Tuesday, June 29, 2010

Financial traffic between KSA and Bahrain produces wreck

According to the international business magazine, The Economist, the financial traffic between the the Kingdom of Saudi Arabia produced a terrible wreck last year - one of the worst in the history of banking in the Gulf.

The Economist article, published June 24, says in May 2009 The International Banking Corporation (TIBC), a Bahrain bank owned by a venerable Saudi merchant family, the Gosaibis, defaulted on its obligations. The default was an early sign that its parent, the Ahmad Hamad Algosaibi & Brothers Group (AHAB), was in financial trouble.

Read the full Economist article here.

First Gulf Bank suing Al Gosaibi for Dh58.7m - details 'secret'

Following the recent news that a lawsuit had been launched against AHAB by the bankruptcy lawyers administering their own bank, The International Banking Corporation (TIBC), Abu Dhabi's The National newspaper now reports that First Gulf Bank, the UAE’s fourth-largest bank by assets, is suing the troubled Saudi conglomerate, Ahmad Hamad Al Gosaibi and Brothers, over an alleged default on Dh58.7 million (US$15.98m) of loans.

The lawsuit, lodged in the Abu Dhabi Court of First Instance last year, seeks recovery of the value of the loans plus lawyers’ fees and interest, court documents obtained by The National show.

The lawsuit names Al Gosaibi’s trading business in Dubai and its parent company in Saudi Arabia as defendants.

Representatives of First Gulf Bank and the Al Gosaibi group could not be reached for comment. But a lawyer at Hilal and Associates in Abu Dhabi, which is acting for First Gulf Bank, said the case was still in the Court of First Instance and that no judgment had yet been made. He confirmed the Dh58.7m default claim but said the remaining details of the case were “secret”.

Read the full article by The National's Asa Fitch here.

Monday, June 21, 2010

Bahrain: Al Gosaibis face new lawsuit

News outlets have reported yet another lawsuit to be launched as banks seek to recover money owed to them. Intriguingly, however, this new lawsuit has been launched against AHAB by the bankruptcy lawyers administering their own bank, The International Banking Corporation (TIBC).

The National reports that "Trowers and Hamlins, the London law firm appointed by the Central Bank of Bahrain to run TIBC after it failed last year, filed the claim with a judicial committee in Saudi Arabia." The claim runs to US$720 million (Dh2.64 billion).

Abdullah Mutawi, the Trowers and Hamlins lawyer who is leading the recovery effort, said that: “These claims form the first in a series of litigation proceedings which will be brought in a variety of jurisdictions around the world against those debtors of TIBC including [the Al Gosaibi group] – the single biggest debtor owing $3.2bn”...[They] will ultimately support the process of asset realisation for the benefit of the creditors of TIBC, who include international and local banks owed in the order of $2.6bn. Further claims will be lodged in the coming weeks and months.”

Mr Mutawi went on to say that the claim followed “unsatisfactory responses from [the Al Gosaibi group] and their representatives to questions relating to the assets of TIBC that we have repeatedly asked them”.

The law firm has also revealed that it launched a similar case in April with the Negotiable Instruments Committee in Saudi Arabia against Saad Trading, a Saad Group subsidiary, for $117m.

In response, Jim Courtovich said that the Al Gosaibis rejected claims made by Trowers and Hamlins “on every level”.“Trowers and Hamlins’ rhetoric simply ignores [the Al Gosaibi group’s] multiple offers to enter into a co-operative information sharing agreement …” he told The National.

Read the original National article here.

Wednesday, June 16, 2010

Bahrain court: Al Gosaibi documents not forged

An article posted earlier today on the website of Abu Dhabi newspaper, The National, reports that a Bahraini tribunal has ruled that key documents in the AHAB/ Maan al Sanea dispute were not forged, as has been alleged.

The article by The National’s Frank Kane and Asa Fitch reported earlier today that lawyers working for Ahmad Hamad Al Gosaibi and Brothers, the Saudi Arabian conglomerate, have alleged that Maan al Sanea, a Saudi billionaire, forged signatures on financial documents to commit a US$10 billion (Dh36.72bn) fraud against the group. Al Gosaibi claimed the signatures on three financial documents – two credit facility letters and one guarantee agreement – were not signed by Suleiman Hamad al Gosaibi, the late chairman of the family conglomerate, but were forgeries. The documents were all dated June 29 2008.

Mr al Sanea has consistently denied the allegations.

The recently formed Bahrain chamber for dispute resolution (BCDR) ruled at the end of last month there was no evidence to show the signatures were not genuine. “The tribunal is satisfied … the signatures which are alleged to be forged are actually genuine and written under the hand of the deceased, Suleiman Hamad Ahmad al Gosaibi, and the tribunal concludes from the circumstances of the case, and the papers submitted thereon, that there are no merits to support the allegation of forgery,” the BCDR ruled.

The ruling represents a reverse for the al Gosaibi family in its legal actions against Mr al Sanea and his company, the Saad Group. Forgery allegations have been a key part of Al Gosaibi’s case against Mr al Sanea. It alleged he had forged the financial documents as the former chairman was terminally ill and undergoing medical treatment. The claims were supported by the accounting firm Deloitte, which investigated the allegations on behalf of Al Gosaibi and hired a specialist graphologist, the UK-based Dr Audrey Giles, who found there was evidence of forgery.

It will be interesting to see the implications of this Bahraini ruling on the dispute in other jurisdictions.

Click here for the full article in The National.

Wednesday, June 9, 2010

Ex-TIBC chief fled Bahrain to avoid 'arbitrary actions'

The American former head of the Bahrain bank, TIBC, who broke travel restrictions and fled the country last month, has surfaced in his Californian home. In a dramatic twist, Glenn Stewart has told Abu Dhabi newspaper, The National, June 8, that he fled the region because he "did not want any longer to be subject to the arbitrary actions and retaliations of the Bahrain legal system. The only way to fight this was to get out of the country.”


According to the article by The National's Frank Kane, Mr Stewart says he has written to the UN Human Rights Council in Geneva, alleging violations of his rights by the Kingdom of Bahrain.


TIBC defaulted on debts in May last year, while Mr Stewart was still head of the bank, triggering financial crises at two Saudi enterprises, Ahmad Hamad Al Gosaibi and Brothers, and the Saad Group. Those crises have since led to accusations of multibillion-dollar fraud and to legal actions in the US, Europe and the Gulf.


Mr Stewart told The National that the powers of attorney had been renewed by the late al Gosaibi family head, Suleiman, with the knowledge of the present leaders of the family, including Saud al Gosaibi, the managing director of the main business.


“The truth is that when times were good, they were happy to let Maan run the show,” Mr Stewart said. “In 2008, I attended corporate events where Maan and Saud were together greeting bankers. It was obvious the al Gosaibi family knew exactly what was going on in the Bahrain business.”


A spokesman for the al Gosaibis said: “Mr Stewart has no basis to assert that the al Gosaibis knew what he was up to in Bahrain. Although Mr Stewart and Mr al Sanea claim that al Gosaibis were members of TIBC’s board of directors, that claim is patently false.”


Click here for the full article in The National.



Euromoney Magazine Receives Malicious Emails

The Euromoney website has published a short but intriguing story about a series of emails it has received relating to the dispute.

It reports that the addresses from which the emails are sent - as well as their content - are "clearly devised to suggest that the Algosaibis' allegations might not be unfounded: something with which Al Sanea's lawyers might disagree."

Euromoney reports that it received these emails from a variety of similar addresses: mideast.fraud.watch@gmail.com, middle.east.fraud.watch@gmail.com and fraud.watch.mideast@gmail.com. It also says that it "suspects that the emails might have been sent to other members of the media and financial community too."

Though Euromoney is careful to avoid suggesting who has been sending these emails, as it points out "all it suggests is that the senders of the emails might hold a slight [our italics] degree of malice towards Al Sanea."

Read the Euromoney story here: http://www.euromoney.com/Article/2586060/Saudi-Arabia-Encouraging-balanced-reporting.html?Type=Article&ArticleID=2586060

Monday, June 7, 2010

Awal Bankers sue UK Firm HIBIS, alleging libel

Andrew England of The Financial Times Newspaper (England) has reported another twist to the already complicated situation in Bahrain: He reports that the three Awal bankers who are currently detained in that country (see our post of May 6) have launched a lawsuit in the UK's High Court against a company called HIBIS.

Mr England reports that the Awal bankers' lawsuit accuses HIBIS of libellously and wrongfully alleging that they were part of a huge $2bn "scam" that caused Awal to collapse. Court documents apparently state that HIBIS wrongly alleged that the Awal trio had "systematically perpetrated a criminal fraud on a giant scale".

The three bankers reportedly allege that HIBIS is guilty of defamation. They also assert that the HIBIS report - commissioned by the Bahraini authorities, it would seem - was "distributed by Hibis to a law firm and an accounting firm in London". That this accusation has been made in court documents seems to suggest - although this can only be speculation at this stage - that the bankers believe that some sort of confidentiality has also been breached.

The Financial Times reports that - although it declined to comment - HIBIS has confirmed that it will be fighting the case. Interestingly, a UK libel lawyer has said that both parties will be fighting a "test-case". The Central Bank of Bahrain has also declined to comment.

Little is known about HIBIS, beyond the fact that they operate in the field of fraud detection and prevention. Internet research does not yield much information about exactly who HIBIS is. The Group apparently consists of two independent companies, one in the UK and the other in Australia. Its UK website is currently under redevelopment, but it does list two Directors (see http://www.hibis.net).

It is not clear how HIBIS - which it seems is a relatively small company - became involved in events in Bahrain, though one must assume that the company was commissioned by the Bahraini authorities. It is not known whether or not HIBIS remains employed as part of Bahrain's investigation into Awal's default.

Taif Info Center will report more information about the case and HIBIS as it emerges. For now, as the Financial Times makes clear, the HIBIS Report to the Bahraini authrorities and the resulting UK libel case, may have big ramifications: potentially for HIBIS, or for the Awal Bankers and - perhaps - even for the Bahraini authorities, not not least because of the lawsuit launched by Glenn Stewart in Geneva (see our previous post).

This is, yet again, one to watch carefully.

Read the original Financial Times story here: http://www.ft.com/cms/s/0/724daec4-6dab-11df-b5c9-00144feabdc0.html

Wednesday, June 2, 2010

Former Algosaibi Banker Flees Bahrain

An incredible story has been reported by England's Daily Telegraph newspaper. Mr Glenn Stewart is an American banker who was the Chief Executive of The International Banking Corporation (TIBC), the Algosaibi's company which is at the centre of the dispute between them and Maan Al-Sanea.

According to the newspaper, Mr Stewart had been the subject of a travel ban imposed by the Bahraini Government, in much the same way as the three Awal bankers that we reported last week. Incredibly, Mr Stewart appears to have fled the country in "mysterious circumstances".

Even more incredibly, Mr Stewart has no lodged a claim in International Court of Human Rights (ICHR) in Geneva in which he is suing three members of the Bahrain authorities who, he argues, falsely imprisoned him to "deliberately inflict mental cruelty and torture".

The Daily Telegraph goes on to report that "lawyers acting for Mr Stewart have already written to several of the organisations charged with investigating TIBC's finances, including investigations company Kroll and accountancy firm Ernst & Young. In the letters seen by The Sunday Telegraph, Mr Stewart's legal representatives have asked the companies to clarify who exactly they are working for and what the nature of their inquiries were."

As the USA does not have an extradition treaty with Bahrain, Mr Stewart will be safe from any legal action. But his story raises some intriguing questions:

- What will the Algosaibis make of the fact that one of their former employees has decided to cut and run in such a fashion?

- Does Mr Stewart's escape mean that he had no confidence in the process of the Bahraini investigation, or did he - perhaps - think that were that investigation to conclude it would not be in TIBC's favour?

- The story will also throw further light on the use of travel bans without formal charges being brought. In particular, what will this event mean for the bankers, both of Awal and TIBC, who remain under travel bans?

For now these questions must remain unanswered, but one thing is certain - the whole story is beginning to unravel...

Read the original Daily Telegraph article here: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7783362/TIBC-banker-sues-Bahrain-after-being-held-for-10-months.html