Banker faces trial over Malaysia 1MDB fraud
A former City commodities dealer and a dissolute Saudi socialite are facing trial at Swizerland’s Federal Criminal Court in Bellinzona, on criminal charges of aggravated money laundering, fraud, corruption and forgery for offences connected to the global 1MBD corruption scandal.
Patrick Mahony is alleged to have made at least $37m from the alleged laundering which involved Geneva–based PetroSaudi International, where he was chief investment officer.
Mahony had worked for Goldman Sachs in Hong Kong and Ashmore in London before joining PetroSaudi in 2009 in Geneva. He was introduced to other members of the criminal gang on 7 September 2009 in New York, according to the indictment. Tarek Obaid was a Saudi and friend of Prince Turki, the son of the former King Abdullah and Jho Low a Malaysian. Obaid is accused alongside Mahony in the Swiss court.
Low is facing charges in multiple jurisdictions, but is currently a fugitive from justice thought to be in hiding in China.
Swiss prosecutors allege that 1MDB, a sovereign wealth fund in Malaysia, lost $3 billion as a result of the laundering scheme. 1MDB collapsed in 2016.
Some £4.4 billion passed through multiple Swiss bank accounts set up by Mahony between October 2009 and July 2015. Prosecutors allege he knew the funds were of a criminal origin and the money was moved in order to hinder its “identification, discovery and confiscation”, according to the indictment.
“The crimes committed formed their main sources of income to finance their lifestyle.
In the space of a little more than 2 years, Tarek Obaid and Patrick Mahony enriched themselves with colossal sums. These were no less than $570 m and $37m respectively,” says the indictment.
Mahony, aged 46, moved £6.2 million to an offshore account Mika2 Ltd in December 2009 to acquire a Ladbroke Square London townhouse. British police imposed a restraint order on the property in 2020. Mahony also acquired a Swiss villa in Gstaad.
On 14 September 2009, in an email cited in the indictment, Obaid celebrated the first tranche of investment from 1MDB when he wrote to Mahony, “Dude – we have to close with them, Jho wake me up there, and they are ready to pay a billion.”
Mahony wrote to Obaid on 14 September 2010, following a further payment of $500m. “Right now we are in a good situation because we have this money in a clean, proper and legal way so there is nothing anybody can do to us. Our issue now is with how to move it around,” said the indictment.
Referring to Lo by his nickname, “Chunk”, Mahony says that he has a better way to move the money than Lo. “We can get them to do this our way for once as we hold the funds”.
Mahony moved the money between multiple bank accounts over two weeks. It landed on 1 October at the bank account called Good Star, whose beneficial owner was Jho Lo.
On 26 April 2011, £1.2 m was transferred to PetroSaudi International’s UK account to pay employees including Rick Haythornthwaite. Haythornthwaite had advised on the valuation of a Turkmen oilfield, according to Swiss prosecutors who spoke to the banker.
Haythornthwaite will become chairman of NatWest Group on 15 April 2024. A spokesman for Haythornthwaite said that, “He was not a director and he was not privy to the actions of the owners. As rumours surfaced, he stepped away.”
Neither representatives for Patrick Mahony ror Tarek Obaid responded to calls for comment.
An edited version of this story appeared in the Sunday Times on 31 March 2024.