Blown billions, Part II
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 II
October 17, 2009 9:27 by Ehtesham Shahid
Click here to read part I.
Not everybody sees this as a straightforward case of fraud. “He is being made into a scapegoat,” says a Dubai-based fund manager who has been following both groups for several years, in reference to Maan al-Sanea. “It is not fraud as you would normally identify a fraud. It is not a Bernie Madoff or Ponzi scheme.” The fund manager suggested
the dispute is also likely to involve other influential people in Saudi Arabia.
Indeed, the case took another twist in late August when Mashreq was drawn further into the dispute. It emerged that AHAB was preparing to file a counterclaim in New York, charging the UAE bank with, in the words of a public statement, “aiding and abetting the fraud of Mr. Sanea by being willfully blind to certain transactions on which they were making excessive profits.”
The company’s lawyer alleges that Mashreq made $12 million in profit through irregular short-term loans. “Any reasonable banker would know that you don’t finance $150 million of working capital by rolling [it] over every seven days and paying 12 to 14 points above the base rate,” AHAB’s lawyer, Eric Lewis of Baach, Robinson and Lewis, told reporters, according to the Reuters news agency.