Blow For The PetroSaudi Boys As US Court Issues Warrant For Their Venezuela Money

Blow For The PetroSaudi Boys As US Court Issues Warrant For Their Venezuela Money

The years long legal battle waged by PetroSaudi to hang on to the hundreds of millions they funnelled out from the 1MDB heist (in return for their role acting as a front for Jho Low and Najib) has crashed into a wall with a definitive ruling in Los Angeles earlier this month.

On 14th October Judge Dale Fischer, a veteran of 1MDB asset seizures brought by the Department of Justice in the United States, finally ruled that the California Court was satisfied with the case brought by prosecutors to prove that £340 million that has been frozen in the account of the London lawyers Clyde & Co had been purloined from 1MDB.

Fischer issued a warrant for the arrest of those assets on the same day. According to the court papers the warrant in fact only relates to any money that the UK authorities might potentially decide to release back to PetroSaudi and its sole current shareholder Tarek Obaid, because the US government recognises that currently the cash is under the jurisdiction of the United Kingdom, which is already questioning the legitimacy of the horde.

The development is a harsh blow for the Saudi national and Swiss resident Tarek Obaid, and indeed any of his conspirators still hoping for rewards. Both Obaid and the former PetroSaudi director Patrick Mahony are being examined on criminal charges in Switzerland and are wanted in Malaysia.

Obaid has spent millions trying to keep his hands on the money which Sarawak Report was the first to report had been funnelled into his personal and business accounts from a so-called joint venture with 1MDB fronted by PetroSaudi and a Saudi Prince, Turki bin Abdullah. The latter is now in jail on domestic corruption charges. The total stolen was $1.83 billion, just over a billion, of which went to Jho Low and the rest to PetroSaudi.

PetroSaudi invested much of this money into a purported oil drilling venture off the coast of Venezuela. However, again this project was soon mired in allegations of fraud and kickbacks to officials. A preposterously favourable contract worth half a million dollars a day was drawn up on behalf of two clapped out drill ships purchased by PetroSaudi, which proved to be non-functioning and unable to extract oil as promised.

However, when the Venezuelan authorities moved to prosecute the officials responsible for  the fraud and to freeze the money owed to PetroSaudi under the fraudulent contracts Obaid and his legal team (financed by their 1MDB loot) countered in the UK courts, demanding that a Portuguese Bank honour so-called Letters of Credit whereby the Venezuelans had promised to pay whether or not PetroSaudi delivered on the contract.

In a massive triumph for Tarek Obaid the UK courts had found in favour of PetroSaudi after Appeal Court judges expressed their view that there had been lack of sufficient evidence brought of a deliberate fraud.

The $340 million was therefore transferred from the Portuguese bank into PetroSaudi’s client account with the legal firm Clyde & Co and the previously overdrawn Tarek Obaid (prior to 1MDB) suddenly looked on the brink of turning into one of the big winners from the heist – not only ‘exonerated’ but a man with hundreds of millions of dollars heading towards his bank account.

However, the situation was to unravel. The law firm proved uncomfortable about releasing such sums into their client’s own account until the blatant issues of fraud were resolved. Meanwhile, legal authorities around the world pounced to retrieve this last major remaining chunk of cash identifiable as proceeds from 1MDB.

Malaysia has put in its own claim to the cash and the US started its proceedings in the California court. The first two hasty asset seizure requests by US prosecutors were, according to Judge Fischer, inadequate to convince the court that there was sufficient evidence that this money repaid on behalf of Venezuela by a Portuguese bank in London could be traced to the theft from 1MDB.

However, the actions stayed the process and kept the money locked up. After a third attempt Judge Fischer has at last accepted that the prosecution evidence (long since publicised by Sarawak Report) is now sufficiently water-tight to issue a warrant for the seizure:

“The Court finds that – after four tries – the government has stated sufficient facts to support a reasonable belief that it will be able to prevail and established probable cause for arrest of the res. [asset]
There is no question that the TAC [civil forfeiture complaint] adequately traces the 1MDB funds through to the purchase of the drillship Neptune Discoverer by PetroSaudi Oil Services Ltd. (PSOSL) and to PSOSL’s guarantees associated with the related drilling project. The government has now also successfully linked the Neptune Discoverer [second drill ship] with the Saturn by alleging that $13 million in proceeds from the Neptune Discoverer project were directly used to purchase the Saturn.”

The judge therefore issued a simultaneous warrant that will mean that should any of the cash be released by the UK court following deliberations the US will move to seize it before it can be returned to Obaid

YOU ARE HEREBY COMMANDED pursuant to Supplemental Rule G(3)(c) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (the “Supplemental Rules”), to arrest and seize any portions of the Defendant Assets that have been or may be released by the High Court of Justice.

Over the past year all this money has been removed from Obaid’s lawyers under the purview of the London High Court, pending the various moves to confiscate. The court has nonetheless released considerable sums to help Tarek fight his legal battles – not something that a common thief tends to be allowed when seeking funding for their own defence, say out of the proceeds of burglary or robbery.

This is perhaps of no surprise to jaded Malaysians. The 1MDB saga has given them many opportunities to view the unequal process of the law (particularly now in Kuala Lumpur) when it comes to the kindly treatment of those who have stolen hundreds of millions or billions, compared to what is meted out mere common crooks.

However, despite the considerable tolerance that has been shown to Tarek Obaid and his company PetroSaudi, it is clear his options have narrowed and the chances of him laying hands on the rest of Malaysia’s 1MDB money are now almost nil.