Two executives from PetroSaudi have been convicted by the Swiss Federal Criminal Court for embezzling over $1.8 billion from Malaysia’s state investment fund 1MDB. Patrick Mahony and Tarek Obaid received sentences of six and seven years, respectively, for their role in the fraudulent scheme. Prosecutors claimed that the two men, along with fugitive financier Jho Low, deceived 1MDB into investing in their joint venture by falsely representing PetroSaudi’s backing by the Saudi government.
The defendants extracted $1 billion from 1MDB to purchase a stake in their venture, then took an additional $830 million as part of an Islamic loan during 2010-2011. The money was laundered through Swiss bank accounts and used to buy real estate, jewelry, and private equity, as well as to fund PetroSaudi’s operations and their own extravagant lifestyle. 1MDB has filed a lawsuit against Mahony to reclaim the stolen funds and expressed satisfaction with the court’s decision.
This development is part of the larger 1MDB scandal, which has implicated numerous high-profile individuals and financial institutions. Malaysian and US investigators estimate that a total of $4.5 billion was misappropriated from 1MDB since its inception in 2009. A former Goldman Sachs manager was sentenced to 10 years in jail for money laundering related to the scandal, and the US Department of Justice has helped return $1.4 billion of embezzled funds to Malaysia. The case continues to shed light on the extent of corruption and financial malpractice within the global financial system.
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