Ahmad Hamad Al Gosaibi and Brothers, the indebted Saudi conglomerate, has filed suit in New York against the billionaire chairman and founder of another struggling Saudi conglomerate, claiming US$10 billion (Dh36.87bn) in fraud, according to a newspaper report. The suit was filed by AHAB against Maan al Sanea, the head of the Saad Group, the Financial Times said yesterday.
According to the London-based newspaper, the suit said Mr al Sanea had "misappropriated approximately $10bn as a result of his frauds", which allegedly involved forged documents used to obtain loans, the proceeds from which were allegedly diverted into Mr al Sanea's hands. It also said Mr al Sanea held an executive position in AHAB, where the firm announced the discovery of "substantial financial irregularities" last month.
These allegations appear to describe much closer financial intermingling between Saad and Al Gosaibi than had previously been reported. Despite family connections - Mr Sanea is married to the daughter of one of the AHAB founders - Saad has said in the past that it has only an "arm's length" commercial relationship with Al Gosaibi. "We have not seen or been served with this claim, although it appears from press reports to be a repetition of claims previously presented extensively to the press and elsewhere and which are baseless," a London-based spokesman for Saad told the Financial Times. "If we are served with such a claim, we will respond to it vigourously through specialist counsel, confident in both the true facts and the judicial process."
The new lawsuit arose as a response to a complaint filed by the Dubai-based Mashreqbank in May over irregular forex trades, the newspaper said. It adds a twist to a story that has been closely watched across the Gulf since Saudi authorities in May froze the accounts of Mr al Sanea, and Saad and AHAB announced they were working on restructuring debts. The troubled firms have also had an effect on banks across the region, which have lent extensively to the groups. HSBC has estimated that Saudi banks alone are owed between $4bn and $7bn by the groups. Several banks in the UAE, including Abu Dhabi Commercial Bank, Mashreq, National Bank of Abu Dhabi and First Gulf Bank, also have exposures to the firms.
Analysts are watching closely as second-quarter financial results start to come in for indications banks are writing down loans to Saad and Al Gosaibi or are setting aside cash to cope with possible defaults. So far in the UAE, only United Arab Bank, Invest Bank and Commercial Bank of Dubai have reported results; none of them appear to have exposures to the Saudi firms. * with Reuters email@example.com