Memory Eludes PetroSaudi Defendant Patrick Mahony As He Takes The Stand

In high finance you get used to big sums and myriad deals. This could be why during his first day in the dock the former PetroSaudi Chief Investment Officer, Patrick Mahony, apparently struggled to remember the purported $700 million loan he’d organised to be ‘paid back’ by 1MDB on the first day of the so-called joint venture project with the Malaysian fund.

According to reports, similar memory lapses afflicted him during much of the initial questioning being carried out by the Swiss judge into the fraud, theft and money laundering charges facing him and fellow former director Tarek Obaid, the owner of the company.

The trial is being held in the Swiss Federal Court in Bellinzona where both men have pleaded innocence and their lawyers have claimed them to be victims of an unfair and biased prosecution. (Mahony and his lawyer, Maurice Harari, are seen approaching the court in the main picture).

Lawyers representing 1MDB and its subsidiary Brazen Sky Ltd were also in the court seeking civil damages out of the $1.83 billion that went missing from the deal, allegedly much of it into the two men’s pockets.

The day began with a dismissal by the 3 judges of the litany of complaints that had been put by Mahony’s and Obaid’s lawyers in a marathon session at the opening of the trial last week.

It was ruled the proceedings were not unfair, biased or mishandled by the prosecution and that evidence crucial to the case (including PetroSaudi documents first leaked by Sarawak Report) could be admitted.

Given the details of the alleged fraud have dominated relentless coverage of the 1MDB scandal for the entire decade since the story broke, it still seems strange that so much of what is at stake had been forgotten by this sharp suited and clearly sharp thinking British businessman.

However, this was the excuse he gave for being unable to answer much of what he was asked, citing the 15 years which have passed since the events had taken place. In other matters, say local court reporters, he claimed ignorance altogether: “The indictment mentions many things of which I have no idea.”

However, Mahony, who said he has been unable to work owing to nature of the case and has been struggling to get by on his family’s support, defended his position relating to a false valuation he had presented of PetroSaudi based on a claim it held operating rights to an oilfield in Turkmenistan it didn’t own.

These were the alleged assets which were brought by Petrosaudi into the joint venture, while 1MDB contributed a billion in cash (followed by a further $830 million in loans).

Prosecutors have pointed out that PetroSaudi never finalised the acquisition of the still disputed Serdar III oil field and therefore represented little more than an empty shell. On the other hand, it was PetroSaudi that acquired control of the funds paid to the joint venture by 1MDB.

According to Mahony the sham asset represented normal business in the oil sector where there are ‘variable evaluations’. He explained PetroSaudi would have entered into an “exclusive negotiation agreement” with the Canadian group Buried Hill that in fact owns the rights to Serdar III.

In fact, Mahony and his colleagues pulled out of their agreement with Buried Hill just days after the Joint Venture had been signed and 1MDB’s billion dollar had been received into the ‘Joint Venture’.

$700 million of that cash was, of course, immediately diverted into the Good Star Limited account of Jho Low who was acting as the Malaysian prime minister Najib’s proxy in this affair – under the guise  of that company being a subsidiary of PetroSaudi and therefore part of the joint venture.

However, Mr Mahony struggled apparently to remember such details (nor doubtless the $33 million he was shortly after paid out of the kickback received by PetroSaudi shareholder, Tarek Obaid, from Jho Low).

This was a royal Saudi company he told the court with high level backing and contacts thanks to the other shareholder Prince Turki bin Abdullah (now in detention in Saudi Arabia over separate corruption charges).

Mahony will continue to face questioning from the defence and prosecution lawyers over coming days. There is plenty more relating to his involvement in the raising of further loans from 1MDB and the investment then disappearance of that money which has never been returned to the Malaysian fund.

Whether he will remember much about it remains to be discovered.

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