetroSaudi activities from which they derived substantial income, and maintain a lavish lifestyle,” the indictment states.

The multi-billion dollar financial scandal surrounding 1MDB has led to criminal investigations worldwide, including in the USA, Switzerland and Singapore.

It is alleged that a number of individuals stole billions of dollars from the 1Malaysia Development Berhad fund and used it to purchase everything from artwork to a superyacht.

In 2022, Najib was sentenced to 12 years in prison in Malaysia for offenses related to embezzlement of public funds. In February, his sentence was halved to six years.

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

During the Swiss trial, the prosecution demanded the seizure and return of the assets seized in Switzerland to 1MDB.

Chambrier said Obaid and Mahony squandered their loot on precious stones, private jets, rented yachts and real estate in London and Geneva.

She accused them of “extraordinary criminal activity and persistence” over a ten-year period between 2009 and 2019, if the alleged cover-up acts are included, Keystone-ATS reported.

The defense attempted to explain the context of the relationship between PetroSaudi and 1MDB.

Nicolas Rouiller said the Swiss Attorney General's Office had “taken a radically wrong approach” and ignored the nature of Saudi Arabia's absolute monarchy.

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

As for the use of an Islamic loan, Rouiller said that this was a common practice in Muslim countries and therefore could not be considered a dishonest maneuver aimed at defrauding 1MDB.

“There were no injuries during this operation. This is exactly what the partners wanted,” he said.

Lawyer Daniel Zappelli said several charges had been dropped by prosecutors, stressed the absence of Najib and Low and said there were discrepancies in the amounts the defendants allegedly laundered, Keystone-ATS reported.

The defence also said Riyadh and Kuala Lumpur wanted to strengthen their relations after Najib's election in 2009, claiming the Malaysians wanted to quickly complete a joint venture between 1MDB and PetroSaudi.

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