Opening salvos in massive Saudi fraud case

Alleged fraud funded lavish lifestyle

The courtroom at Kirk House has been converted to accommodate the many lawyers who are working on the trial. - PHOTO: TANEOS RAMSAY

One of Saudi Arabia’s wealthiest businessmen was accused, Tuesday, of a multi-billion-dollar fraud that led to one of the biggest corporate defaults in the kingdom’s history.

Beginning his opening statement in what is expected to be a seven-month trial in Cayman’s Grand Court, David Quest, QC, said Maan Al Sanea had engaged in multiple scams over nearly a decade to raise money for his own gain and lavish lifestyle at the expense of the Ahmad Hamad Algosaibi and Brothers Company, a large Saudi family business empire.

He said Mr. Al Sanea, who married into the family and was given control of a financial services company called the Money Exchange, had used the business as a “machine to borrow money” for his own ends.

At one point, he claimed, Al Sanea, whose alleged scams included creating fake banks with fake clients, was misappropriating up to one billion dollars per year.

He said the family company partners were not aware of the fraud, which went on for nearly a decade, until the Money Exchange and other business operated by Al Sanea collapsed in 2009, causing AHAB to default on 9 billion dollars of debt, borrowed from more than 100 banks.

In the litigation, AHAB is seeking damages from Al Sanea and his own companies, many of them registered in the Cayman Islands, which it says were unjustly enriched as a result of his schemes. It says the funds are needed to repay its creditors, with whom it has been attempting to negotiate a settlement since 2009.

The claim is contested by Al Sanea and the liquidators of his Cayman Islands-registered companies.

Mr. Quest, in his opening, said the defendants would claim that the partners of the family conglomerate were aware of the extent of Al Sanea’s borrowing and authorized it.

But he said the Money Exchange transactions showed no benefit to the conglomerate and questioned, “Why would they allow this?

“Why would Algosaibi permit Al Sanea to borrow to the point that would have bankrupt them?”

Despite the discovery of millions of documents for the case, he said Al Sanea had not been able to provide any evidence to show the partners were aware of his dealings at the Money Exchange.

“If there were some smoking gun document that implicated them in the Money Exchange activities or conclusively proved their knowledge of it, you can be pretty sure that he would have made sure that document would have come to light,” he said.

Outlining some of the history of the Saudi family business, he said its genesis was a pearl and timber business that had developed into a conglomerate operating across all sections of the economy, including shipping, logistics, paint, hotels, travel and Pepsi distribution.

Al Sanea’s involvement with the company began in 1981 when he married the daughter of one of the founders and was given control of the Money Exchange, established as a fairly small retail financial services business, the functions of which included currency exchange, cash remittances and an American Express franchise.

Mr. Quest outlined how, over the following decades, Al Sanea had expanded the business and attempted to develop it into the “central treasury” for the Algosaibi business empire.

Though he found favor with his father-in-law, Mr. Quest said Al Sanea was disliked and treated with suspicion by the other partners in the family company.

He claimed the Money Exchange never attained the hoped for central role in the business and had in fact become the “central treasury” for Al Sanea’s own independent business empire.

The trial was continuing Tuesday afternoon.

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