Algosaibi firm as Mashreq hints at reconciliation

Even as Abdul Aziz Al Ghurair, CEO of Mashreq, said yesterday that the Dubai-based bank might hold talks to reach a settlement with the indebted Ahmad Hamad Algosaibi & Brothers Company (Ahab), a spokesperson for the Saudi firm maintained that there was no change in its stand.

"We have had ongoing talks with the banks since this [issue] started… We have had meetings with creditors from Dubai to London…," a US-based spokesperson of Ahab told this paper.

"This continues now with all creditors and stakeholders. So there is no change on that now as compared to a month ago, two months ago and so on. Our focus remains the same – seek the stolen money around the world to help put an end to this and find a global solution to this massive fraud," he said.

"There are no talks, but there are signs that we may be heading in that direction," Al Ghurair said yesterday. "They [Ahab] started talking about some kind of settlements and offers, which may include repaying some in instalments," he added.

According to papers seen by Emirates Business, Ahab filed a motion last week to set aside Mashreq's attempt to have Ahab's counterclaim to them struck. In a strongly worded statement, Ahab filed: "Mashreq's motion to dismiss… founders on Mashreq's self-serving mischaracterisation of the facts of the transactions at issue and Mashreq's role in them."

In a statement sent to Emirates Business, Eric Lewis of Baach Robinson & Lewis, lead counsel in the case and global legal co-ordinators for the Algosaibi family, stated: "Our opposition makes clear that the Algosaibis are the real victim here and that they have a strong and viable counterclaim against Mashreq bank for assisting Maan Al Sanea in carrying out his multi-billion dollar fraud.

"Mashreq's opportunity to earn excessive profits by charging huge interest rates made them turn a blind eye to the obvious fraud against the Algosaibis represented by these bogus foreign exchange transactions, which was simply disguised short term lending, nearly $5 billion [Dh18.36bn] in 16 months.

"When Al Sanea directed employees to refuse to provide a notarised signature on loan documents, because the chairman of the company was comatose and could not sign, Mashreq agreed to waive the rules. When the 'Know Your Customer' requirements were too stringent, asking questions that Al Sanea did not want answered, Mashreq called off its compliance. As the opposition makes clear, in doing so, Mashreq lent its money and its assistance to Al Sanea's enormous Ponzi scheme. We expect Mashreq to be held accountable."


Mashreq may invest in Dubai bond

Dubai's planned $10 billion (Dh36.73bn) debt issue is open to investors and Mashreq may consider purchasing part of it, said the bank's chief executive yesterday.

When asked whether his bank may be open to purchasing part of the issue, Abdul Aziz Al Ghurair said, "Yes, absolutely." "We're always examining what the opportunities are to invest and we have surplus liquidity now," he said on the sidelines of a financial conference.

Emirates Business yesterday reported that HSBC would also be examine subscribing to the planned issue.

"We will always support any new UAE initiative to support the economy," he said.

Al Ghurair said his bank has taken adequate provisions against its exposure to two indebted Saudi conglomerates. He said UAE banks should get used to lower growth rates as the region's economies recover from the global credit crisis.

"If we get five per cent growth in banks, this is good," said Al Ghurair. (Agenciesi)

The Algosaibi saga

- May 12: S&P cuts The International Banking Corporation (TIBC), a Bahrain-based bank owned by the Algosaibi group, to selective default

- May 14: Bahrain's central bank urges TIBC's creditors to meet, the first acknowledgement of the troubles by a regulator

- June 1: Saad Group says it plans to restructure the debt of units hurt by a liquidity squeeze, as Moody's cuts parts of the group to junk status and the Saudi Central Bank freezes bank accounts of Saad Chairman Maan Al Sanea, according to bankers

- June 10: The UAE's Central Bank directs banks to cut ties to both groups, according to bankers

- June 18: In a legal action, Mashreq successfully ties US assets of Algosaibi-owned TIBC bank into any claim on default

- June 24: Reuters data reveals Abu Dhabi Commercial Bank highly exposed to the Saudi groups with at least $500 million (Dh1.83 billion) at risk

- July 13: Saudi Government sets up crisis panel over Algosaibi

- July 17: Algosaibi takes Al Sanea to court in US for fraud over allegations of loan irregularities

- July 21: Mashreq confirms suing Algosaibi

- July 31: A Cayman Islands court orders freeze of $9.2bn worth of Saad assets

- August 24: Algosaibi files counterclaim against Mashreq in US court; alleges lender of being intentionally blind to irregular deals

- August 27: Mashreq says Algosaibi counterclaim attempt to deflect liabilities owed to many banks.

- August 28: Lawsuits totalling $450m filed against Algosaibi in London's High Court; Saad also faces London lawsuit

- September 4: ADCB files $30m claim in London against Saad unit

- September 16: Mashreq reveals full exposure of over $400m to Algosaibi in US court documents

- September 18: Saad settles $2.6bn debt with local banks, say bankers

- October 14: Al Sanea breaks silence; claims innocence in court papers

- October 30: Algosaibi accuses Sanea of operating multi-billion-dollar Ponzi scheme in court papers

- November 2: Mashreq CEO hints at reconciliation; Algosaibi denies any progress

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