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Malaysian Wealth Fund Sues PetroSaudi CEO for $1.8 Billion Over Oil “Sham”

The scandalized Malaysian sovereign wealth fund 1MBD has filed a lawsuit against PetroSaudi International CEO Patrick Mahoney for $1.83 billion over what it says was a sham oil exploration joint venture. 

According to the lawsuit, 1MBD (1Malaysia Development Berhad) had been led to believe that Petrosaudi was owned by Saudi royalty, which served as the basis upon which the fund agreed to the JV deal. 

The joint venture “was a sham which resulted in 1MDB suffering a complete loss of its investment” of US$1.83 billion, 1MBD said in the lawsuit, calling for Mahoney to be held liable for the damages because of his “dishonest assistance” in relation to the 2009 joint venture, according to 1MBD, as reported by The Malaysian Reserve on Thursday. The lawsuit represents lower-level damage control after the Fund became embroiled in a multi-billion-dollar global corruption scandal. 

The lawsuit also names UK-based law firm White & Case LLP as a defendant, claiming that Mahoney colluded with members of the law firm, including with a fugitive businessman, to defraud 1MBD. The Fund also claims that the law firm did Mahoney’s bidding when he instructed them to prepare fraudulent agreements for PetroSaudi Holdings, among other dubious transactions. Last month, the $1.8-billion fraud trial centered around 1MBD opened in Switzerland, with two individuals accused of embezzling $1.8 billion from the sovereign wealth fund on Tuesday. 

In 2022, former Malaysian premier Najib Razak was sentenced to 12 years in prison for offenses related to the scandal, though his sentence was reduced by half earlier this year. 

Swiss prosecutors have accused Mahoney and a Saudi-Swiss businessman also named in the lawsuit of fraudulently claiming to be negotiating on behalf of the late Saudi King Abdullah and of fraudulently claiming to have controlling rights to an oilfield in the Caspian Sea. 

Mahoney and his Saudi-Swiss counterpart will plead not guilty, Agence France Presse reports. 

By Charles Kennedy for Oilprice.com

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