Lawyers withdraw defence in case against Saudi investment group AHAB

The defence of a major banking litigation worth $250m (£154.5m) has collapsed nine days into the High Court trial.

Lawyers withdrew the defence of the $250m claim brought against Saudi investment company Ahmad Hamad Algosaibi & Brothers (AHAB) by HSBC Holdings and four other banks on Friday (17 June).

The case, which was due to be heard this month, was set to be one of the largest before the commercial court in 2011 and was featured in The Lawyer’s top cases of 2011 (3 January 2011).

When the Saudi bank collapsed in May 2009 it did so owing $9bn to more than 100 banks globally.

Between them the five claimant banks were seeking to recoup $250m in loans, swaps, Islamic finance facilities and trade finance facilities, all of which AHAB says are forgeries.

AHAB argued that fraud was perpetrated by Maan Al-Sanea, a family relation and founder of Saudi conglomerate Saad Group, who managed to get $9.2bn in loans using the AHAB name.

The five domestic actions were part of the worldwide litigation, in which AHAB is pursuing Al-Sanea in the Cayman Islands and Saudi Arabia, and at the appellate level in New York.

Appearing in the High Court on behalf of HSBC, Brick Court Chambers’ Tim Lord QC, suggested that the defence assertions about alleged forgeries committed by Al-Sanea amounted to a “cock and bull story”.

However, a statement released by the defendant’s global legal coordinator, Baach Robinson & Lewis partner Eric Lewis, insisted that his clients were as much a victim of the fraud as the domestic claimants.

“The evidence was clear that there was massive forgery and that Al-Sanea diverted billions to his companies and that the Algosaibis received no material benefit. They were the true victims here,” the statement confirming withdrawal of the defence read.

The High Court heard that over a 10-year period $330bn went through the account of AHAB’s Money Exchange business controlled by Al-Sanea.

Lord asked the court: ’The huge question is what did the partners think? How were they going to be serviced, how were they going to be paid?

“The only way that could have happened was entering into new borrowing agreements. They’ve behaved in an ever-more frantic way in order to stay afloat.”

Lord added: “They’d no income, they’ve gone from a position where they had hundreds of millions of dollars of short-term loans. They had to keep financing. The whole of the business empire was built on sand.”

That said, Al-Sanea’s lawyers at Harbottle & Lewis said in a statement: “Mr Al-Sanea has consistently rejected all allegations of wrongdoing and is vigorously defending the actions brought against him.”

The five claimant banks were: HSBC; British Arab Commercial Bank (BACB); Arab Banking Corporation; ABC Islamic Bank; and Calyon.

The line up:

Claimant lawyers:

Sue Millar of Stephenson Harwood instructed Jonathan Davies-Jones and David Simpson of 3 Verulam Buildings for BACB.

Clyde & Co partner Stephen Tricks instructed David Wolfson QC of One Essex Court and Richard Edwards of 3 Verulam Buildings for CACIB.

Herbert Smith partner Kevin Lloyd instructed 3 Stone Buildings’ Andrew Twigger for Arab Banking Corporation and ABC Islamic Bank.

Reed Smith partner Richard Spafford instructed Brick Court’s Tim Lord QC and Alexander Polley of One Essex Court for HSBC and HSBC Middle East.

Harbottle & Lewis partner Louis Castellani for Maan Al Sanea.

Simmons & Simmons partner Richard Bunce instructed Blackstone Chambers’ Thomas Beazley QC to lead Brian Kennelly, also of Blackstone, in respect of the Cayman proceedings and the High Court worldwide freezing order.

Defendant lawyers:

Baach Robinson & Lewis partner Eric Lewis coordinated AHAB’s global legal team.

Withers partner Andrew Ford instructed 3 Verulam Buildings’ Ewan McQuater QC to lead David Quest and Peter Ratcliffe for AHAB in London and Cayman. Mourant Ozannes partner Peter Hayden also represented AHAB in the Cayman proceedings.

Lawrence Graham (London) partner Jamie Curle and Maples & Calder (Cayman) instructed 3 Verulam Buildings’ Stephen Phillips QC in the Cayman proceedings and the worldwide freezing order in the High Court. Mourant Ozannes partner Peter Hayden is also representing AHAB in the Cayman proceedings.

Harbottle & Lewis partner Louis Castellani acts for Maan Al-Sanea.

Appleby partner Jeremy Walton is representing MaanAl Sanea directly in the Cayman proceedings, instructing Blackstone Chambers’ Thomas Beazley QC to lead Brian Kennelly, also of Blackstone, in respect of the Cayman proceedings and the High Court worldwide freezing order.

Farrer & Co partner Adrian Parkhouse instructed Andrew Green QC and Simon Pritchard of Blackstone Chambers for Sana Algosaibi.