The trial of two managers of a Saudi oil exploration company began in Switzerland on Tuesday for alleged fraud and money laundering connected to a scandal involving the Malaysian sovereign wealth fund 1 Malaysia Development Berhad (1MDB). The defendants, who were not named for privacy reasons, are accused of setting up a scheme in 2009 that led to the misappropriation of billions of dollars from the state-owned investment fund. Swiss prosecutors have charged them with commercial fraud, aggravated criminal mismanagement, and aggravated money laundering based on events that occurred over a six-year period.
The joint-venture deal between 1MDB and PetroSaudi involved the transfer of $1 billion from 1MDB and assets from PetroSaudi valued at $2.7 billion, including oil fields in Turkmenistan and Argentina that the company did not actually own. After the deal was signed, approximately $700 million was transferred to a Swiss bank account linked to a Malaysian investor, with tens of millions ending up in the defendants’ hands and PetroSaudi. Swiss prosecutors allege that the defendants also orchestrated other schemes to divert additional funds from the 1MDB board, including an “Islamic loan” of $830 million over two years.
The looted money from the 1MDB scandal was allegedly used to purchase jewelry, hotels, art, luxury yachts, and finance Hollywood films such as “The Wolf of Wall Street.” More than $700 million from the fund ended up in the bank accounts of former Malaysian Prime Minister Najib Razak, who was convicted and sentenced to 12 years in prison for graft in August 2022. The Swiss attorney general’s office highlighted the seriousness of the case, noting that the U.S. Justice Department had characterized it as the “biggest kleptocracy case” to date.
The trial in Bellinzona, Switzerland is the first of its kind in the country and is expected to continue through the end of April. The court will hear arguments related to the alleged fraud and money laundering committed by the PetroSaudi managers in connection with the 1MDB scandal. The investigation into the affair has implicated financial institutions in Switzerland and other countries, revealing a complex web of transactions and illicit activities that spanned several years. The case represents a significant milestone in the pursuit of justice for those involved in the misappropriation of funds from the Malaysian sovereign wealth fund.
