Al Gosaibi faces $720m lawsuit

Lawyers overseeing TIBC sue over foreign exchange deals

The bankruptcy lawyers administering The International Banking Corporation (TIBC) in Bahrain have sued Ahmad Hamad Al Gosaibi and Brothers, the bank's owners, for allegedly defaulting on US$720 million (Dh2.64 billion) in foreign exchange transactions. Trowers and Hamlins, the London law firm appointed by the Central Bank of Bahrain to run TIBC after it failed last year, filed the claim with a judicial committee in Saudi Arabia.

"These claims form the first in a series of litigation proceedings which will be brought in a variety of jurisdictions around the world against those debtors of TIBC including [the Al Gosaibi group] - the single biggest debtor owing $3.2bn," said Abdullah Mutawi, the Trowers and Hamlins lawyer who is leading the recovery effort. "These proceedings will ultimately support the process of asset realisation for the benefit of the creditors of TIBC, who include international and local banks owed in the order of $2.6bn. Further claims will be lodged in the coming weeks and months."

The case adds to a growing legal tangle for the Al Gosaibi group, the Saudi family-owned business that defaulted on financial obligations starting last summer. The group has since alleged that it was the victim of a $10bn fraud by Maan al Sanea, a Saudi billionaire who runs another Saudi conglomerate called the Saad Group. Mr al Sanea denies those allegations. Cases relating to the dispute have been filed in the Cayman Islands, London, New York, Bahrain, Saudi Arabia and the UAE.

A spokesman for Al Gosaibi said the company rejected claims made by Trowers and Hamlins "on every level". "Trowers and Hamlins' rhetoric simply ignores [the Al Gosaibi group's] multiple offers to enter into a co-operative information sharing agreement ?"said Jim Courtovich, the spokesman for Al Gosaibi, said in a statement to The National. TIBC was taken over by the Central Bank of Bahrain last August after it ran out of cash and began to default. The central bank also took over Awal Bank, a Bahraini lender owned by the Saad Group that ran into similar trouble.

Charles Russell, another UK firm, was put in charge of Awal. The law firms have been tasked with recovering money due to the two banks and winding them down with the assistance of restructuring specialists. Trowers and Hamlins said yesterday that in addition to the claim filed on Wednesday against the Al Gosaibi group, it had filed a case in April with the Negotiable Instruments Committee in Saudi Arabia against Saad Trading, a Saad Group subsidiary, for $117m.

Hearings in those cases are scheduled for early next year, the lawyers said. The $720m claim involving the Al Gosaibi group's foreign exchange deal is being heard by a judicial committee under the Saudi Arabian Monetary Agency. Mr Mutawi said the claim followed "unsatisfactory responses from [the Al Gosaibi group] and their representatives to questions relating to the assets of TIBC that we have repeatedly asked them".

Charles Russell has already filed claims in Saudi Arabia and Bahrain seeking recovery of assets, according to court documents obtained by The National. Awal and TIBC have received bankruptcy protection in US courts, where cases have been lodged by creditors. In a letter to Mr Mutawi dated May 26 obtained by The National, a lawyer for Al Gosaibi said the group was advised not to hand over documents to Trowers and Hamlins because the firm was planning to use them as evidence in cases against Al Gosaibi.

"We could not responsibly advise our clients to proceed in this manner," the letter, from Eric Lewis at the firm of Baach Robinson and Lewis, said. In the letter, Mr Lewis also advised Trowers to join Al Gosaibi in the fight against Mr al Sanea, asserting that filing lawsuits against the group would be unproductive for creditors to TIBC. A London-based representative for Mr al Sanea declined to comment.

In Bahrain this week, a judicial panel made an interim ruling in a dispute between Al Gosaibi and Bank Muscat International that loan documents the group alleged were forged were in fact genuine. The Al Gosaibi group plans to appeal the decision. The group alleges that Mr al Sanea siphoned off about $10bn when he was head of the Money Exchange, a financial services arm. Mr al Sanea says he is innocent and is fighting to clear his name in courts across the globe.