x Abu Dhabi, UAEFriday 28 July 2017

US court rejects hearing al Sanea charges

Ruling, similar to another issued by a Cayman Islands judge, is another setback to the Al Gosaibi business family of Saudi Arabia.

A New York court has dealt a further blow to the Al Gosaibi business family of Saudi Arabia in its attempts to recover billions of dollars it claims were stolen by Maan Al Sanea, head of the Saad Group. Justice Richard B Lowe III of the New York Supreme Court ruled that an action brought by the UAE's Mashreqbank should be heard in the Emirates, where parallel action is already taking place, and not in New York. He also said Saudi Arabia could be the appropriate place for other parts of the allegations to be tested. Mr al Sanea denies the allegations.

The US court decision comes days after a court in the Cayman Islands reached a similar ruling on certain aspects of legal actions brought there by the family's partnership, Ahmed Hamad Algosaibi and Brothers (AHAB). The Cayman court said the Saudi authorities should consider some essential parts of the allegations of fraud, forgery and theft, all of which Mr Al Sanea denies. The actions in American and Cayman courts were controversial in Saudi Arabia because they exposed deficiencies in the kingdom's financial system to international attention. The New York action was brought by Mashreqbank over $225m in foreign exchange transactions in May 2009 which AHAB failed to complete. A statement from AHAB's lawyers said Justice Lowe found that "the exercise of long-arm jurisdiction over Mr Al Sanea and Saad Trading comports with due process notions of fair play and substantial justice." He further explained the court had jurisdiction because Mr Al Sanea and Saad Trading "made New York the epicenter of several large scale financial transfers" and "having made the choice to use New York banks, they may not escape the imposition of jurisdiction." However, the judge decided the case between AHAB and Mr Al Sanea would not be conveniently tried in New York. He suggested either the UAE or Saudi Arabia as potential alternatives. The judge also noted that many of the witnesses do not reside in New York and it may be more convenient for them to appear in a Middle Eastern court. Eric Lewis, the lead lawyer for AHAB said, "We did not choose to litigate in New York; Mashreq did." He added that the ruling highlights a dangerous gap in oversight of the US financial system, where foreign parties can use New York banks to perpetrate massive financial fraud but escape scrutiny simply by residing abroad and engineering the wrongdoing from there. Mr Lewis stated that AHAB believes the decision is wrong as a matter of both law and policy and that it is considering its options. He said AHAB has strong grounds for appeal. "We will continue to work with the multiple legal authorities who have taken significant issue with the $160 billion that was moved through the US banking system in the commission of this fraud," said Mr Lewis. A London spokesman for Mr Al Sanea said he was pleased with the ruling from New York. @Email:fkane@thenational.ae