One of Saudi Arabia’s wealthiest businessmen stands accused of a multibillion-dollar fraud as the largest trial in Cayman Islands history begins Monday.
Over the next seven months, a team of up to 40 lawyers and liquidators will attempt to untangle a complex family feud to unravel the truth behind one of the largest corporate collapses of the global financial crisis.
The trial revolves around the hotly contested claim by Saudi family conglomerate the Ahmad Hamad Algosaibi and Brothers company that it was the victim of a spectacular $9.1 billion dollar fraud.
It alleges that Maan Al Sanea, who married into the family and managed its financial services businesses, engaged in massive unauthorized borrowing, siphoning off proceeds to his own companies, many of them registered in the Cayman Islands.
In a statement of claim, filed with the Grand Court, lawyers acting for AHAB, allege that Al Sanea engaged in a series of corrupt transactions over two decades, which ultimately led to the collapse of the conglomerate as crisis-weary banks finally stopped lending in 2009.
AHAB is seeking damages from Al Sanea and his companies, which it says were unjustly enriched as a result of his fraudulent schemes. The claims are contested by Al Sanea, as well as by the liquidators of the Cayman Islands-registered companies.
A resolution of the protracted case could help the Saudi-based family business finally reach an agreement with its creditor banks to facilitate substantial repayments to them.
The case, presided over by Chief Justice Anthony Smellie, throws Cayman’s legal and financial services infrastructure into the world spotlight, providing a significant test of the islands’ capabilities as an international dispute resolution center.
The litigation team includes four local firms – Harneys, HSM Chambers, Mourant Ozannes and Walkers – which are instructing and assisting London counsel and three different teams of liquidators, according to a press statement from the Cayman Islands Judicial Administration.
Preparation for the case has involved discovery of some five million documents and new data management technology and upgrades to the courtroom at Kirk House, where the case will be heard. Jury facilities have been dismantled to accommodate case documents, video conferencing facilities have been improved and attorney “robing rooms” have been re-purposed to accommodate the large number of lawyers involved in the case. A stenographer will provide live notes, streamed on computer monitors to each participant.
Scope of the case
The case involves allegations of fraud, forgery and conspiracy and has required the law firms to retain a host of experts, including handwriting experts, forensic accountants and experts on Swiss, Bahrani, German and Saudi law.
Borrowings from 118 banks worldwide and transactions involving financial institutions in Saudi Arabia, Bahrain, London, New York, Switzerland and the Cayman Islands are central to the case.
Chief Justice Smellie said in a press release that the islands’ reputation as a financial center depends on its ability to resolve such complex cases in a timely and efficient manner.
“In the face of the widely acknowledged need for upgraded court facilities towards which we have long been striving, we have worked assiduously with the various interests to ensure that we do not compromise the smooth and efficient management of this case from the perspective of resources and facilities,” he said.
The chief justice added that the case is “exceptional” in its scope. But he noted that “large and complex cases” are an everyday part of the business of courts in the Cayman Islands.
Shelly White, partner with Walkers, which represents nine of the 16 firms listed in the suit, said the case would demonstrate the strength of the Cayman Islands legal infrastructure.
“As a result of the careful investment in the legal infrastructure by the Cayman Islands’ government, and the focus of leading local law firms in attracting and cultivating high-caliber Caymanian and international attorneys, these proceedings will confirm the islands’ status as a world-class jurisdiction in which to do business.”
Brett Walter, general counsel with Mourant Ozannes, which is representing AHAB, said, “AHAB is grateful to the Cayman Courts for accommodating the imminent and lengthy trial of these complex, high-value and important proceedings.
“AHAB looks forward to the ultimate resolution of this dispute, by which it seeks to recover a significant sum for the benefit of its creditors.”