Frank Kane, of The National, has written a story confirming a serious blow to the Algosaibis; namely, that banks in Saudi Arabia have launched formal claims against the family for the “liabilities owed by its indebted businesses.”
Documents seen by the newspaper “show that at least four big banks in the kingdom have submitted claims to the Committee for the Resolution of Banking Disputes, a body set up by the Saudi Arabia Monetary Agency (SAMA), demanding immediate repayment of loans and credit facilities.”
The claims thus far amount to 3.2 billion Saudi riyals (Dh3.13bn), the largest from Al Rajhi Banking and Investment. The company says Algosaibi had declined to repay the 1.54 billion riyals despite "numerous and repeated requests". Arab National Bank, Bank Aljazira and Bank Albilad have also made substantial claims.
According to Mr Kane, a “source familiar with the situation said other big Saudi creditors, including NCB, Saudi Hollandi Bank and Saudi Investment Bank, were also pushing claims against the family, which could lift the total to about 8bn riyals.”
In a statement provided to the newspaper, the Al-Gosaibis legal counsel Eric Lewis confirmed that the claims have been lodged: "[Algosaibi] is committed to continuing the ongoing dialogue with all stakeholders, including its dialogue with Saudi banks...The filing of these lawsuits is not surprising, and confirms that Saudi banks will be part of a normal commercial and legal process rather than subject to any extraordinary process in Saudi."
It will now be interesting to see what events these claims trigger. It could be reasonable to expect further lawsuits against the Al-Gosaibis in Saudi Arabia – including from foreign creditors, as the newspaper's source intimated could happen.
We must also keep an eye on how these claims effect the workings of the King's Committee which was set up to investigate the dispute. Mr Kane writes that the claims “seem to dash hopes” that Committee can find a solution to the dispute. That view, however, seems to be contradicted by the Alwatan article, covererd by Ta'if last week, that suggested that it was, in fact, the Committee who instructed the banks to proceed.
Read the original National article here.
Saturday, January 22, 2011
Tuesday, January 4, 2011
A New Year Round-up: Saudi Committee Acts
As we approached the end of 2010, those with an eye on the dispute between the Algosaibi family and Mr. Al-Sanea could have been forgiven for thinking that the New Year heralded nothing 'new' at all. Well over 18 months since TIBC went into default, we had seemingly reached an impasse, with even the matter of where the case should be heard still hotly disputed. Indeed, one leading commentator, The National's Frank Kane, described the dispute as a “a saga worthy of a Tolstoyan treatment” in a December 2010 article headlined “This one will run and run”.
It seems, however, that Mr. Kane and other commentators (including Ta'if) may have spoken too soon, though given the protracted nature of events thus far that is understandable. For significant news has just been reported in the Middle East. The Saudi Committee investigating the dispute has, it seems, given the green light to banks owed money by the Algosaibi family to pursue their cases in court. And to do so now, rather than wait for the wider Gosaibi allegations of fraud to be tested. This decision, then, would seem to have big implications.
Before we assess the significance of this decision, however, and in the spirit of a New Year, it may be worth casting an eye over the history of the dispute thus far. For by considering the many twists and turns and by reminding ourselves of the complicated context can we make sense of this new development.
The dispute was launched, of course, by the fact that the Gosaibi-owned TIBC went under, with Standard & Poor's downgrading the institution to selective default on the 12th May 2009. Saad Group, owned by Mr. Al-Sanea was also suffering from what, it termed, the “liquidity squeeze” and ratings agencies – following their moves to do so against Ahmad Hamad Algosaibi and Brothers – also downgraded. A month later, freezing orders were placed on the assets of both prominent families.
There followed swiftly, of course, a whole host of court cases; claims and counter-claims. First, Mashreqbank (one of the Algosaibis major creditors) sued them in New York. The Algosaibis countered, stunning the financial world by alleging that this and other debts were not theirs, as – they allege – they had been the victim of a $10bn fraud run by Mr. Al-Sanea, who has consistently denied their claims. Cases were lodged in New York, the United Kingdom and the Cayman Islands, with both TIBC and Awal Bank placed under administration, with Trower Hamilton acting for the former and Charles Russell for the latter.
Given that the dispute had – rapidly – become multinational, the question of jurisdiction (that is, where the dispute should properly be heard) was always going to be both a bone of contention and a key issue. 2010 proved this to be the case. Though it wasn't until July 2010 that he definitively ruled [ on the matter, New York State Supreme Court Justice Richard Lowe had intimated in January that he did not believe the various lawsuits belonged in the US Courts. Indeed, as Bloomberg reported he said that “I find it incredible that everyone here represents someone over there....All of the parties, all of the witnesses, all of the documents here have to be translated from Arabic and I have to then apply New York state law.”
The New York July ruling could have been an end to the matter and seen, definitively, matters heading back to Saudi, but unfortunately waters were muddied by events in the Cayman Islands, where, of course, Ahmad Hamad Algosaibi and Brothers had succeeded in having Mr Al-Sanea's assets frozen (as they remain). At first, signs were promising, with a Cayman Court ordering a stay in proceedings, also on the grounds of jurisdiction. However, just last month that ruling was overturned on appeal (launched by the Algosaibis), seemingly allowing the case to proceed after a year of delay.
At the time of this decision, The National newspaper ran an editorial , in which it speculated on why it may have come about. Frank Kane drew attention to the fact that the Court had ruled that "there was no reason to expect the Saudi committee would reach a conclusion" on the dispute. As the journalist put it, "In layman's terms, he [the Judge] was telling the Saudis: "We've given you your chance but we're fed up waiting for you, so we're going to tackle it ourselves."
And now, just a month after this important Cayman decision, we have the latest – Saudi – development.
In a story published 29 December, Bahraini newspaper Alwatan reports of a meeting between local banks, all of whom are creditors of the Algosaibis. In what could be a huge development, the meeting – at the HQ of Arab Bank in Riyadh - concluded with a decision by the banks that it would be appropriate for them to commence and coordinate legal proceedings against the Algosaibis to recover what they are owed. That decision was based, Alwatan reports, upon instructions issued by the Saudi Committee investigating the dispute.
What is particularly interesting is the timing of this decision to allow the banks to proceed against the Algosaibis. Though this must remain pure speculation, it is interesting to note that the Saudi Committee has decided to act so soon after the Cayman ruling that suggested there was little prospect of it doing so at all. Is that just a coincidence?
And then there is, of course, another factor – one that Ta'if has been reporting throughout the course of the dispute. The three Awal bankers, denied the right to leave Bahrain for 18 months were, only recently, released from their travel ban. At the same time, Mr. Kevin Moriarty – a former TIBC employee – was also allowed to leave the country. All four were allowed to return home after intervention came from the highest level, Bahrain's Crown Prince, Salman ibn Hamad ibn Isa al-Khalifa. Could their situation have also influenced the Committee's actions? We can only guess, but it seems significant in terms of the Committee's timing that those individuals whom the Algosaibis accused of having conspired against them have been allowed to leave Bahrain without charge, a point that the Bahraini press, such as Akhbar Alkhaleej, has been making.
The past month, then, has been extraordinary. As Ta'if's (lengthy!) summary of the dispute has shown, this has been a hugely protracted affair. After 18 months, the December Cayman ruling prompted many commentators to suggest the dispute was even further away from conclusion. How ironic, therefore, if it has actually played an important role in speeding it towards the finish line...
Read the Akhbar Alkhaleej article here (in Arabic).
It seems, however, that Mr. Kane and other commentators (including Ta'if) may have spoken too soon, though given the protracted nature of events thus far that is understandable. For significant news has just been reported in the Middle East. The Saudi Committee investigating the dispute has, it seems, given the green light to banks owed money by the Algosaibi family to pursue their cases in court. And to do so now, rather than wait for the wider Gosaibi allegations of fraud to be tested. This decision, then, would seem to have big implications.
Before we assess the significance of this decision, however, and in the spirit of a New Year, it may be worth casting an eye over the history of the dispute thus far. For by considering the many twists and turns and by reminding ourselves of the complicated context can we make sense of this new development.
The dispute was launched, of course, by the fact that the Gosaibi-owned TIBC went under, with Standard & Poor's downgrading the institution to selective default on the 12th May 2009. Saad Group, owned by Mr. Al-Sanea was also suffering from what, it termed, the “liquidity squeeze” and ratings agencies – following their moves to do so against Ahmad Hamad Algosaibi and Brothers – also downgraded. A month later, freezing orders were placed on the assets of both prominent families.
There followed swiftly, of course, a whole host of court cases; claims and counter-claims. First, Mashreqbank (one of the Algosaibis major creditors) sued them in New York. The Algosaibis countered, stunning the financial world by alleging that this and other debts were not theirs, as – they allege – they had been the victim of a $10bn fraud run by Mr. Al-Sanea, who has consistently denied their claims. Cases were lodged in New York, the United Kingdom and the Cayman Islands, with both TIBC and Awal Bank placed under administration, with Trower Hamilton acting for the former and Charles Russell for the latter.
Given that the dispute had – rapidly – become multinational, the question of jurisdiction (that is, where the dispute should properly be heard) was always going to be both a bone of contention and a key issue. 2010 proved this to be the case. Though it wasn't until July 2010 that he definitively ruled [ on the matter, New York State Supreme Court Justice Richard Lowe had intimated in January that he did not believe the various lawsuits belonged in the US Courts. Indeed, as Bloomberg reported he said that “I find it incredible that everyone here represents someone over there....All of the parties, all of the witnesses, all of the documents here have to be translated from Arabic and I have to then apply New York state law.”
The New York July ruling could have been an end to the matter and seen, definitively, matters heading back to Saudi, but unfortunately waters were muddied by events in the Cayman Islands, where, of course, Ahmad Hamad Algosaibi and Brothers had succeeded in having Mr Al-Sanea's assets frozen (as they remain). At first, signs were promising, with a Cayman Court ordering a stay in proceedings, also on the grounds of jurisdiction. However, just last month that ruling was overturned on appeal (launched by the Algosaibis), seemingly allowing the case to proceed after a year of delay.
At the time of this decision, The National newspaper ran an editorial , in which it speculated on why it may have come about. Frank Kane drew attention to the fact that the Court had ruled that "there was no reason to expect the Saudi committee would reach a conclusion" on the dispute. As the journalist put it, "In layman's terms, he [the Judge] was telling the Saudis: "We've given you your chance but we're fed up waiting for you, so we're going to tackle it ourselves."
And now, just a month after this important Cayman decision, we have the latest – Saudi – development.
In a story published 29 December, Bahraini newspaper Alwatan reports of a meeting between local banks, all of whom are creditors of the Algosaibis. In what could be a huge development, the meeting – at the HQ of Arab Bank in Riyadh - concluded with a decision by the banks that it would be appropriate for them to commence and coordinate legal proceedings against the Algosaibis to recover what they are owed. That decision was based, Alwatan reports, upon instructions issued by the Saudi Committee investigating the dispute.
What is particularly interesting is the timing of this decision to allow the banks to proceed against the Algosaibis. Though this must remain pure speculation, it is interesting to note that the Saudi Committee has decided to act so soon after the Cayman ruling that suggested there was little prospect of it doing so at all. Is that just a coincidence?
And then there is, of course, another factor – one that Ta'if has been reporting throughout the course of the dispute. The three Awal bankers, denied the right to leave Bahrain for 18 months were, only recently, released from their travel ban. At the same time, Mr. Kevin Moriarty – a former TIBC employee – was also allowed to leave the country. All four were allowed to return home after intervention came from the highest level, Bahrain's Crown Prince, Salman ibn Hamad ibn Isa al-Khalifa. Could their situation have also influenced the Committee's actions? We can only guess, but it seems significant in terms of the Committee's timing that those individuals whom the Algosaibis accused of having conspired against them have been allowed to leave Bahrain without charge, a point that the Bahraini press, such as Akhbar Alkhaleej, has been making.
The past month, then, has been extraordinary. As Ta'if's (lengthy!) summary of the dispute has shown, this has been a hugely protracted affair. After 18 months, the December Cayman ruling prompted many commentators to suggest the dispute was even further away from conclusion. How ironic, therefore, if it has actually played an important role in speeding it towards the finish line...
Read the Akhbar Alkhaleej article here (in Arabic).
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