Chief justice dismisses claims in massive Saudi fraud trial

| 31/05/2018 | 22 Comments
Ahmad Hamad Algosaibi & Brothers

Law Courts Building, Grand Cayman

(CNS): The biggest ever trial to be held in the Cayman Islands has finally concluded, after almost two years of deliberations, as fraud allegations in Saudi Arabia — centering initially on over US$9 billion of debt — were dismissed by Chief Justice Anthony Smellie in the case known as SAAD, which brought the eyes of the world over Cayman. The case, Ahmad Hamad Algosaibi & Brothers (AHAB) v Saad Investments Company Limited (In Official Liquidation) and Others, began in the Grand Court in July 2016, centering on the collapse of the Saudi Al Gosaibi family’s business empire, which it claimed was a result of fraud by Maan Al-Sanea.

Al-Sanea ran the company’s financial services business after marrying into the family of one of the founders. AHAB claimed Al-Sanea negotiated huge amounts of unsecured loans on the strength of the AHAB name, which went into default amidst the 2008 financial crisis. It was argued that Al-Sanea forged documents and diverted proceeds to his own companies, including a number of Cayman Islands companies, which the liquidators of the Cayman companies denied. AHAB’s claim was initially to recover the US$9.2bn of unrepaid borrowings, subsequently reduced to US$6bn, representing the proceeds of the alleged fraud.

From a mammoth 1,348 page judgement, Chief Justice Smellie outlined his findings, stating that the AHAB partners knew of and authorised the fraudulent borrowing through the firm’s money exchange and financial business, adding fraudulent practices were institutionalised for the purposes of defrauding the banks, with one of the founder’s sons, Abdulaziz, knowingly aware and the primary architect of the practices.

The chief justice said allegations that Al-Sanea engaged in “industrial scale fraud” upon AHAB were made on the selection of documents on a random basis, while the documents also showed AHAB was aware of the ever increasing facilities which they procured.

It was further stated that the AHAB partners were willing to allow the massive personal borrowing of Al-Sanea from the money exchange business go unchecked because it was the quid pro quo for his willingness to use the money exchange to procure fraudulent borrowing on behalf of the AHAB Partners themselves.

Counterclaims against AHAB for approximately $5.9 billion were also dismissed in the judgement, which said the evidence relied upon in their proof is unsafe and unreliable.

The dismissal of AHAB’s claims will be seen as a victory for the Cayman law firms acting for the companies in liquidation: Harneys, Walkers and HSM Chambers. It was indicated that an application for costs with indemnity will be made and these could run up to more than $70 million, according to one of the lawyers present. Lawyers involved also made the point that the case demonstrated the ability of the Grand Court of the Cayman Islands and its judiciary to deal with the most complex and high value litigation.

Simon Charlton, the Chief Restructuring Officer of AHAB, said in a press release, “When proceedings were commenced in 2009, AHAB’s overriding objective was two-fold: to prevent Al-Sanea from further dissipation of assets held in the Cayman entities, thereby putting them out of the reach of creditors, and to return assets to AHAB’s creditors. While we achieved the first objective, we are disappointed not to succeed in the second.”

In 2012 AHAB obtained a US$2.5bn judgment against Al-Sanea in the Cayman Islands, which still stands. “We will continue to enforce this judgment debt, in Saudi Arabia, for the benefit of AHAB’s creditors,” Charlton said, adding that AHAB is also pursuing claims against Al-Sanea in Saudi Arabia.

“Unfortunately, the effect of the judgment is that none of the assets in Cayman can be paid to AHAB’s creditors,” Charlton added. “It is important though that the counterclaims were defeated and also that the judgment against Al-Sanea stands.

“Obviously, the judgment is a very substantial document and, together with our lawyers, we are considering our next steps,” Charlton said. “There is an automatic right of appeal in Cayman; however, any appeal is unlikely to be heard until 2019.”

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Comments (22)

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  1. Anonymous says:

    So everyone was lying? Yes?

  2. Anonymous says:

    I don’t believe a word of this. Nothing happened. Ordinary people got conned….as usual.
    Money people laughing at us. It is all bullshit.

  3. Bertie :B says:

    Finally I know exactly what happened here !

    • Observer says:

      We can always depend on the Chief Justice to make well-reasoned judgments based not only in law but also in sound ethics.

      We saw him, for example, rebuff the pressures that were exerted in the infamous Tempura debacle.

      The outcome of this case is a credit to him and to the outstanding lawyers that uphold the rule of law in the Cayman Islands.

      It is an example of how important a strong judiciary is in the operations of a reputable world class financial centre.

      • Anonymous says:

        Only in Cayman can you find courts that set precedent or pass judgement on the most complex legal cases in the world yet we let people walk after being found sleeping on top a shotgun that’s loaded and his Dna is on cartridges in the chamber or sentence child rapists to months in the Hotel.

      • Anonymous says:

        Except when they are moving coke?
        Get a life and take those silly rose-tinted glasses off.
        Oh, I forgot, you people stick together.

  4. Anonymous says:

    Perhaps someone should investigate what businesses were associated with this mess in Cayman and who was involved.

  5. Anonymous says:

    The appeal is unlikely to be made since this mess was dismissed by Justice Smellie. Excellent. Dismiss them all. Waste of money in the first place.

    • SSM345 says:

      Apparently not a waste of money to Walkers; Harenys or HSM cause some people ova there just hit the Powerball.

      • Fred the Piemaker says:

        Defence costs in the excess of $70 million. Total costs including claimants probably in excess of $100 million. Not just the law firms doing well – that’s a huge amount of revenue into the local economy. How many cruise ships tourist do we need to provide a similar benefit? Yet we would rather build a pier than improve the court house.

  6. Anonymous says:

    World Class Court System. I am so proud to be a Caymanian and a civil servant. An independent judiciary is critical to our continued success.

  7. Anonymous says:

    So where’s the judgment???

    • Jotnar says:

      It’s nearly 1400 pages long. Do yourself a favour and read the summary on CNS library.

      • Anonymous says:

        I am a litigation attorney; I don’t need or want a summary. Jotnar, you aren’t the only giant who comments on here, whoever you are.

        • Jotnar says:

          Well if you are a litigation attorney why don’t you just download the judgment from the Court website? And I know plenty of lawyers who have better things to do than read a 14 page judgment when all the critical points of law are covered in the summary, hence my suggestion at which you seem to have taken some unintended offence, but knock yourself out.

        • Anonymous says:

          Oh mighty Giant! Rephaim or Nephilim?

        • Anonymous says:

          God, I’m an attorney, and I’m never going to read that thing. I think one lot accused the other lot of being crooks, but the lot that did the accusing seem to have known everything that was going on all along. So everyone seems to have been crooked and no-one won anything. Which is nice.

  8. NorthSideSue says:

    Well, that was certainly as clear as mud.


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