Saudi Saad group sued for $10 bln fraud

A festering dispute between two leading Saudi business families has erupted with Al-Gosaibi group filing a $10-billion fraud lawsuit against Maan al-Sanea’s Saad group, the Financial Times reported on Friday.
Ahmed Hamad Algosaibi and Brothers Company (AHAB) alleged in the suit filed in a New York court that billionaire Sanea used “forged or falsified documents” to arrange loans from a Gosaibi financial unit and took the money for his own needs, Britain’s FT reported, citing lawsuit documents.
“AHAB presently estimates that al-Sanea misappropriated approximately $10 billion as a result of his frauds,” the documents say.
Sanea, estimated by Forbes magazine earlier this year to have a $7 billion fortune, was at the time senior executive of an AHAB unit, the “Money Exchange,” according to the suit.
According to the FT, the action is a response to an earlier suit by the United Arab Emirates bank Mashreq alleging that AHAB owes it 150 million dollars.
The Saad group, a finance and construction conglomerate with a large portfolio of international investments, said in a statement on Friday that it has no information on the lawsuit.
“We’ve not seen or been served with this claim, although it appears from press reports to be a repetition of claims previously presented extensively to the press and elsewhere and which are baseless,” the group said.
The suit opens wides a festering financial scandal that has enveloped numerous Saudi, Gulf and international banks whose exposure could be as much as $16 billion according to an estimate earlier this month by EFG Hermes.
It also pits two wealthy, closely-linked business groups’ families from Saudi Arabia’s eastern Al-Khobar industrial city against each other and their bankers.
Sanea is married to the daughter of Abdelaziz Algosaibi, one of the founders of AHAB.
While in June the Algosaibi family said it had no current business links with Sanea, the lawsuit suggests the Saad chairman was closely involved with at least some AHAB units.
In the suit AHAB charged that Sanea “organised a massive fraud in which he had entered into transactions largely through the Money Exchange and purportedly in AHAB’s name with third parties including, allegedly, Mashreq,” according to the FT.
The New York suit could complicate moves by the Saudi and the UAE central banks to seek a quiet resolution by bringing local banks together for joint settlements.
Such moves left international creditors uncomfortable over their own positions, according to reports.

Copyright AFP (Agence France-Presse), 2009