GENEVA (AP) – Two managers of a Saudi oil exploration company went on trial in Switzerland on Tuesday for alleged fraud and money laundering over a scandal years ago linked to a Malaysian sovereign wealth fund that the United States (US) Justice Department once described as the “biggest kleptocracy case” ever.
The defendants from PetroSaudi – a Swiss Saudi citizen and a Swiss British national who were not identified by name for privacy reasons – are accused of having created a scheme in 2009 under which 1 Malaysia Development Berhad, or 1MDB, would set up a joint venture based on false premises.
Malaysian investigators allege that over USD4.5 billion was stolen from the fund, established in 2009, and laundered by associates of former prime minister Najib Razak through layers of bank accounts in the US and other countries.
Swiss prosecutors said the PetroSaudi managers were indicted on charges of commercial fraud, aggravated criminal mismanagement and aggravated money laundering, based on events that took place over at least six years.
The attorney general’s office, in a filing last year, said the managers sought to enrich themselves and others by misappropriating at least USD1.8 billion that was transferred to the state-owned investment fund.
The indictments are the first of their kind in Switzerland, where some financial institutions were ensnared in the far-reaching scandal.
The joint-venture deal called for 1MDB to pour in USD1 billion and for PetroSaudi to contribute assets consisting of oil fields in Turkmenistan and Argentina valued at USD2.7 billion, even though the oil company didn’t actually own those assets, according to the criminal court in the southern city of Bellinzona.
After the deal was signed, about USD700 million from 1MDB was transferred to a Swiss bank account linked to a Malaysian investor for whom the defendants had allegedly been working, and tens of millions ended up in the hands of the defendants and PetroSaudi, without serving the joint venture, it said.
Swiss prosecutors say the defendants also hatched other plots that aimed to cause the 1MDB board to transfer USD830 million as part of an “lslamic loan” that followed the joint venture over the next two years. Those funds were also diverted, the court said.
Some of the looted money allegedly paid for jewellery, hotels, art and a luxury yacht, and helped finance Hollywood films such as The Wolf of Wall Street.
More than USD700 million landed in Najib’s bank accounts. He was sent to prison in Malaysia in August 2022 to serve a 12-year sentence for graft. 1MDB was a development fund that he set up shortly after taking power in 2009.
The Swiss attorney general’s office noted last year that “the US Department of Justice described the affair as ‘the largest kleptocracy case to date’. “
The three-judge panel in Bellinzona, which is home to the Swiss federal criminal court, is to hear arguments in the case through the end of April.
