A UK judge orders a division of the Saudi conglomerate to pay Abu Dhabi Commercial Bank for defaulting on a currency-exchange deal.
British court orders Saad to pay ADCB $33.1 million
A UK judge yesterday ordered a division of the Saad Group, the Saudi conglomerate owned by Maan al Sanea, to pay Abu Dhabi Commercial Bank (ADCB) US$33.1 million (Dh121.5m) for defaulting on a currency-exchange deal. The judgment hands ADCB one of the first victories in a complex tangle of court cases that began when trouble cropped up last summer at Saad and another large Saudi business, Ahmad Hamad Al Gosaibi and Brothers.
Judge Michael Brindle ruled in London's High Court that Saad Trading, Contracting and Financial Services defaulted on a currency-swap transaction when its credit ratings were withdrawn in June last year. Bloomberg reported the judge called Saad's argument that ADCB failed to terminate the swap deal on time and neglected to provide a bank account for payment "hopeless". ADCB and London representatives of the Saad Group did not respond to requests for comment. It is unclear whether the Saad subsidiary will appeal yesterday's decision.
Dozens of banks have sued since the Saad and Al Gosaibi groups began to default last summer. Courts in London, New York, the Cayman Islands, Bahrain and the UAE are hearing claims against them. Al Gosaibi alleged last July that its problems stemmed from a $10 billion fraud committed against it by Mr al Sanea when he was in charge of Al Gosaibi's remittances arm. Mr al Sanea, one of Saudi Arabia's most prominent businessmen, has denied the allegations.
The global accounting company Grant Thornton has been trying to broker an agreement between Saad and Al Gosaibi since early this year, hoping to put to rest a dispute that has shaken the kingdom's conservative business community and caused turmoil at the region's banks. Banks in the Gulf are thought to account for about half of the Saad and Al Gosaibi groups' overall debts of about $20bn and the turmoil has led many lenders to write off loans and set aside provisions against defaults.
Several UAE banks including Emirates NBD, ADCB, Abu Dhabi Islamic Bank (ADIB) and Mashreqbank have significant exposure to the groups. With no sign of a settlement in sight, the court battles continue. In one of the most prominent cases to arise from the dispute, Mashreqbank is suing Al Gosaibi in New York over defaults on $225m of currency swaps. And Fortis Bank, a Dutch lender that merged this year with ABN Amro, is also suing ADIB in New York, alleging it failed to honour obligations under a $40m trade finance deal that involved Al Gosaibi and Awal Bank, a Bahraini banking subsidiary of the Saad Group that has since been put under administration by Bahrain's central bank.