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 Ehtesham Shahid
In its response to a suit filed against it on May 27 in New York by the UAE’s Mashreq, AHAB delivered a third-party summons to Maan al-Sanea and Awal, putting the blame for the missing money squarely on al-Sanea, who it names as “a senior executive of AHAB’s financial services division,” even though al-Sanea denies being involved in AHAB’s operations in any way.
The New York case alleges that al-Sanea “organized a massive fraud” by entering into transactions in AHAB’s name with third parties. “Al-Sanea obtained loans frequently using forged or falsified documents and then diverted the funds received to his own use,” the court document says, naming $10 billion as the amount of misappropriated funds. The specific transaction discussed in the Mashreq case – a transaction AHAB says its board and principals didn’t even know about until the case was filed – was only a recent part of a swindle going back years, claims AHAB.
“Over many years, through massive forgery of documents and the provision of phony confirmations and guarantees, acting in concert with entities that he controlled, including his wholly owned bank, third-party defendant Awal Bank Ltd., as well as third-party entities, al-Sanea fraudulently obtained money as a result of unauthorized, non- commercial transactions with a variety of financial institutions in the United States, the Middle East, and elsewhere, including, apparently, Mashreq,” the document states.
Saad Group calls these claims a “publicity stunt based on spurious and scurrilous accusations” and says al-Sanea “will respond in court in the correct manner.” According to one source familiar with the dispute, an issue likely to be raised in court is the validity of a power of attorney given to Maan al-Sanea by his father-in-law, Abdulaziz, prior to the latter’s death.
Many of the disputed transactions were said to have been signed on the basis of that document.