Swiss court convicts 1MDB fraudsters for over $1.8bn theft but deems them no flight risk

Two Geneva businessmen were found guilty for their roles in a $1.8bn scam to defraud Malaysia's 1MDB economic development fund. The guilty verdict was given by a Swiss court last week.

These businessmen are Tarek Obaid (sentenced to seven years in prison) and his colleague Patrick Mahony (sentenced to six years in prison). The duo was convicted on the charges of criminal mismanagement and aggravated money laundering, according to a spokesperson for Switzerland’s Federal Criminal Court.

The Swiss court said that the multi-year prison sentences were justified since there were "high amounts (of money) involved and the intensity of the criminal activity" alongside the purported "selfish motive".

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The court also ordered the men to compensate 1MDB for the funds that were diverted. The compensation will be in the form of the seizure of their own assets alongside the ones confiscated by the authorities as part of the scandal.

But the duo were not determined to be a flight risk and the court rejected the prosecutors' request for them to be immediately detained.

Both of them can still appeal the verdicts and the sentences before they come into force. "Many essential elements presented by the defence were not taken into consideration and we deplore that," Myriam Fehr-Alaoui, Obaid’s lawyer, said.

Mahony too will appeal the verdict, her lawyer Laurent Baeriswyl was quoted as saying by Bloomberg.

What does it mean?

Reports in the Western media are trying to pass it off as a win for the Swiss prosecutors to purportedly demonstrate that the country is not soft on white-collar crime.

But the fact of the matter is that despite the conviction, the duo is not behind bars and they are not deemed a flight risk as yet.

Above all, Jho Low, the alleged mastermind behind the broader $4.5 billion defrauding of 1MDB, remains at large. Two Goldman Sachs bankers were embroiled in the scandal and the bank paid $2.5 billion as part of a 2020 settlement with the Malaysian government over its role.

(With inputs from agencies)