A top Swiss court sentenced two PetroSaudi executives to jail terms on Wednesday after finding them guilty of embezzling $1.8 billion from Malaysia’s 1MDB sovereign wealth fund.

Tarek Obaid, 48, the Swiss-Saudi chief executive of the oil exploration and production company, was sentenced to seven years in prison by Switzerland’s Federal Criminal Court.

His right-hand man Patrick Mahony, 47, a Swiss-British director at Geneva-based PetroSaudi, was given a six-year sentence by the court in the southern city of Bellinzona.

The convictions can be challenged on appeal and the prosecution’s request for their immediate detention in custody was rejected by the court.

They were found guilty over their parts in a vast embezzlement orchestrated by Jho Low, an advisor to former Malaysian prime minister Najib Razak, with the complicity of the latter.

Noting the sums involved compared to Malaysia’s GDP, Prosecutor Alice de Chambrier called it the “scam of the century” and branded the defendants as “calculative, manipulative and obscenely greedy”, Swiss news agency Keystone-ATS reported during the trial.

‘Selfish motive’

The trial was heard by three judges in April.

The court found the defendants, acting in league with people working for 1MDB, “set up a fraud which enabled them, to the detriment of 1MDB, to collect $1 billion on the basis of a false joint venture partnership between PetroSaudi and 1MDB,” a court statement said.

After converting the joint venture into an Islamic loan, the pair aided the diversion of two additional payments of $500 million and $330 million, “falsely legitimising them with alleged investment opportunities – and then laundering the entire amount diverted”.

“Once the money had been embezzled, the defendants carried out a large number of acts aimed at frustrating the identification of the origin, the tracing or the forfeiture of assets,” the court said.

It found that Obaid committed 370 acts of money laundering, for a total of more than $7 billion, and Mahony 220 acts for more than $5 billion.

They were found guilty of fraud, aggravated money laundering and complicity in aggravated criminal mismanagement.

To set the sentences, the court said it took into account “the very high amounts involved, the intensity of the criminal activity, the selfish motive and, as a reducing factor, the time elapsed”.

The allegations covered a period from 2009 to 2015.

The court also ordered the defendants to return to 1MDB the amounts diverted from the fund, “as well as part of the assets under seizure, and ordered the forfeiture of certain elements of their assets”.

During the hearings, Chambrier said Obaid and Mahony squandered their loot on precious stones, private jets, rented yachts and property in London and Geneva.

Investigations worldwide

The multi-billion-dollar 1MDB financial scandal has led to criminal investigations around the world, including in the United States, Switzerland and Singapore.

It is alleged that billions of dollars were pilfered from the 1Malaysia Development Berhad fund by a number of people and used to buy items ranging from artwork to a superyacht.

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

In 2022, the former prime minister was sentenced to 12 years in jail in Malaysia for offences linked to the misuse of public money. In February, his sentence was halved to six years.

In a statement, the 1MDB board welcomed the convictions in Switzerland, notably the order for forfeiture and restitution of monies and assets.

“We continue to bring enforcement actions against the parties involved in fraudulent misappropriation of Malaysian state funds around the world,” a spokesperson said.

“Today’s judgement is a further step towards recovering the harm done to the people of Malaysia. We will continue to pursue those responsible for the looting of 1MDB and recover our nation’s rightful assets, wherever they may be.”