Awal Bankers take Bahrain to United Nations Court

Britain's The Sunday Telegraph newspaper has reported that the three British bankers, recently allowed to leave Bahrain after over a year's detention, have filed a complaint against the country with the United Nations Human Rights Council (UNHRC).

In what will be seen as another blow to Bahrain, Alistair MacLeod, Anthony James and Cliff Giddings have alleged that they were the victims of an “arbitrary and illegitimate” travel ban, the Telegraph reports.

In papers filed with the UNHRC and seen by the newspaper, the bankers said that their “gentleman’s agreement” with the Bahraini government not to take further action was “morally and legally void” because of the continued harassment by officials in the kingdom’s central bank, believed to mean the recent filing of accusations in Bahrain's Lower Criminal Court.

“We regret having to do this, but the persistent behaviour of officials at the CBB [Central Bank of Bahrain] and the Public Prosecutor’s Office, who are behaving in a manner not as your King had led us to believe, leave us with no alternative,” wrote the men in a letter to Sheikh Khalifa bin Ali Al-Khalifa, the Bahraini ambassador to Britain.

This move is a highly interesting development, particularly because the bankers appear to make very serious allegations. As the Telegraph states, "among the allegations made are that the prosecutors in Bahrain have suppressed documents that could exonerate the men over their role in the collapse of Awal Bank."

Couple with the bankers action against UK investigative firm HIBIS, how the UNHRC acts will, no doubt, be watched very closely in Bahrain.

Read the Telegraph report here.

Al Gosaibis sue former TIBC chief for billions - The National

Al Gosaibis sue former TIBC chief for billions - The National

Abu Dhabi's The National reports that the Algosaibis have launched a fresh legal claim of at least US$9 billion, though this time the claim is against Mr. Glenn Stewart, the former chief executive of their own, now bankrupt, company, The International Banking Corporation. The newspaper states that the Gosaibis lawsuit alleges "aiding and abetting fraud, breach of fiduciary duty, fraud, conspiracy to commit fraud, and unjust enrichment."

Mr Stewart, who left Bahrain last year for his native California, said in an e-mail to The National he had not yet seen the complaint and would respond in detail once he had had time to study the claims. He denied all the allegations.

Al Gosaibi faces a fresh $8.2bn claim - The National

Al Gosaibi faces a fresh $8.2bn claim - The National

The National (Abu Dhabi) carries a hugely intriguing story about a new US$8.2 billion claim against the Algosaibi family’s assets.

According to the newspaper, documents before the Grand Court of the Cayman Islands show that Grant Thornton, the liquidator to the Saad company businesses registered there, is “planning an action to retrieve that amount from the family [Algosaibi] partnership. The assets, Grant Thornton claims, are in the form of financial instruments, cash and land in Saudi Arabia.”

News of this claim would be a huge development in its own right, but it is the wider implications of this counter-claim that could be of major significance. As The National makes clear:

“Grant Thornton has previously been regarded as supportive of the al Gosaibi family's claims that it was the victim of a $10bn fraud perpetuated by Mr al Sanea, which he has consistently denied.

“The liquidator was appointed by the court to act for creditors of the Saad companies.

“The court document shows that Grant Thornton will contest Al Gosaibi's claim to be a fraud victim, and will say the partnership or individuals within it had knowledge and gave approval to Mr al Sanea in his business dealings.”

The potential importance of this new twist cannot be overstated. The Algosaibi case against Saad rests upon their accusation of a fraud perpetuated against them. With this reported counter-claim, Grant Thorton – independently appointed – appears to be arguing that it believes that the accusations against Saad are those that can be fought and won.

The last word on this issue should go to Steven Akers, the head of Grant Thornton’s recovery and reorganisation practice, quoted by The National:

"We have determined on advice that we have a robust defence to the claims against Saad entities and will be filing a substantial defence and very substantial counterclaim in this action."

Bahrain: British bankers may face charges

Media reports this week suggest that the three British bankers, formerly executives at Awal Bank, may face charges in Bahrain. Alistair MacLeod, Cliff Giddings and Anthony James were only recently allowed to leave the country, having been the subject of a travel ban for nearly 18 months.

In an article on the 8^th March, Britain’s The Daily Telegraph reports that Bahrain’s Public Prosecutor, Nawaf Abdulla Hamza, has announced that a hearing will take place – this Monday – in Bahrain’s lower criminal court.

As the newspaper explains, “In Bahrain, the court, not the prosecutor, has the power to bring criminal charges.” As such, we will not learn until this hearing what is the extent of any charges against the three men. However, it is noticeable that the hearing will take place in the lower court, which may give some indication as to the level and significance of the allegations against the three.

Next week promises to shed more light on the situation. Read the original Daily Telegraph report here.

Update: Saudi Claims; Cayman Jurisdiction

Feb 10 2011: Bloomberg has provided an update to the ongoing Algosaibi dispute, giving further detail to the claims lodged in Saudi Arabia against the Algosaibis, as well as the recent jurisdictional decision in the Cayman Islands.

According to the news agency, the Algosaibis "may owe $2.4 billion to 10 Saudi Arabian banks, according to filings by the lenders to the country’s Committee for the Settlement of Banking Disputes." Filings seen by Bloomberg state that The Saudi Investment Bank has submitted the largest claim, with Al Rajhi Bank and National Commercial Bank filing for 1.5 billion riyals each. It is believed Mr Al-Sanea reached a deal with his Saudi creditors last year.

Eric Lewis, the legal representative of the Algosaibis, said in a statement that "AHAB is committed to continuing the ongoing dialogue with all stakeholders, including its dialogue with Saudi banks”.

Bloomberg also reported the recent decision of Justice Chadwick in the the Cayman Court of Appeal regarding where the claims should be heard. Justice Chadwick said that "the Cayman Islands was the jurisdiction in which the claims in these proceedings could be appropriately tried in the interests of all parties".

The remaining judicial entity which can rule definitively on jurisdiction is Britain's Privy Council, the UK's highest court, to which the Cayman Court is ultimately answerable. The Privy Council can, if it agrees with any representation made to it, overrule the Cayman Court of Appeal's decision.

Read the Bloomberg report here.

Banks launch claims vs Algosaibis, National says

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.

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).