Wed | Aug 16, 2017

Multibillion fraud lawsuit heads to trial in Cayman Islands

Published:Friday | July 15, 2016 | 7:00 AM

The largest trial in the history of Cayman Islands, a British overseas territory, will get under way on Monday with billions of dollars at stake.

The case to be heard in Grand Court involves worldwide allegations of fraud, forgery and conspiracy arising from a credit crisis involving a large family conglomerate in the Middle East and financial institutions in Saudi Arabia, Bahrain, London, New York, Switzerland and the Cayman Islands.

Borrowings from some 118 banks worldwide are central to the case.

Jurisdictional and other interim challenges have already been argued and resolved through appeals ranging up to UK Privy Council, the highest court of appeal for the British territory.

To facilitate the start of the trial, the Cayman Islands courts have blocked out seven months, to be followed by two to three months for deliberations and writing of the judgment by the chief justice.

The litigation team comprises four different firms of local lawyers - Harneys, HSM Chambers, Mourant Ozannes and Walkers - who are instructing and assisting London counsel, and three different teams of liquidators.

The 30 to 40-member team has been assembled with the goal of finally resolving the tangle of complex claims and counterclaims in a trial that many will be watching.

"As the trial progresses, the international financial community will be turning a critical eye towards the developments in the Cayman Islands," said Shelley White, partner with Walkers.

"As a result of the careful investment in the legal infrastructure by the Cayman Islands' government, and the focus of leading local law firms in attracting and cultivating high-calibre Caymanian and international attorneys, these proceedings will confirm the Islands' status as a world-class jurisdiction in which to do business."

She made particular reference to the establishment in 2009 of the Financial Services Division of the Grand Court (FSD), a development that has resulted, she said, "in the Grand Court being expertly equipped to handle the particular needs of a matter of this size and sophistication".

Outside of that general infrastructural preparedness, arrangements for the case of such all-round massive proportions have necessitated the discovery of five million documents, the procuring of data-management technology housed in London and commissioned at a cost of millions of dollars, and the retrofitting of court facilities in Kirk House, where the case will be heard.

Court administrator Suzanne Bothwell said preparations have included ongoing case management by the chief justice and liaison between her office and local law firms to ensure the court facilities are modified to accommodate the expansive case.

The first named defendant in the case is a Saudi billionaire of Kuwaiti origin, Maan Al-Sanea, who is the head of the Saad Group, a prominent Saudi investment company.

Al-Sanea, who is married to a daughter of a founder of AHAB, was put in charge of AHAB's financial-services business following his marriage into the family.

The allegation is that over a 20-year period, Al-Sanea negotiated huge amounts of loans, most unsecured, on the strength of the AHAB name.

By 2009, crisis-weary banks stopped lending and, one by one, AHAB defaulted on payments to them.

The Algosaibi family has alleged that it has been the victim of a massive US$9.2-billion fraud that it claims resulted from Al-Sanea's manipulation of the affairs of AHAB's finances.

Claims of fraud include allegations of forged documents and the siphoning off of proceeds to Al-Sanea's Saudi and Bahraini companies and then on to others established by him in the Cayman Islands.

These allegations are resisted by the liquidators of the Cayman companies, which are the active defendants to AHAB's claims.

- CMC