Ruling on $126bn Al Gosaibi family feud will see creditors reimbursed
The law firm representing the defendants says the conclusion "vindicates" their position
A UK law firm, which is involved in a Cayman Islands court ruling that found a Saudi Arabian family and a Kuwaiti-born businessman both defrauded scores of banks out of $126 billion, said the decision means creditors will finally be reimbursed.
Stewart Hey, partner at Charles Russell Speechlys, represented the Joint Official Liquidators of six Cayman Islands registered companies, known collectively as the AwalCos, who were among the 15 resulting defendants in the multi‑billion dollar trial.
“This conclusion vindicates the defendants’ position after a 129-day trial, the longest running trial in Cayman Islands history, and we are delighted at the outcome for our clients which will allow many millions of dollars to be returned to creditors," Mr Hey said said in a statement.
The ruling follows a 10-year dispute played out in international courts between the Saudi Arabian Al Gosaibi family and Kuwaiti businessmen Maan Al Sanea's Saad Group of companies over who was to blame for the collapse of each other’s business empires.
On Thursday, a Cayman Islands court dismissed claims against the Saad Group. .
With a total value of $9.2 billion claimed, the sums at issue during the trial made it one of the biggest ever recorded, Mr Hey said.
“The case is one of the most intricate pieces of litigation that we have ever been involved in – by virtue of the technical and financial complexity; sheer volume of documents in many different formats and multiple languages; geographical span; and the number of parties and legal practitioners involved in different countries globally,” he said.
According to Reuters, The AwalCos formed part of the business empire of Mr Al Sanea. Their liquidations followed one of the biggest corporate collapses of the 2008-2009 global financial crisis - and the largest in Saudi Arabian financial history, that of the Ahmad Hamad Algosaibi & Brothers Company, known as Ahab.
Ahab and the Saad Group, owned by Mr Al Sanea, both defaulted amid the crisis, with international and regional banks and other creditors owed billions of dollars.
In the judgment on Thursday, Anthony Smellie QC, the chief justice of the Cayman Islands, dismissed a $4bn claim by Ahab against the Saad Group of companies for alleged fraud involving an Ahab business unit called the Money Exchange, according to a copy of the judgment seen by Reuters.
The chief justice left in place Ahab’s existing $2.5bn judgment against Al Sanea, Reuters reported.
Instead, the Grand Court of the Cayman Islands found in favour of the liquidators of six defendant companies advised by Charles Russell Speechlys.
The chief justice found that Ahab knew of, and authorised the fraud carried out by the Saad group, the judgment said. The judge also dismissed a $5.9bn counterclaim by Saad, Reuters reported.
In dismissing the claims against Charles Russell Speechlys’ clients, Mr Smellie was quoted as saying in the Charles Russell Speechlys' statement: “The evidence reveals that the Money Exchange … has been used to perpetrate one of the largest Ponzi Schemes in history …"
Mr Smellie said the fraud was perpetrated by Ahab and Mr Al Sanea acting in concert against the banks, to obtain borrowing "which would certainly not have been provided had the banks known the true financial position of the Money Exchange".
Mr Al Sanea, who married into the Al Gosaibi family in 1980, was appointed the Money Exchange’s managing director in 1981, according to Reuters.
"Ahab has concealed its active role in the fraud on the lending banks since 2009. It has refused to make a clean breast and presented a dishonest case until the conclusion,” Mr Smellie added in the Charles Russell Speechlys' statement.
Ahab said in a statement seen by Reuters that it was considering its legal options, adding that there was an automatic right of appeal but that any appeal was unlikely to be heard until 2019.
Reuters said that representatives for Mr Al Sanea and Saad did not respond to a request for comment.
The Al Gosaibi family did not comment on the case.
Updated: June 5, 2018 03:49 PM