Asa Fitch over at The National has an interesting article on Fortis Bank's suit against ADIB for some US$40 million for ADIB's failure to honor its confirmation of an Awal Bank LC which was the basis for Fortis adding its own confirmation.
The underlying transaction appears to one of those fairly common "Islamic" transactions - a loan disguised as a commodity purchase transaction carefully to meet "Shari'ah compliant" banking "principles". Yes, those quotations marks mean exactly what you think they do.
ADIB is asserting fraud in the inception by Mr. AlSanea as its defense against payment to Fortis.
Where have I heard that legal defense before?
And this is as good place as any to note that Mr. AlSanea denies any wrongdoing.
In any case, I'll post a bit more on this in a day or two once I regain my composure. I can't stop laughing.
I thought the letters of credit that Ahli Bank Kuwait issued for TIBC were a howl. ADIB's "letter of credit" is beyond that.
As an extra bonus for your patience, I'll also post on BNPP Bahrain's suit against ADIB for some US$44.9 million involving letters of credit issued by TIBC that BNPP confirmed against ADIB's irrevocable undertaking.
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