Al Sanea legal battle heats up

A month after a UK court lifted a $9.2 billion freeze on the assets of Maan Al Sanea, mirroring a judgement by a Cayman Islands court a fortnight before that, the legal battle between Saudi Arabia’s Algosaibis and Maan Al Sanea seems to be heating up once again.

Al Sanea, facing criminal and civil proceedings relating to billions of dollars allegedly defrauded from his wife’s family the Algosaibis, recently won a big respite after the Cayman and UK courts lifted a freeze against his assets.

“A wrongful $9.2billion freezing order against me has been lifted, with the courts recognising that it should never have been imposed in the first place,” Al Sanea said in statement sent to Emirates 24/7 in late September.

Yesterday, the Grand Court of the Cayman Islands granted a default judgement in favour of plaintiff Ahmad Hamad Algosaibi & Brothers (AHAB) in a case filed by the Algosaibis against Saad Investments Co. and Al Sanea, among others. The ‘default interlocutory judgement for damages to be assessed’ in the case noted that the second defendant (Maan Al Sanea) had not given any “notice of intention to defend” prior to the date of AHAB’s application for a default judgement (October 13, 2011).

The court, through the order filed on November 7, 2011, “adjudged that the Plaintiff [AHAB] do have judgment against the 2nd defendant [Al Sanea] for damages for conspiracy and breach of fiduciary duty to be assessed together with such costs to be taxed if not agreed.”

Simultaneously, UK newspaper The Telegraph reported on Sunday that a New York court has ordered HSBC, Standard Chartered, Citibank and Bank of America to release papers relating to bank accounts held by Al Sanea despite the banks’ pleadings the evidence could be used against them.

The potential for claims against the four banks that handled over $1 trillion of Algosaibi money was revealed in a court transcript obtained by the daily. The banks argued the release of documents to the Algosaibis could be used as a ‘Trojan Horse’ to bring cases against them but the judge, while acknowledging potential liability, ruled against the banks.

“I have never fully seen the force… of the Trojan Horse argument,” Honourable Judge Jed S. Rakoff of Federal District Court in Manhattan was quoted as saying in the ruling. “If it [the information] is genuinely relevant abroad, he [Algosaibi] gets it even if it hurts you, for lack of a better word. And if it’s not relevant abroad, he doesn’t get it.”

The Algosaibis are litigating that Al Sanea operated a Ponzi scheme while managing Money Exchange, an Algosaibi-owned remittance service, and defrauded the owners of billions of dollars – a claim that Al Sanea has denied and asserted that he will vigorously defend against.

“Since AHAB started its litigation scheme over two years ago, I have been resolute in my complete rejection of its desperate claims that I somehow defrauded the Algosaibis by borrowing large sums of money on their behalf without their knowledge through their Money Exchange division, Al Sanea said in his lengthy and rare statement issued in September after securing the lifting of an international freeze on his assets.

Cases are currently being pursued in London, Bahrain, the Cayman Islands and Switzerland.

“Courts in Bahrain, the UAE, the US, and elsewhere have rejected their claims. As a UK court heard when AHAB finally admitted liability in June, the Algosaibis emphatically knew of the activities of the Money Exchange and had done all along.

I also made clear to the courts two years ago that AHAB’s partners were hiding documents that confirmed their knowledge. Their advisors also denied the existence of these documents and claimed that their 50-strong legal and accounting team would surely have found them had they existed,” Al Sanea said in the statement.

With yesterday’s default interlocutory judgement, AHAB says it will now take the necessary steps to apply for an assessment of damages owed by Al Sanea. “The damages are expected to be in the billions of dollars,” it noted in a statement even as Al Sanea earlier won damages amounting to his legal fees along with the lifting of his assets freeze.

“The court has also ordered AHAB to pay 100 per cent of my legal fees connected with the wrongful order and to hold hearings on my damages suffered because of the wrongful order obtained by AHAB,” Al Sanea had said in the statement issued on September 22, 2011.

“Maan Al Sanea has repeatedly said he is waiting for his day in court to defend the charges against him,” said Eric Lewis, AHAB’s chief legal coordinator, in a statement sent to 'Emirates24|7'. “Those statements ring hollow. The Cayman Court determined that it had jurisdiction over this matter and gave Al Sanea every opportunity to submit a defence. Clearly, he cannot defend the fraud charges on the merits and the court has acted accordingly,” he said.

AHAB advisor Simon Charlton, a managing director of Deloitte Corporate Finance in Dubai, said: “This is a major victory for the Algosaibis. Al Sanea fought jurisdiction, lost and then lost again. When the time finally came to explain the fraud, the forgeries, the sham banks, the vast, unexplained money flows, he defaulted. It is now clear that once the procedural roadblocks are cleared away, he has no defense to the charges against him.”

But the case seems far from over – with both parties vigorously defending their claims, the case is a rare feud involving business families from Saudi Arabia that is being fought tooth-and-nail in full public view. More importantly, it also involves a number of local and international banks that have not only their finance, but now also their reputations at stake.