Swiss court convicts 2 top PetroSaudi executives in fallout from 1MDB Malaysian fund scandal

GENEVA — Switzerland's federal criminal court on Wednesday convicted two top managers of a Saudi oil company on charges including fraud and money laundering in a vast scam that swiped at least $1.8 billion from a Malaysian state-owned investment fund.

PetroSaudi executive Tarek Obaid, a Saudi-Swiss dual national, received a seven-year sentence and British-Swiss associate Patrick Mahony was handed a six-year sentence from the Federal Criminal Court in southern Bellinzona, officials said.

Swiss prosecutors had requested a 10-year prison sentence for Obaid and nine years for Mahony. The court also ordered them to pay $2 billion, plus interest, to the 1 Malaysia Development Berhad, or 1MDB, sovereign wealth fund, and other fees, officials said.

Over a six-year span starting in 2009, the executives and an adviser to Malaysia's then-Prime Minister Najib Razak hatched a joint venture with 1MDB built in part around false claims that PetroSaudi had access to oil fields in Argentina and Turkmenistan — leading the fund to pour money into the project, according to prosecutors.

During the trial, prosecutor Alice de Chambrier denounced the activities as ''the fraud of the century'' and said the executives were ''calculating and arrogant manipulators, with no scruples, and obscenely greedy," Swiss newspaper Le Temps quoted her as saying during the proceedings in April.

Mahony's defense lawyer Laurent Baeriswyl blasted a ''shocking and totally contested verdict'' and expressed confidence in an email to The Associated Press that the appeals court will note that "the conditions for the charges retained were not met."

Myriam Fehr-Alaoui, a lawyer for Obaid, said he too will appeal. In an email to the AP, she wrote that the court's summary of the decision read out in court on Wednesday ''did not take into account many essential elements from the defense, and we regret that.''

Over the next two years, some $500 million was collected in connection with an ''investment opportunity'' in a French energy industrial group at a 20% discount that ''did not exist,'' and another $330 million was withdrawn from 1MBD to finance ''an alleged — non-existent — drilling project to be carried out in eastern Saudi Arabia,'' the court said.

One of the defendants — the court did not specify — committed 370 acts of money laundering for a total of more than $7.2 billion in dollars and other Western currencies, while the other was behind 220 such acts for a total of more than $5 billion.

The sentences were linked to the embezzlement of the $1 billion, the court said.

The Malaysian wealth fund welcomed the verdict and said the country had won a judgment for more than $1.75 billion and the recovery of ''known assets'' of $240 million. The whereabouts of much of the ill-gotten money remain unclear.

''Today's judgment is a further step towards recovering the harm done to the people of Malaysia,'' a spokesperson for 1MDB said in an email, noting Mahony and Obaid also face prosecution in the Southeast Asian country for embezzlement and other charges.

''Today's judgment shows that economic crimes are prosecuted regardless of their complexity and sophistication,'' he said in an email.

The 1MDB scandal and cover-up attempts upended the Malaysian government at the time. Najib suffered a stunning defeat in the 2018 elections and began serving a jail term in 2022 for graft. He allegedly reaped over $700 million.

The scandal also sent ripples through Hollywood, where some of the stolen money financed lavish parties, a superyacht, premium real estate and even the 2013 film ''The Wolf of Wall Street.'' Obaid used some of the money to donate $7 million to the Mayo Clinic in Minnesota in honor of his parents, Swiss prosecutors said.

Obaid was accused of having ''enriched himself'' directly or indirectly through the Saudi oil company to the tune of at least $800 million, prosecutors said. Mahony was said to have received at least $37 million.

Malaysian financier Low Taek Jho, who Swiss prosecutors said had ''privileged contacts'' with Najib and cooked up the plot with Obaid, remains an international fugitive.