Wednesday, June 30, 2010

AlGosaibi v Maan AlSanea - Grant Thornton to Broker "Peace" Deal? Authorities Supporing?

Frank Kane over at The National reports that Grant Thornton is trying to broker a settlement between AHAB and Mr. AlSanea.  Under what is described as the proposed deal, the parties would cease litigation against one another and pool assets to repay outstanding debt.  The stated goal is to maximize creditor recovery.  First, by eliminating the costs of litigation which no doubt would be considerable.  Second, and perhaps, more importantly, shortening the time frame until ultimate payment. 

Acceptance of the proposed plan would also achieve at least four other highly convenient goals:
  1. It probably closes the book on allegations of financial crimes - which would no doubt be a comfort to any party who may have committed a crime.   In this regard, it should be noted that not a single party to the dispute has admitted to any wrongdoing.  And all aver they are as pure as newly fallen snow.  Perhaps, the proverbial pristine white snows of Saudi Arabia. 
  2. It could relieve jurisdictions of the need to engage in complicated, messy and uncertain criminal prosecutions.
  3. It will reduce (but not eliminate) the current intense scrutiny and reputation bashing of regulators and their countries - an unwelcome event fed largely by continuing press reports of the feud.
  4. It would settle the dispute between two very important Saudi parties via a compromise .  Peace among the tribes rather than a victory for one side over the other.  Well consonant with Saudi tradition.
As the Cayman Islands' Court appointed liquidator for Mr. Al Sanea's Cayman companies,  GT's sense of fiduciary duty is clearly the motive for devising the settlement plan.   

As outlined above the plan would benefit other parties.  And they might well be expected to promote its acceptance.

Since the beginning of the crisis, Mr. AlSanea has suffered  heavy personal opprobrium in the press despite his repeated denial of any wrongdoing.  He and his firms have borne the brunt of legal actions filed.  And thus he may be well incentivized to deal.  

AHAB has until recently had a kinder fate.  And may therefore need a bit of prodding.   As well, they are perhaps the key to acceptance given the nature and vehemence of their accusations against Mr. AlSanea.  If they will sign the deal, then it may be easier for Mr. AlSanea to agree-  particularly if as expected the deal will involve a removal of accusations.

That's why I wonder about the recent spate of litigation directed against AHAB.  

Could it be that certain authorities are attempting to put pressure on AHAB with the view of securing its acceptance?

You'll recall that in announcing its US$720 million lawsuit against TIBC on 16 June Trowers and Hamlins said it took the action "following referral of the claim by the Council of Ministers." Clearly a reference to the Saudi CoM.  No doubt, any proposed legal actions were vetted as well by Trowers and Hamlins with its employer, the Central Bank of Bahrain.   In both cases an official "green light" to proceed.

Then again this all may be coincidence, though I don't think so.  The affair has dragged on to long.  Each day it persists is highly inconvenient for important parties who no doubt feel that it's time to close the book and move on.

4 comments:

Anonymous said...

but criminal prosecution has nothing to do with the civil matter, right? No matter what settlement is reached (which everyone on the civil side has an interest in doing) Al Sanea is still being investigated by US authorities in addition to all the others.

Abu 'Arqala said...

You are correct that there is no necessary link between criminal and civil proceedings. Either may proceed without the other.

But as a practical matter, there may be.

I rather doubt that the authorities in the region are eager to launch a criminal prosecution in this case. And are no doubt fervently wishing all this would just "go away".

A key issue for foreign jurisdictions would be their ability to obtain and interpret evidence, secure the presence of witnesses, and all the other aspects of bringing charges and then prosecuting. Here many of the documents in a foreign language, radically different law systems apply, the mechanics of business transactions are abstruse. A good defense attorney would be able to confuse a jury quite easily. I'm aware of a case not so long ago in one of the sophisticated Western countries where a learned judge was convinced that in Saudi Arabia, the mere declaration by a debtor that he wanted to renegotiate his loans was tantamount to Chapter 11 in the USA.

What would motivate foreign authorities to embark on this arduous road? The pursuit of justice for justice's sake?

Sadly, I don't think so.

If they have no direct interest in the case and the alleged crimes do not directly touch their national interests, I suspect the attitude will be let the local authorities prosecute. I'd note here as always that all of the parties to the dispute forcefully hold to their innocence. As pure as the snows of Tabuk in January 2008 - or so I am told.

Time will of course tell whether a criminal proceeding is launched.

I won't by holding my breath. And suggest you don't either.

Laocowboy2 said...

I may be old and cynical but I see this as a preface to a deal whereby the Saudi banks get most (if not all) of their claims settled while foreign creditors (at least those without security - much of the Al Sanea overseas debt at SICL was secured) get stiffed.

When will people ever learn that the GCC is different - and the KSA even more different! Sadly this will probably mean that decent borrowers in the GCC region will find it even more difficult to access international markets - at least until the aggressive Alzheimers that seems to infect most bankers works its magic once again - say 2012 or so?

Abu 'Arqala said...

Laocowboy2

Can't comment on the "old". As to "skeptical" perhaps a more apt description is "experienced" or "realistic".

As to bankers' Alzheimers, I already forgot what we were discussing.

From SAADCO to SAAD. From AAA to AHAB.