KUALA LUMPUR (Oct 3): Tarek Obaid, the co-founder of PetroSaudi International embroiled in 1Malaysia Development Bhd (1MDB) scandal, has been barred from accessing his shares of US software company Palantir Technologies.
High Court judge Datuk Azhar Abdul Hamid issued the freeze on Friday, after allowing Deputy Public Prosecutor Nurul Izzati Sapifee’s application under Section 53 of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA).
Apart from Obaid, the ex-parte application also named Palantir as a party to the court directive, officially known as prohibition order.
Obaid owns 2.5 million Palantir shares worth US$468 million, or nearly RM2 billion, based on its last price of US$187.05 apiece on Nasdaq.
Section 53 allows the public prosecutor, at his or her discretion, to apply for the order that will bar dealing with assets held outside Malaysia linked to money laundering, terrorism financing, or other serious offences.
However, how the order would be executed or enforced remains to be seen.
It is understood that the shares in Palantir, a company specialising in data analytics and launched by Paypal co-founder Peter Thiel, were purchased using monies swindled from 1MDB during the "Good Star" phase around 2009.
The misappropriated funds were funnelled into Obaid's personal bank account in 2010 to buy the shares then worth just US$2 million, according to a statement from the Malaysian Anti-Corruption Commission.
It is linked to a sham joint venture between 1MDB and PetroSaudi Ltd, disguised to be associated with the government of Saudi Arabia and King Abdullah.
1MDB invested US$1 billion to secure a 40% stake in the joint venture, while Petrosaudi were to inject assets, which turned out to be dubious, in exchange for the balance 60% stake. Obaid executed the agreement with 1MDB on behalf of Petro Saudi Holdings (Cayman) Ltd.
The US$1 billion was to be transferred to the joint venture company 1MDB PetroSaudi Ltd. However, the remittance was split on 1MDB’s instruction in the 11th hour, and only US$300 million went to the venture.
The larger chunk of US$700 million ended up in Good Star Ltd, which was linked to Low Taek Jho, the fugitive businessman also known as Jho Low. At that material time, the company made false representations that Good Star was an affiliate with Petrosaudi.
In total, 1MDB is said to have lost a total of US$1.83 billion in the so-called government-to-government joint venture.
In late August last year, the Swiss Federal Criminal Court ruled that both Obaid and another Petrosaudi executive Patrick Mahony, had deliberately deceived 1MDB board into believing that Petrosaudi had links with the Saudi Arabian government, and that the company would contribute significant oil assets to the companies’ joint venture.
They were both convicted of fraud, criminal mismanagement and money laundering, after being indicted of defrauding 1MDB of US$1.8 billion to enrich themselves, with Obaid getting at least US$805 million and Mahony at least US$37 million.
Obaid was sentenced to seven years in prison, while Mahony received a sentence of six years. They were also ordered to pay back US$1.75 billion to 1MDB. Both are appealing the decision.
The Malaysian High Court has also issued similar prohibition orders against Obaid and other 1MDB-related personnel. Earlier in March, the court issued a similar order against Obaid and two companies, barring them from dealing with 41 pieces of jewellery worth about nine million pounds.
Obaid is also a party to many ongoing 1MDB civil suits.
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Court issues 'freeze order' against PSI's Tarek Obaid and others from accessing assets worth £9 mil linked to 1MDB