The National, Abu Dhabi, reports today that a senior US politician is calling for an immediate investigation into allegations of “massive global money laundering” by big US banks in their dealings with “persons from the Middle East”. Those persons being, of course, being AHAB and Maan Al-Sanea.
The paper reports that Peter King, who is a Republican Congressman, wrote to the US Attorney General calling for the "US government to investigate transactions involving billions of dollars that passed between the Gulf and New York banks." Mr King reported went on to cite allegations by AHAB that some $4.7bn of “suspicious transactions employed for the alleged fraud moved through one account at Bank of America in New York”.
Mr King goes on to warn that “If the allegations against Mr al Sanea prove correct, I fear that the systemic failure to detect such a significant money-laundering scheme from a high-risk region could serve as a presage for even more ominous events, perhaps even significant sources of terrorist financing.”
It will be interesting to see what happens next and what effect the Congressman's letter has, not just with the American authorities, but with those investigating the dispute in Saudi Arabia. This is an issue to which The National Alludes: "Mr King’s letter will also raise the stakes in Saudi Arabia, where the authorities have been conducting an internal investigation into how Al Gosaibi and Saad Group, Mr al Sanea’s holding company, came to owe $22bn to more than 100 Gulf and international banks."
Read the full article here: http://www.thenational.ae/apps/pbcs.dll/article?AID=/20100510/BUSINESS/705109867/1005
Taif Information Center will endeavor to report back with more information about what prompted the Congressman's intervention, as well as any further details as to what effect it may have.
Tuesday, May 11, 2010
Thursday, May 6, 2010
British Bankers Trapped in Bahrain
The Times newspaper, England, reports today that three senior executives at Awal Bank - part of the Saad Group - have launched a £300,000 libel lawsuit in the High Court in London against a company called Hibis.
The three bankers - Alistair MacLeod, Anthony James and Cliff Giddings, all British - have been under investigation for nearly a year in relation to the collapse of Awal Bank. "They remain under criminal investigation by Bahrain’s Public Prosecutor as part of a wider inquiry into the collapse of Awal but have not been charged", reports The Times.
The article goes on to report that the three men claim that the basis of the investigation against them is a report commissioned by the Central Bank of Bahrain and written by this company called Hibis. It is in the report that accusations against the three men are said to have surfaced first and which is the subject of the libel lawsuit.
The newspaper also reports that the three men have been unable to leave Bahrain after having had to surrender their passports. They have written to the UK Government's Foreign Secretary to appraise him of the situation and to "complain that their health and that of their families has suffered as a result of their confinement. One says he has been unable to seek appropriate checks for a relapsed cancer."
Read the full article here: http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7117342.ece
Taif Information Center will endeavor to find out more about this new development, so check back for updates.
The three bankers - Alistair MacLeod, Anthony James and Cliff Giddings, all British - have been under investigation for nearly a year in relation to the collapse of Awal Bank. "They remain under criminal investigation by Bahrain’s Public Prosecutor as part of a wider inquiry into the collapse of Awal but have not been charged", reports The Times.
The article goes on to report that the three men claim that the basis of the investigation against them is a report commissioned by the Central Bank of Bahrain and written by this company called Hibis. It is in the report that accusations against the three men are said to have surfaced first and which is the subject of the libel lawsuit.
The newspaper also reports that the three men have been unable to leave Bahrain after having had to surrender their passports. They have written to the UK Government's Foreign Secretary to appraise him of the situation and to "complain that their health and that of their families has suffered as a result of their confinement. One says he has been unable to seek appropriate checks for a relapsed cancer."
Read the full article here: http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7117342.ece
Taif Information Center will endeavor to find out more about this new development, so check back for updates.
Tuesday, May 4, 2010
CATCH 22 IN THE GULF - MORE LAWSUITS POSSIBLE?
Asa Fitch of the National newspaper (Abu Dhabi) has written an illuminating article about the dispute, drawing interesting parallels with Dubai World.
As well as offering a neat summary of the history of the dispute, the article highlights how the region's banks have been affected by the Al-Gosaibi / Saad Group dispute and how they have changed the way they do business themselves: they have, for instance, begun to "re-evaluate the age-old practice of name lending".
Furthermore, as Asa Fitch writes, after the two companies started to miss payments to banks in the Gulf, the banks "made an additional $2.6bn of provisions [cash set aside as a cushion against bad loans] in the remainder of the year, a rise analysts say is attributable mainly to the Saudi defaults...The groups were estimated to owe UAE banks $3bn, suggesting that more than half of the provisioning by banks in the latter half of last year could have been linked to exposures to Saad and Al Gosaibi."
Mr Fitch goes on to argue that the "strains caused by the saga...have so far been much greater than difficulties stemming from the better-publicised Dubai World debt restructuring. The banks have yet to take any write-downs on Dubai World loans because the conglomerate is continuing to make scheduled interest payments as it works towards a debt deal."
In making that comparison, Mr Fitch has hinted at one of the greatest difficulties of this dispute, an issue both simple and serious, which has caused so many problems for the region's banks.
Banks have not had to take provisions with regards to Dubai World, because it is servicing its debts. They were forced to with regards Saad Group and AHAB because those two companies were (are) not. But this is the Catch 22. For the very nature of the dispute has prolonged the banks' exposure to the two Groups, worsened the situation and actively prevented either party servicing their debts.
Take, for example, the fact that AHAB sought and obtained a freezing order in the Cayman Islands for $9.2 billion of Maan Al-Sanea's assets. So, despite Mr Maan Al-Zayer's (see our previous post) repeated statement that all debt would be serviced, the company is unable to do so.
Or, on the other hand, consider the simple fact that AHAB's position is that their debts are the responsibility of Maan Al-Sanea and therefore the duty to service them is not theirs - a position that Maan Al-Sanea contests. Therefore, once again, as things stand the banks are left with little prospect of recovering what is owed to them (hence all the provisions) until the dispute is settled one way or the other.
How likely is that, however? As Mr Fitch points out, a panel was set up in Saudi Arabia to investigate the myriad allegations. We are approaching that panel's first birthday and, seemingly, it has found nothing of note. Nothing to report on yet, at any rate.
One has to wonder what the Gulf's banks think about the lack of movement, because with the situation seemingly at an impasse, with freezing orders in place, and with blame so vigorously disputed they face continued exposure to the loans they made. It will be interesting to see how long their patience lasts and whether more lawsuits - launched by them - could be on the way...
Read the full National article here: http://www.thenational.ae/apps/pbcs.dll/article?AID=/20100502/BUSINESS/705029964&SearchID=73389661512208
And please post your thoughts on the complex situation below.
As well as offering a neat summary of the history of the dispute, the article highlights how the region's banks have been affected by the Al-Gosaibi / Saad Group dispute and how they have changed the way they do business themselves: they have, for instance, begun to "re-evaluate the age-old practice of name lending".
Furthermore, as Asa Fitch writes, after the two companies started to miss payments to banks in the Gulf, the banks "made an additional $2.6bn of provisions [cash set aside as a cushion against bad loans] in the remainder of the year, a rise analysts say is attributable mainly to the Saudi defaults...The groups were estimated to owe UAE banks $3bn, suggesting that more than half of the provisioning by banks in the latter half of last year could have been linked to exposures to Saad and Al Gosaibi."
Mr Fitch goes on to argue that the "strains caused by the saga...have so far been much greater than difficulties stemming from the better-publicised Dubai World debt restructuring. The banks have yet to take any write-downs on Dubai World loans because the conglomerate is continuing to make scheduled interest payments as it works towards a debt deal."
In making that comparison, Mr Fitch has hinted at one of the greatest difficulties of this dispute, an issue both simple and serious, which has caused so many problems for the region's banks.
Banks have not had to take provisions with regards to Dubai World, because it is servicing its debts. They were forced to with regards Saad Group and AHAB because those two companies were (are) not. But this is the Catch 22. For the very nature of the dispute has prolonged the banks' exposure to the two Groups, worsened the situation and actively prevented either party servicing their debts.
Take, for example, the fact that AHAB sought and obtained a freezing order in the Cayman Islands for $9.2 billion of Maan Al-Sanea's assets. So, despite Mr Maan Al-Zayer's (see our previous post) repeated statement that all debt would be serviced, the company is unable to do so.
Or, on the other hand, consider the simple fact that AHAB's position is that their debts are the responsibility of Maan Al-Sanea and therefore the duty to service them is not theirs - a position that Maan Al-Sanea contests. Therefore, once again, as things stand the banks are left with little prospect of recovering what is owed to them (hence all the provisions) until the dispute is settled one way or the other.
How likely is that, however? As Mr Fitch points out, a panel was set up in Saudi Arabia to investigate the myriad allegations. We are approaching that panel's first birthday and, seemingly, it has found nothing of note. Nothing to report on yet, at any rate.
One has to wonder what the Gulf's banks think about the lack of movement, because with the situation seemingly at an impasse, with freezing orders in place, and with blame so vigorously disputed they face continued exposure to the loans they made. It will be interesting to see how long their patience lasts and whether more lawsuits - launched by them - could be on the way...
Read the full National article here: http://www.thenational.ae/apps/pbcs.dll/article?AID=/20100502/BUSINESS/705029964&SearchID=73389661512208
And please post your thoughts on the complex situation below.
Saturday, May 1, 2010
Cayman Islands Proceedings Continue
As Andrew England for London’s Financial Times newspaper reported a month ago (http://www.ft.com/cms/s/0/319f69e4-3877-11df-aabd-00144feabdc0.html), Maan Al-Sanea was found in contempt by a Cayman Islands court “for breaching a worldwide order freezing $9.2bn of his assets”.
A spokesperson for Mr Sanea's Saad Group said the company was pleased that the court "ruled in our favour on the major allegations and that any findings against us are of a narrow, technical, and novel nature".
The spokesperson added: "We will be appealing against those elements of the judgment, and it remains our resolute belief that Saudi Arabia is the correct place for this entire spurious dispute to be resolved."
Yet to be reported on, however, is the fact that – right now – the judgements are being debated in the Cayman Islands Grand Court. The court’s calendar – viewable here: http://www.caymanjudicial-legalinfo.ky/Courts/Cause-lists/20100426-Grand%20Court%20List.pdf - – suggests that, right now, the case is again being heard in court. Indeed, five days have been scheduled to argue the facts.
With both sides so resolute as to where blame lies, the events in the Cayman Islands might prove significant. What will both sets of lawyers argue? With whom will the Judge agree, especially given the recent contempt ruling? And what will the wider ramifications be? We will soon find out...
A spokesperson for Mr Sanea's Saad Group said the company was pleased that the court "ruled in our favour on the major allegations and that any findings against us are of a narrow, technical, and novel nature".
The spokesperson added: "We will be appealing against those elements of the judgment, and it remains our resolute belief that Saudi Arabia is the correct place for this entire spurious dispute to be resolved."
Yet to be reported on, however, is the fact that – right now – the judgements are being debated in the Cayman Islands Grand Court. The court’s calendar – viewable here: http://www.caymanjudicial-legalinfo.ky/Courts/Cause-lists/20100426-Grand%20Court%20List.pdf - – suggests that, right now, the case is again being heard in court. Indeed, five days have been scheduled to argue the facts.
With both sides so resolute as to where blame lies, the events in the Cayman Islands might prove significant. What will both sets of lawyers argue? With whom will the Judge agree, especially given the recent contempt ruling? And what will the wider ramifications be? We will soon find out...
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