Five minutes in court mark milestone in tortuous Saudi legal saga


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There isn't much "normal" business going on in Bahrain at the moment, but one event went off, more or less as planned, in downtown Manama on Monday.

As the rest of the city was recovering from its worst day of violence for many weeks, a small gathering took place in the lower criminal court on the fringe of the area controlled by protesters.

Perhaps the gathering was smaller than it would have been in other circumstances. Apart from a judge, a smattering of court officials and a lawyer, there was hardly anybody present to witness the first criminal hearing in the long-running saga of al Gosaibi versus al Sanea.

The two Saudi business families have been at daggers drawn for nearly two years now, with accusations of fraud, theft and forgery flying, legal actions on three continents, and international bankers out of pocket to the tune of US$20 billion (Dh73.45bn) or so.

And it all began in (then) sleepy Bahrain.

In May 2009, two banks in the kingdom, The International Banking Corporation and Awal, defaulted on financial obligations and triggered a corporate crisis in Saudi Arabia, just a short trip away across the causeway linking the two countries.

Ahmad Hamad Al Gosaibi & Brothers, the family partnership that owns one of Saudi Arabia's biggest business conglomerates, fell out with the Saad Group, run by Maan al Sanea, a relative of the al Gosaibis by marriage.

In a nutshell, the al Gosaibis accused Mr al Sanea of stealing close on $10bn from them over a number of years. Mr al Sanea immediately and vigorously protested his innocence, and has continued to deny all accusations since.

It will ultimately be for the courts to decide the truth, and that process began in Bahrain on Monday.

Not that the court heard anything about grand larceny on the scale alleged. The charges mentioned were for the much less serious offences of breaches of the Bahraini commercial code, particularly relating to financial reporting requirements for the central bank.

The Bahrain public prosecutor named 15 individuals, including Mr al Sanea, as subject to his investigations.

The court confirmed it was considering the charges but decided the individuals needed more time to have papers served and evidence produced, and pronounced there would be a further hearing at a date still to be decided but probably within the next month.

That was that - the whole process was over in no more than five minutes.

But it was an important milestone in the tortuous saga. While the affair has spawned legal actions aplenty, in New York, London, the Cayman Islands and the Middle East, it was the first time allegations of a criminal nature had been heard by authorities anywhere.

What Bahrain decides could ultimately affect the outcome of multibillion-dollar lawsuits in the capitals of global finance.

It might also go a way to restoring some of the business confidence in Saudi Arabia that has been badly affected by the fallout from the affair.

International creditors have had to sit on their losses for a long time while the Saudi kingdom wonders what to do about the scandal.

Suggestions of a cosy deal in Riyadh for Saudi banks to recoup some of their debts from the businesses involved have not helped the matter.

One set of creditors at least has decided it is time for a more proactive stance.

In the Cayman Islands, where a vital part of the legal battle is being fought out because Mr al Sanea based a big chunk of his assets there in holding companies that have since gone into liquidation, the courts have been told to expect a large claim against the al Gosaibi family, to the tune of $8.2bn.

This action, expected by the end of next month, is dismissed as a "litigation tactic" by the al Gosaibis' legal team, but it will increase the pressure on the family. It has been costly to maintain an army of lawyers, investigators and other advisers in the field. The al Gosaibis' determination to pursue the case against their adversary, and the resources to do so, cannot be limitless.

Whatever the outcome in Cayman, developments in Bahrain have acquired their own momentum. The authorities there have been prodded into action, and criminal cases have an inexorable dynamic, unlike civil actions.

But in the fluid and highly volatile atmosphere in Bahrain at the moment, who can say what is inevitable?