KUALA LUMPUR – The Office of the Attorney General of Switzerland (OAG) has filed an indictment against two Petrosaudi managers, accusing them of misappropriating at least US$1.8 billion (RM8.03 bil) transferred by 1Malaysia Development Bhd (1MDB) to enrich themselves and others.
The two accused used the misappropriated funds to acquire real estate in Switzerland and London, jewellery, and private equity to develop Petrosaudi activities from which they received substantial income among other expenditures. The funds were also used to maintain their lavish lifestyle.
The OAG will submit its conclusions, including requests relating to the forfeiture of the assets under seizure, at the hearing before the Swiss Federal Criminal Court (FCC) in Bellinzona.
The assets under seizure total around 192 million Swiss francs (RM959.64 million) – not counting the real estate seized in Switzerland and in London.
According to the statement released by the OAG, the indictment at the FCC accused the duo of acting in concert with fugitive Low Taek Jho (Jho Low) to propose a purported government-to-government transaction between Saudi Arabia and Malaysia through a joint venture between Petrosaudi and 1MDB.
The allegations were said to have taken place at least from 2009 to 2015, pointing to supposed involvement by Jho Low’s Good Star Ltd in the 1MDB financial scandal.
As part of the indictment, the duo was accused of working with Jho Low to “manipulate” a meeting with then Malaysian prime minister Datuk Seri Najib Razak – who was finance minister and 1MDB advisory board chairman – and Prince Turki Bin Abdullah Bin Abulaziz Al Saud – the son of the late Saudi king.
The purported meeting was held near Cannes in August 2009 on the yacht called Alfa Nero.
The OAG said the joint venture contract that was concluded in September 2009 required 1MDB to provide US$1 billion in cash and Petrosaudi to provide assets valued at US$2.7 billion – which it did not possess.
“From the US$1 billion paid in by 1MDB, and contrary to what had been authorised by the 1MDB Board of Directors, US$700 million was transferred to an account opened at a bank in Switzerland in the name of a company whose beneficial owner was Low.
“From that US$700 million, Low transferred US$85 million to one of the accused, who in turn, transferred US$33 million of that sum to the other accused. The remaining US$300 million was transferred to the account of the joint venture company at a bank in Switzerland. In reality, only Petrosaudi derived any benefit from this US$300 million.”
In October 2019, the Kuala Lumpur High Court was told that Petrosaudi International Ltd chief executive and co-founder Tarek Obaid received an US$85 million commission after the joint venture deal with 1MDB.
During the same proceeding, Najib’s defence lawyer Tan Sri Muhammad Shafee Abdullah said US$33 million from the US$85 million was paid to Petrosaudi executive Patrick Mahoney.
The OAG added that the two accused and Low benefited from the support of two managers at 1MDB who spread a narrative throughout 1MDB which was intended to mislead the board of directors of the sovereign wealth fund.
“This left the 1MDB Board of Directors with an inaccurate understanding of the government-to-government operation: the Kingdom of Saudi Arabia was not in involved in the transaction, and the 1MDB Board was unaware of the debt amounting to US$700 million due by the joint venture company to Petrosaudi, or indeed that Petrosaudi did not hold the rights it was said to have to the Turkmen assets that it claimed to be bringing into the joint venture.
“As a result, the 1MDB Board of Directors eventually agreed to the transaction, albeit after attaching conditions to it – which ultimately were not respected by the two managers who were acting in concert with the accused and Low.”
The two accused and Low allegedly devised other plans to induce the 1MDB Board of Directors to authorise other transfers totalling US$830 million between September 2010 and October 2011 as part of an Islamic loan that followed on from the joint venture.
“(These) funds transferred were also misappropriated. In addition, interest of more than US$80 million was transferred to 1MDB. This amount was in fact taken from the funds that 1MDB had itself transferred.”
The duo is alleged to have arranged for bank accounts to be opened in Switzerland and abroad to hold, accept and disburse the funds from September 2009 to July 2015
They were also said to have “organised the transfers of funds in order to obstruct the identification of their origin and their forfeiture”.
Other updates
The OAG said no proceedings will be taken following a criminal complaint by a whistleblower, who was described as a former Petrosaudi employee, accusing his employers of blackmail, false imprisonment and abduction, among others.
While the whistleblower had sent copies of data from his former employer's server to the press and submitted a criminal complaint to the public prosecutor, the OAG found that “either the constituent elements of the reported offences have not been met, that the right to file a complaint is time-barred, or that the matters reported do not give rise to a reasonable suspicion”.
“The OAG wishes to point out that this decision may be appealed to the FCC. As the appeal deadline has yet to expire, the decision is not final and is not therefore currently available for inspection.”
While the OAG did not name the whistleblower, this is apparently in reference to Xavier Justo, who released a book early this year titled, Rendezvous with Injustice: how a family survived hell after blowing the whistle on the 1MDB financial scandal.
Aside from the indictment against the two Petrosaudi managers, other ongoing criminal proceedings in Switzerland include one opened in August 2015 against two former officers of 1MDB and against persons unknown on suspicion of bribery of foreign public officials, misconduct in public office, money laundering and criminal mismanagement.
This was then extended in April 2016 to include two former public officials from the UAE who were in charge of the sovereign fund of Abu Dhabi, on suspicion of fraud, criminal mismanagement, misconduct in public office, forgery of documents, bribery of foreign public officials and money laundering.
In May 2016, the Swiss Financial Market Supervisory Authority (Finma) opened criminal proceedings against the BSI SA bank on suspicion of inadequate internal procedures. Due to the suspected deficiencies, the bank is alleged to have been unable to prevent the commission of the offences currently under investigation.
In November 2018, criminal proceedings were brought against an ex-employee of Petrosaudi on suspicion of industrial espionage.
The criminal proceedings opened in October 2016 against Falcon Private Bank SA, now known as Falcon Private SA, are currently suspended. – The Vibes, April 26, 2023
