Swiss 1MDB Case Widens With Probe of Petrosaudi Officials

(Bloomberg) -- Swiss prosecutors widened their probe into allegations of corruption at Malaysian development fund 1MDB, opening criminal proceedings to look into two officials of Saudi Arabian oil producer PetroSaudi who were allegedly tied to the affair.

The investigation into the pair on suspicion of criminal mismanagement, fraud, bribery and aggravated money laundering began in November 2017 but “certain measures taken against the two officials and a risk of collusion” prevented the Swiss Attorney General’s office from disclosing the news, it said Tuesday in an email. The probe into the Petrosaudi International Ltd. employees was reported earlier by the Financial Times.

Swiss, U.S. and Singaporean authorities have conducted several years of investigations into allegations that more than $3 billion was diverted from 1 Malaysia Development Bhd., originally intended as an investment fund to foster economic development across Malaysia. Officials at 1MDB and others, under the pretense of investing about $1 billion in a joint venture between 1MDB and PetroSaudi, instead transferred about $700 million to an account not associated with PetroSaudi, the U.S. Justice Department alleged in a 2016 seizure order.

Leaked documents showed that about $700 million may have moved through government agencies and companies linked to 1MDB before appearing in the personal accounts of Malaysian Prime Minister Najib Razak. News of that in August 2015 at sent hundreds of thousands Malaysians onto the streets of Kuala Lumpur to vent their rage -- much of it directed at Najib. Najib said that the $681 million that ended up in his accounts it was a political donation from a royal family in Saudi Arabia and that most of it was returned.

Carter-Ruck, PetroSaudi’s law firm, said in an email that PetroSaudi isn’t the subject of an investigation, that it’s cooperating with authorities, and that the probe is understood to be at a preliminary stage.

“PetroSaudi denies any wrongdoing in connection with its joint venture with 1MDB and it rejects any claims that it, or any of its officials, are involved in the misappropriation of funds from 1MDB,” Carter-Ruck said.

Bangkok Prison

A former Petrosaudi executive, Xavier Justo was sentenced in August 2015 to three years by a Bangkok court for attempting to blackmail the company over ties to 1MDB. His term was later cut to two years and he was allowed to return to his native Switzerland after being released from a Bangkok prison in December 2016, after lobbying from the Swiss Foreign Affairs Ministry.

Justo filed a criminal complaint that he was pressured into pleading guilty by Petrosaudi officials, according to the FT. The Swiss Attorney General’s office declined to confirm the substance of the filing, saying only that it is still being analyzed.

Justo said in an email that he’s glad that the complaint is being investigated and he will meet with a prosecutor in the Swiss capital of Bern in the coming weeks.

“It’s a great day for Justice, for the people whose money was stolen and for the nightmare these people made us endure,” said Justo. “We have learned that the justice system is sometimes slow but it’s very efficient!”

©2018 Bloomberg L.P.

Bloomberg
Stay Updated With Business News News On BloombergQuint