Familiar face to lead Al Gosaibi through latest phase of saga

The appointment of a former Deloitte executive to run the Saudi Arabian family business Al Gosaibi has big implications for the Middle East's longest-running financial sore, the feud between Al Gosaibi and the family's erstwhile partner Maan Al Sanea.

One little-noticed piece of news could have big implications for the Middle East's longest-running financial sore, the feud between the Al Gosaibi business family in Saudi Arabia and its erstwhile partner Maan Al Sanea.
The 2009 confrontation between the two resulted in multimillion-dollar legal actions on three continents and big debts - probably to the tune of US$15 billion - to the 90-odd banks that lent money to both sides.
Out-of-pocket creditors would probably welcome anything that might help to break the logjam that has developed in the affair.
So how will they react to the news that Al Gosaibi, for the first time in its decades-long history as a family business, has appointed a new chief executive and non-family executive team?
Simon Charlton, formerly the head of forensic services in the Middle East for the accounting firm Deloitte, has been named the acting chief executive and chief restructuring officer at Al Gosaibi, along with two colleagues from Deloitte to run the finances.
Mr Charlton has been involved with the Al Gosaibi affair since the start. He ran the investigation that uncovered alleged forgery, fraud and theft by Mr Al Sanea, charges he has consistently denied; and Mr Charlton has appeared as a court witness many times on behalf of the family.
It's also true that the practice of putting accounting executives "in-house" at distressed companies is becoming a trend, especially with Deloitte. Aidan Birkett went from the firm to be head of restructuring at Dubai World, and three Deloitte executives were recently appointed to Dubai International Capital. Nonetheless, Mr Charlton's appointment was a surprise. To lure a partner from a big accounting firm, in his case with 25 years' experience, is no small thing.
And to a company like Al Gosaibi as well. For the past four years, there have been serious doubts about the family's ability to carry on its business. Its share of the debts amounts to more than $9bn, and its available assets, as shown in various court filings, go nowhere near covering that. So Mr Charlton's new job could be viewed as a sign that there is a future for the Al Gosaibi business after all.
Mr Charlton himself believes so. He expects to do a minimum of three years in the job, and to leave Al Gosaibi as a modern, professionally managed corporation at the end of it. The partnership structure, which has caused so much trouble for the family by making it personally liable for the debts, will certainly go.
He is unwilling to rule out disposals of some parts of the business, although it is too early to say which, if any, might be for sale.
His top priority, though, is to deal with the bank creditors. This is a three-stage process, hopefully settling with Saudi creditors first, then other Middle East banks, and finally the troublesome army of international banks. The appointment could be interpreted as a sign of fresh thinking in creditor negotiations, although Mr Charlton has been so closely involved in the tortured negotiations that both sides know each other very well.
And, over four years, the banks have dug in for a long-term war of attrition, and some are taking an increasingly aggressive line on their outstanding loans.
More than 20 international banks have sought and obtained judgements from the Saudi Arabian Monetary authority against Al Gosaibi. In his new position Mr Charlton cannot afford to ignore these judgements for long.
Other creditors have attempted to sidestep the Saudi process altogether. HSBC and others had judgements awarded in the London courts a couple of years ago. Now Standard Chartered has taken action in New York against Al Gosaibi and one of its most important trading partners, the drinks firm PepsiCo with which it has a Saudi bottling operation. Obviously fearing that Al Gosaibi might try to sell the Pepsi venture, Standard Chartered has sought a restraining order in the United States preventing any such move.
There is no predicting where the Standard Chartered action will lead, but it is a sign that, after four years of loggerheads, Mr Charlton will not have an easy ride in his new job.
 
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