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Blown billions, Part I

Blown billions, Part I

Banks in the Gulf and beyond are reeling from Saudi Arabia’s Saad and al-Gosaibi scandal. We look at the web of relationships behind a dispute that will change the way business is done in the region, reports Trend magazine. Part I

October 14, 2009 4:44 by



But without the fictitious money he credited to his clients’ accounts, Madoff may have “only” stolen between $10 billion and $17 billion. The Saad and al-Gosaibi affair, in other words, ranks in the big league of fraud allegations.

On a more local level, a loss of $10 billion would deliver a sharp blow to liquidity in the Gulf financial system. The amount equals, for instance, the entire first tranche of the bond issue bought by the UAE central bank in February to help Dubai’s companies state afloat. And the full scale of the crisis is still unknown. With dozens of affiliates, subsidiaries and affiliated banks with opaque debt channels, the tentacles of the Saad and al-Gosaibi groups reach into financial institutions around the globe, with as many as 100 banks exposed to related losses.

Tip of the iceberg

Saudi family-owned companies are notoriously secretive, and the complex web of relationships, both personal and professional, between the Saad Group and AHAB make it difficult to make sense of even the small portion of the story revealed to the public so far. Discussions with sources close to the companies have pieced together a number

of details, however. The Saudi Arabian Monetary Agency (SAMA), the country’s central bank, instructed banks to freeze all the assets of al-Sanea, his wife and four of his children on May 31, according to the Arabic-language press.



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1 Comment

  1. FG on October 14, 2009 7:45 pm

    Interesting synopsis of a developing story. Note that Al Sanea (his mother is related to Kuwait’s ruling Al-Sabah clan) did not work for AHAB until he married Sana, at which time he was effectively given management control of the AHAB owned Money Exchange – akin to a dowry of sorts. Sana and her husband were considered heirs to the business model that her father had built . It was Ahmad, the oldest of the Al Gosaibi brothers, who built the trading operations and laid the industrial foundation, but Abdulaziz who used it as collateral to leverage the family into the billion dollar league.

    Cousins Yousef and Saud (Sana’s younger brother) are managing AHAB’s operations but it is likely that they may not be the market makers their respective fathers were. That Saud may have been jealous of his brother-in-law is possible, but outright incompetence in management – well the owners are to wholly be blamed for that.

     

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