UAE authorities have taken fresh action against Maan al Sanea, the entrepreneur involved in the biggest corporate scandal to hit the Gulf.
UAE court moves on assets of Saad firms
UAE authorities have taken fresh action against Maan al Sanea, the entrepreneur involved in the biggest corporate scandal to hit the Gulf. An Abu Dhabi court has moved to place under its protection any goods or assets held by two of his companies - Saad Group and Saad Trading, Contracting and Financial Services - in the UAE. The order gives the court claim over US$151 million (Dh554.6m) of assets it says is owed to an Abu Dhabi bank, which it declined to name.
The bitter confrontation between Mr al Sanea and the al Gosaibi Saudi business family has put at risk some $22 billion of loans to 100 or so banks worldwide. About $3bn of that is owed to UAE banks, analysts estimate, with the biggest amounts outstanding to Abu Dhabi Commercial Bank ($600m) and Mashreqbank of Dubai ($400m). The court said that the Saad companies had built up $151m in debts in financing facilities and credit lines, but had defaulted on repayments.
The move by the Judicial Department of Abu Dhabi, called a provisional attachment, is a further tightening of the screw on Mr al Sanea. The Central Bank froze all lines of credit to Saad and al Gosaibi companies in June this year and allowed UAE creditors to offset their exposures against any assets held here. In addition to the bank creditors, Mr al Sanea faces claims on his assets from the al Gosaibis, who have accused him of taking as much as $10bn from them in a sustained campaign of fraud and forgery. Liquidators have also been appointed to his Cayman holding company. A London-based spokesman for Mr al Sanea declined to comment.
Some observers of the scandal said the UAE action was further evidence of the anger felt by financial institutions outside Saudi Arabia at the $2bn settlement reportedly reached between Mr al Sanea and Saudi banks, from which non-Saudis were excluded. Meanwhile Mr al Sanea has sought protection for one of his financial companies in the US. Saad Investments Finance Company (No 5), part of the Saad global empire, was placed under the provisions of Chapter 15 of the US bankruptcy code, which provides protection for foreign companies in the US.
American law allows foreign companies to use the provisions of its bankruptcy laws while they reorganise or liquidate in their home country. The Cayman Islands holding company of Mr al Sanea, Saad Investments Company Ltd (SICL), was placed under a court liquidator in July this year after lawyers working for the al Gosaibi family sought to identify allegedly stolen assets. The case was filed in the US to protect company assets there "from potential seizure or attachment by third parties", according to documents lodged in a court in the state of Delaware.
The company has 57 private equity funds and one hedge fund, worth $145.9m in total, the papers said. Twenty of those funds are in the US and are worth $41.5m, Saad claimed, adding that their liabilities were less than $10m. In a report to Saad creditors last week in the Caymans and London, the liquidator Grant Thornton said SICL had a total of $334m of hedge fund and private equity balances. Hedge funds totalled $183m and were held by seven custodians. Based on Saad records, Grant Thornton said the majority of these funds were unpledged, that is, not held by other financial institutions as security.
The majority of them are denominated in US dollars with a diversified portfolio invested in primary buyout funds, venture funds and some fund of funds. The vintage spread of the portfolio ranges from 1990 to 2007 with concentration between 2004 and 2007, Grant Thornton said. "Until the market is tested, however, it is not possible to determine what the likely realisation for SICL will be," the liquidators said.