Grant Thornton, the international accounting firm, is trying to broker a peace deal to end one of the Middle East's longest-running business feuds. The firm has approached the al Gosaibi family of Saudi Arabia with a plan to end the hostilities between it and Maan al Sanea, the Kuwaiti-born entrepreneur who built the Saad Group, sources say.
Grant Thornton has also put a proposal to the creditors of the two businesses, which are owed as much as US$20 billion (Dh73.45bn) as a result of the financial problems at the two Saudi companies. The plan was first suggested earlier this year and heads of agreement drawn up for the two sides, but they have not yet been signed. The plan would "pool" assets and liabilities of Saad and Ahmad Hamad Al Gosaibi and Brothers, the partnership that controls the family businesses, in a move to maximise the returns to creditors. Damaging litigation between the two sides would be halted if the initiative succeeded.
The Grant Thornton proposals signal the first sign of an olive branch in the bitter dispute between the two groups. It has led to allegations of fraud, theft and forgery by Al Gosaibi against Mr al Sanea, a series of legal actions in New York, the Cayman Islands, London and the Gulf, and damaged the business image of Saudi Arabia. Mr al Sanea has consistently denied the Al Gosaibi allegations. There is no guarantee the Grant Thornton move will succeed and legal action will proceed in parallel, but a spokesman for Al Gosaibi said yesterday: "The [al] Gosaibi family is committed to working on whatever constructive proposal can move this matter to a fair and final conclusion."
A spokesman for Mr al Sanea declined to comment on the initiative. There is a precedent for the pooling of assets and liabilities of troubled financial institutions in the region. A similar strategy was successfully used in the case of Bank of Credit and Commerce International, which went bankrupt in the 1990s. News of the Grant Thornton plan emerged as creditors to Al Gosaibi met in Dubai to consider the latest offer to settle the $9bn of liabilities the family firm owes to more than 100 banks.
As The National reported this week, Al Gosaibi is offering 20 cents on the dollar, amounting to $1.6bn, plus the proceeds of any assets recovered from Mr al Sanea through legal actions, subject to a ceiling of about $4bn. About $800 million would be paid immediately to creditors, with the same amount payable over five years. The cash payments would be funded from operational revenue, or from the disposal of land in Saudi Arabia owned by the family for generations.
Core operating assets such as the Pepsi bottling plant and Crown canning and packaging businesses would not be sold, informed sources say. The proposals to creditors will also continue in parallel with the Grant Thornton initiative, as will the legal action, backed by a $150m "fighting fund" proposed by Al Gosaibi and funded by the banks. The offer was formally considered at a three-hour meeting at the Dubai offices of Emirates NBD, a member of the steering committee of banks owed money by Al Gosaibi.
Also present at the meeting were WestLB, Standard Chartered, Dubai Bank and Abu Dhabi Commercial Bank. Bankers declined to comment after the meeting. A source present at the meeting said Al Gosaibi and the creditors had agreed to draw up lists of assets held by the family, which would then be assessed by a British legal expert to ensure ownership and valuation. Informed sources said Saudi banks were pressing their claims for full redress, even if at the expense of regional and international rivals. A committee of the kingdom's political and financial establishment has been monitoring the situation.
Despite the Grant Thornton peace move, the hunt goes on for assets held by Mr al Sanea in businesses round the world. Liquidators found some $2.2bn net in the Cayman Islands company SICL, of which $500m is believed to be in cash and liquid assets. fkane@thenational.ae
