Estate of MerchantBridge founder faces new lawsuit over Asiacell investment
MerchantBridge, one of the largest Iraq-focused private equity firms, has again become the subject of controversy after a second lawsuit emerged over its investment in Asiacell.
A former partner in the company alleges that its late founder, Basil Al Rahim, misrepresented the MerchantBridge stake in the Iraq mobile operator, costing him millions of dollars.
Founded by Al Rahim, a former Carlyle Group executive, and other wealthy Arabs in 2001, MerchantBridge served as a conduit for investments by big names such as Qatar National Bank, Qatar Telecom and Lafarge Cement in post-war Iraq.
But the company’s operations were cut short after Al Rahim, his business partner Abdullah Lahoud and two JP Morgan bankers died when the company’s private jet crashed in February 2011.
The event triggered a legal dispute in 2012 between shareholders and the estate of Al Rahim. The case was settled out of court the same year.
MerchantBridge held a 49 per cent stake in Asiacell. It sold a 30 per cent stake to Qatar Telecom in 2007. The remaining 19 per cent stake was at the heart of the dispute.
Now a founding partner has taken the estate of Al Rahim to court, claiming US$31,526,399 in addition to damages.
The case has been filed in the London High Court by Samir Arab, a Saudi Arabian, who was also a MerchantBridge shareholder.
Mr Arab declined to comment when contacted by The National.
In his court filing, Mr Arab alleges that Al Rahim pressured him to leave the company in 2009 before Mr Arab eventual resigned in 2010.
He also claims that Al Rahim told him that MerchantBridge’s shareholding in Asiacell was only 2.5 per cent. That would place the company’s holdings at $34,413,265, the filings said. Mr Arab alleges that Al Rahim said the remaining 16.5 per cent stake was held by various third parties, the identities of which were “confidential and very sensitive”.
Mr Arab was forced to sell his share of the 2.5 per cent at a value of $1.4 million, the filings said.
He also alleges that he was denied a bonus after being told that the company was losing money.
Mona Voswani, the lawyer representing the Al Rahim estate said that his clients “reject the allegations in Mr Arab’s claim and will be defending the claim”.
Court documents filed in the Cayman Islands after Al Rahim’s death showed that the Asiacell investment that was supposed to be in the company’s name had been transferred to a special purpose vehicle (SPV) in Al Rahim’s name. Had the full stake remained with MerchantBridge, its value would have actually been $261,540,814, the filings said.
Shareholders responded to this revelation by filing a writ of summons in the Cayman Islands, where the SPV was registered, The National reported in 2012.
They demanded that the assets and profit from the investment be reassigned to MerchantBridge itself. The plaintiffs alleged that the assets and revenue of the SPV established by Al Rahim, called Bluewood, were actually held in trust for the investors, legal filings showed.
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Updated: September 9, 2014 04:00 AM