Swiss prosecutors have launched a criminal probe against officials of a Saudi Arabian oil company in an escalation of the scandal at Malaysia’s 1MDB state investment fund that has dogged Najib Razak’s government.

The investigation into two unnamed individuals from PetroSaudi for suspected offences including fraud, bribery and aggravated money laundering is part of a long-running wider inquiry into misappropriation of 1MDB funds, the public prosecutor’s office confirmed to the Financial Times.

News of the Swiss probe into the PetroSaudi officials is the latest damaging revelation for the Malaysian prime minister’s administration from several international investigations into the alleged misappropriation of billions of dollars from 1MDB. Mr Najib’s government is seeking re-election on May 9.

The Swiss inquiry is also significant because it is the first officially disclosed criminal case targeted at employees of the Saudi company, a little-known but well-connected business co-founded by one of the kingdom’s princes.

US investigators have previously alleged that $1bn of Malaysian public money meant for a joint venture between 1MDB and PetroSaudi was siphoned off to a Malaysian businessman. PetroSaudi has always denied wrongdoing.

The PetroSaudi officials under investigation were suspected of criminal mismanagement, bribery of foreign public officials, aggravated money laundering and misconduct in public office, the Swiss prosecutor said. One of the pair was also suspected of document forgery.

The investigation into the individuals began in November but was not disclosed previously for operational reasons, the prosecutor added.

PetroSaudi said it was “aware of an ongoing investigation by the Swiss authorities related to 1MDB” but was not the subject of the probe. It said it rejected any claims that it or any of its officials were involved in the misappropriation of funds from 1MDB. PetroSaudi would co-operate fully with any investigating authorities, it added.

US investigators alleged in a 2016 legal case that $1bn of 1MDB funds earmarked for its joint venture with PetroSaudi were misappropriated to Jho Low, a Malaysian businessman, who splurged millions on art, partying and a Hollywood film. The US asset seizure lawsuit also claimed $20m ended up in the bank account of an unnamed top Malaysian official whose description corresponds to Mr Najib. Both Mr Low and the Malaysian prime minister have denied any wrongdoing.

Mr Najib, who formerly chaired 1MDB’s advisory board, has been engulfed by questions about the fund since evidence emerged in 2015 of payments of $681m into his personal bank account. The country’s attorney-general said the money was a gift from the Saudi royal family and was not linked to 1MDB.

International banks have been fined and officials jailed over their role in the 1MDB affair, which spawned an extensive probe in Singapore, as well as the Swiss and US investigations.

Mr Najib is near the climax of a bitter election battle against an opposition led by Mahathir Mohamad, his 92-year old predecessor and one-time mentor, who has accused the premier of corruption.

The Najib government has rejected such political attacks and denies allegations that it is trying to stifle opposition by gerrymandering the electoral machinery and introducing a new law threatening jail sentences against people who spread “ fake news”.

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The latest expansion of the Swiss 1MDB probe comes as separate allegations related to PetroSaudi have been made by Xavier Justo, a former executive who leaked corporate email correspondence purportedly related to the company’s relationship with 1MDB. Mr Justo pleaded guilty to blackmailing the company in August 2015, in a case brought by Thai authorities. He was released from jail in Bangkok in December 2016.

The Swiss public prosecutor has said it is reviewing a criminal complaint filed by Mr Justo and his wife that claims he was pressurised into pleading guilty by PetroSaudi officials.

PetroSaudi has denied it took any steps to force Mr Justo to make a false confession. It has described the evidence against him as “overwhelming and incontrovertible”.

Swiss prosecutors have stepped up efforts in recent years to counter the country’s image as lax on international financial scandals. The 1MDB investigation is one of a series of large-scale probes that include those looking at Brazil’s Petrobras and Fifa, football’s world governing body.

The Swiss attorney-general’s office opened proceedings against two former 1MDB officials in August 2015. Its investigation was extended in April 2016 to include two former officials who had been in charge of Abu Dhabi sovereign funds.

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