Saudi Arabia: Value of AlSanea Group Debt Surges 67% to 200%

Beatrice and Benedict Discuss the Value Surge

1 February Thompson Reuters reported that following recent reported efforts by the KSA Government to “step up its efforts” to resolve the Ahmad Hamad Al Gosaibi/Maan al Sanea USD 22 billion or so debt dispute: 

“In a sign that some creditors are now more optimistic there will be a positive outcome to the debt dispute, Saad Group’s debt has been trading up at 3 to 5 cents on the dollar in recent weeks, compared to 1 to 3 cents previously, bankers say.”

In percentage terms that's quite a movement.  Not so much in absolute amounts.

AA would guess that these now more optimistic creditors are the same ones who made the original loans to AlAwal and TIBC.  Or would have if they had had the chance. 

For some of those earlier “great moments” in banking you can refer to the posts right here on SAM, e.g., AlAhli Bank Kuwait letters of credit, Mashreq Bank’s split value FX deals, and many more.  Here. Or here.  Name lending combined with what some might rightly consider unsound banking practices.  Talk about compounding errors!

Those less charitable than AA might also make a comment about the extent of the “step up” by the KSA Government of its efforts.  After all, it’s only been a scant 8 years 10 months. 

No surprise that when there’s good news, there’s always some naysayer like AA who refuses to acknowledge it or see the upside potential.  Saudi investment banking fee riches is yet another example. 

“But some investors remain skeptical. A hedge fund trader who had been considering buying Saudi debt described the attempts by Saad’s advisers to resolve the issue with creditors as a “dog and pony show” and said “very little” work had been done to reach a settlement since November." 

Note that the anonymous hedge fund trader quoted above would be purchasing the paper at a deep discount.  Unlike the original lenders who have been well and truly skinned, he could still make a profit even if final settlement were at a 8% recovery level.  Yet, he still doesn’t find it attractive. 

Why is that?

As AHAB/AlSanea and REDEC have well demonstrated, generally KSA prefers (in the technical legal sense of a preference) domestic over foreign lenders. SAMA take good care of their banks. Foreign banks not so much. 

If that weren’t enough, the Saudi courts and legal system generate “uncertain” outcomes (euphemism of this post).  Hapless foreign creditors are more likely to get “shaken down” than to get a “fair shake”.  Or is that shaykh?  To be fair KSA is not alone in the region.  One need  look no further than Dana Gas in the UAE.

More on Awal Bank Chapter 11 Filing

Updated for comments on Chapter 11.

Here are some additional details on Awal's filing.

1. The case number assigned by the Bankruptcy Court of the Southern District of Manhattan is 10-15518-alg.  Awal's previous Chapter 15 filing has case number 09-15923alg.
2. As indicated by the "alg" at the end of the case number, Justice Allan L. Gropper has been assigned this case.
3. The Bank is being represented by Brown Rudnick LLP who filed the Voluntary Petition for Bankruptcy under Chapter 11.
4. The filing was authorized by Awal's Administrator, Charles Russell, LLP.  Presumably before proceeding CR obtained the no objection of the Central Bank of Bahrain who appointed them.  I think this is a pretty strong indication that the CBB has decided to proceed with the liquidation of the Bank.  Note:  A Chapter 11 proceeding is of course a reorganization not a liquidation.  The latter is Chapter 7.  Chapter 11 allows the debtor to propose a plan for dealing with its existing obligations - either payment in full, in part, conversion to equity, etc.  Post implementation the debtor continues as a going entity (e.g., Continental Airlines).  So what I mean here is that the CBB has decided to proceed knowing it will cause the lenders some pain.  That in turn means the situation is beyond repair.  And that the Bahraini authorities have decided to "bite the bullet" and take the reputational damage that will come from such action. 

As part of its filing, Awal Bank made the following statements:

1. After the payment of various expenses including that of administration, there will be no funds available for distribution to unsecured creditors.
2. Estimated creditors are between 50 and 99. 
3. US assets are above US$50 million up to and including US$100 million.
4. Estimated debts (worldwide) are over US $1 billion.  (This is the largest amount provided on the Bankruptcy Filing Form).

As required on the Filing Form, the debtor lists its top twenty unsecured creditors.  No amounts are provided though.

Here they are in the order of appearance on the Form:

1. Abu Dhabi Commercial Bank, Abu Dhabi
2. Abu Dhabi Islamic Bank, Abu Dhabi
3. AlGosaibi Money Exchange, Saudi Arabia
4. Bank of Montreal, Canada
5. Bayerische Hypo-und Vereinsbank, United Kingdom (London Branch)
6. Bayerische Landesbank/Bayern LB Germany
7. Boubyan Bank, Kuwait
8. Calyon Corporate and Investment Bank, United Kingdom
9. Commercial Bank of Kuwait, Kuwait
10. Commercial Bank of Qatar, Qatar
11. Commerzbank Global Equities AG (formerly Dresdner Bank) Germany
12. Commonwealth Bank of Australia, United Kingdom (London Branch)
13. Fortis Bank, Belgium
14. Gulf International Bank, Bahrain
15. HSBC, Australia
16. HSBC, United States (NY Branch)
17. HSH Nordbank AG, German
18. JP Morgan, United Kingdom (London Branch)
19. Kuwait Finance House (Liquidity Management House), Kuwait
20. The International Banking Corporation, Bahrain

If you're wondering about TIBC (which also filed under Chapter 15 in 2009) taking a similar action, a  court hearing is scheduled under their case next week Tuesday (26 October).  Stay tuned.

AlGosaibi v Maan AlSanea - The Financial Times "The Fix is In"

Here at Suq Al Mal some of the most vigorous exercise we get is from patting ourselves on the back. 

Before I head to the showers after this strenuous work-out, I'd just note that those who read Suq Al Mal read the main theme from today's Financial Times article starting back in June.  And most recently here.

From the FT:

The two decisions put a halt to the key cases at the heart of the scandal, and are a blow for Ahab, which has mounted an aggressive campaign against Mr Sanea, accusing him of a “massive fraud” that it claims could be as much as $10bn

Saudi officials have been tight-lipped about the dispute, and a high-level committee was set up to resolve the issue away from public glare. But it has reportedly been annoyed by the attention Ahab and its allegations have heaped on the conservative kingdom. 

And as always we close by noting that Mr. AlSanea continues to vigorously deny involvement in any fraud or other misconduct.

AlGosaibi v Maan AlSanea - Almost "Fixed"

There has been a remarkable reversal of fortune of late for AHAB.  

First was the decision by Trowers and Hamlins back in June to sue AHAB and which gave what I described as the first indication that the concerned authorities in the GCC were moving to make this messy problem "go away."   And that the Grant Thornton settlement proposal might be seen as a promising vehicle. to achieving that end.  Essentially GT's Plan involves a pooling of assets of the two companies to settle global creditor claims and the dropping of lawsuits between the two parties.  Those lawsuits have been the primary venue for the charges of fraud levied against Mr. AlSanea by AHAB.  Charges as we always note here on Suq Al Mal Mr. AlSanea continues to deny.  Ending the lawsuits probably allows "diplomatic cover" for jurisdictions to quietly let these difficult and embarrassing matters expire.

Yesterday (28 July) Asa Fitch at The National reported the Caymans Court decision to put its proceedings "on ice" to allow the special Saudi committee to make a determination.   I commented that it looked to me like the "fix" was in as this step increased the pressure on AlGosaibi to agree to the Grant Thornton settlement proposal and that:

A similar movement by the New York Supreme Court would, I think, confirm that this is what is happening. 

In what might be a remarkable judicial coincidence, but just maybe  is not,  today (29 June) NY Supreme Court Justice, the Honorable Richard Lowe III issued final disposition rulings effectively terminating the cases he was adjudicating based on "forum non conveniens".  

Frank Kane's article in The National provides some useful information.   But there's a bit more.  Judge Lowe did not just terminate the Mashreqbank cases but also that of AlAhli Bank which did not involve any countersuit by AHAB.

The three cases and their NY Supreme Court reference numbers are:

1. 601650/2009 - Mashreqbank v AHAB to which AHAB had added Mr. AlSanea and Awal Bank as a Third Party Defendants
2. 602171/2009 - Mashreqbank v the Individual Partners of AHAB
3. 602847/2009 Ahli Bank of Kuwait v Mr. AlSanea and Saad Trading Contracting and Financial Services

The decision (some 19 pages ) is Document 134 in Supreme Court Case Reference 601650/2009 which can be accessed at the NY Supreme Court Website  http://iapps.courts.state.ny.us/webcivil/FCASMain.

What's interesting about the decision?

1. First, Judge Lowe ruled that NY courts did have jurisdiction but dismissed the cases on the grounds of forum non conveniens.  Key reasons cited were: (a) availability of other judicial venues for the cases; (b)  presence of key witnesses in the Middle East; (c) local laws govern some key documents. (d) documents in Arabic language and witnesses English language skills, etc.  From the ruling it seems he sees Dubai as the venue for Mashreq's cases (with AHAB then able to raise its claim against Mr. AlSanea in Dubai or Saudi).  And Kuwait as that for AlAhli Bank's case.
2. Second, another significant "bit" of Judge Lowe's rationale for accepting the forum non conveniens argument was that Mashreqbank stated that it was happy to litigate in either NY or Dubai.  And  that in fact Mashreqbank had commenced a lawsuit in Dubai which includes (but is not solely restricted to) the FX transactions which are the subject of NY cases.  See Page 16 of the ruling.   Now, at first blush, this seems a bit surprising.  Why would Mashreqbank incur the not inconsiderable costs of launching a case in New York and then cavalierly toss it away by telling Judge Lowe that it was indifferent to venue?  Perhaps, the answer is to be found in AHAB's defense:  that Mashreq knew the FX transactions were disguised loans and that therefore they were somehow colluding with Mr. AlSanea.  A rather messy situation.  One complicated by AHAB's motion to have the NY Supreme Court compel disclosure under the very strict requirements of NY law.   Perhaps the shift to the more "convenient" judicial venue in Dubai would allow this issue to be dealt with in a more "convenient" way (at least for Mashreq).  And then again perhaps not.  Perhaps it was just a cost cutting measure - Mashreq decided to husband cash by running one instead of two expensive litigations.  And the case in Dubai is for almost twice that in New York.  So there is more "bang" per lawyer "buck" there.  Perhaps it was a belief that justice would be more swift in Dubai.  Perhaps it was another reason entirely.
3. The dismissal of the Ahli case is a bit more concerning - or perhaps should be to BNPP and Fortis who have lawsuits against Abu Dhabi International Bank.  If the Honorable Justice Melvin Schweitzer (who is handling the Fortis and BNPP actions) takes Judge Lowe's ruling as a useful precedent - both banks might wind up  in judicial venues they'd rather not.  NY has a very  large  well reasoned body of case law on letters of credit.  Bahrain would appear to have much less.  At least this could be a conclusion drawn from the Bahraini Court's ruling in ADIB's favor in both actions.  There the Court seemed remarkably unperturbed by the fact that ADIB's case was commenced after both banks had incurred irrevocable payment obligations.  Though to be fair, as I understand it, the Bahrain judgment is not final. 

AHAB does have the right to appeal Judge Lowe's ruling.  Overturning the ruling will I think be as the Japanese say "Possible but very difficult".

AlGosaibi v Maan AlSanea - BNPP versus Abu Dhabi Islamic Bank in re TIBC L/Cs

In discussing the Fortis lawsuit against ADIB, I mentioned that ADIB was also a defendant in a lawsuit brought by BNP Paribas' "Full Commercial" Branch in the Kingdom of Bahrain.

The relevant documents can be found at the NY Supreme Court Website http://iapps.courts.state.ny.us/webcivil/FCASMain  under Case # 603365/2009.   Or more precisely one document as all that is posted so far is the complaint by BNPP - missing what I'll bet ares some very interesting attachments.  Unclear why this is.  Especially since the submission in question dates from November 2009.

Here are the facts from the material posted on the NY Supreme Court's website:

1. In March 2009, ADIB issued six irrevocable reimbursement undertakings ("IRU's") in favor of BNPP to induce it to confirm 6 "commercial" letters of credit issued by The International Banking Corporation in favor of Dawnay Day and Co for the Account of AlGosaibi Trading Company.
2. BNPP confirmed TIBC's letters of credit and then upon presentation of the documents accepted the documents and the time drafts presented.  
3. On an unspecified date, BNPP claimed reimbursement of some US$44,875,000 from ADIB.  Presumably, the maturity date of the accepted time drafts.
4. ADIB refused to pay.
5. In September 2009 (after acceptance of the drafts by BNPP) ADIB obtained a judgment in Bahrain Court enjoining ADIB from making any payment.  
6. BNPP is seeking to have the Court issue a temporary restraining order preventing ADIB from moving assets (presumably balances in its correspondent accounts in NY) from the USA.
7. Its claim is for the principal of the payment (US$44,875,000) plus interest, attorney's fees and costs.

Now to some comments.

1. It's not clear to me why there isn't more precision in documents sent to the Court with exact dates when events took place, additional details of the individual transactions -  currency, goods, tenor, etc.  Perhaps time was of the essence and BNPP's lawyers wanted to file quickly to block the potential movement of assets outside of the USA. 
2. Dawnay Day was a very large "financial firm" with a commodities trading wing which ran into some "financial difficulties" as a result, I believe, of the global financial crisis (small "g" as always).  It was also an active participant in structured "Islamic" trade transactions as described in my post about Fortis.  It had at least one subsidiary Condor Trading which it uses so that the "purchaser" and "seller" of the goods are not the same party.  
3. It appears (but the documentary record here is very slim so this is an educated guess) to be a mirror of the Fortis transaction.  The TIBC L/Cs are one half of the "Islamic" structure:  the purchase on deferred terms.  For TIBC/AlGosaibi to actually get the funds a spot sale on a cash basis is required.  That could have been with Condor with TIBC Bank acting as the "arranger" of the transaction.   That is probably the most likely scenario and the one that I think happened - but again note this is an educated (or uneducated) guess.
4. Since discovery in other legal cases has resulted in the publication of  some details of at least the US - domiciled US dollar accounts of Awal Bank and TIBC, clever boots might be looking through that material for incoming credits around the time of the negotiation/acceptance (but not the payment date) of the first leg letters of credit. That is in the Fortis case the Awal Bank LC confirmed by Fortis under ADIB's IRU.  And in the BNPP case, the letters of credit issued by TIBC and confirmed by BNPP against ADIB's IRUs.  If these are indeed disguised clean money on money loans, the second leg (the spot sale) should have occurred around the same time.  The amounts would not necessarily be the same as interest on the loan might be built into the price on the first leg (the deferred payment).
5. But one key additional bit of information.  If we look at the Fortis Case (NY Supreme Court Reference 601948/2009 Exhibit #2 Document #34 Amended Declaration of Qays Zubi, we note two things.  First, TIBC LC's seem to have been denominated in Euros not US.  Second, a restraining order has only been obtained for four L/Cs not six as mentioned in BNPP's complaint.  The total of the L/C's mentioned in the Qays Zubi Declaration are some Euros 18,243,975.  Clearly, that does not equal US$44,875,000.  Two L/Cs are "missing".  Does that give Fortis a legal "wedge"?
6. We also learn that the payment dates on the TIBC L/Cs were between 22 June and 24 June.  You'll also notice that the certified translation has an error in that it shows the last LC as due March 23,2009.  The Arabic clearly states (in "Western" numbers not Arabic!!!) 23 June. 
7. The central point of BNPP's claim (like that of Fortis) is that under a documentary (aka commercial) letter of credit the bank's obligation to pay is independent of the commercial contract.  Its obligation is set by the terms of the letter of credit.  Compliance with the documentary requirements of the letter of credit establishes the obligation.  
8. To overcome the rather substantial amount of case law and precedents in favor of BNPP's legal position, I believe ADIB has to prove two things. (a)  Fraud in the inception.    (b) Involvement of BNPP in that fraud.  That is a a tough row to hoe as the saying goes.  

AlGosaibi v Maan AlSanea - Legal Case Summary and Status

Citi, the Delegate on Saad's Golden Belt Sukuk 1, has posted a notice on the BSE listing the legal cases  it is aware of involving Mr. Al Sanea and his companies as well as their current status.

Besides conveying useful information, the Delegate is putting Golden Belt Certificateholders on notice that other creditors of Mr. AlSanea and his companies are pursuing legal claims.  As long as Golden Belt Certificateholders are not, they are effectively in a junior position.

Why?

As I read the Delegate's last announcement, while a sufficient number of Certificateholders (more than 25%) have voted for Dissolution of the Trust, they have not indemnified the Delegate to its satisfaction.   That is, agreed to reimburse Citi for expenses.  Until that happens, the Delegate is not obligated to take the legal steps to dissolve the Trust, claim on the Repurchase Obligation of Saad Trading and Contracting, and in the event of non payment by STC pursue STC in Court.   Thus, the Certificateholders are effectively in a subordinate position against STC - they have an uncalled guarantee.  

The Delegate is doing this to cover its legal posterior.  In the event that the Certificateholders' recovery is adversely affected by failure to take action, the Delegate will have a legal defense that it has done all it  was obligated to do to protect their rights.

The thorny issue for Certificateholders is whether they agree to repay Citi for legal expenses involved in taking such actions.  Will the net recovery after the expenses be more than if they did not take action?

And this is I suppose as good a place as any to note that Mr. AlSanea still denies any improper or illegal behavior.

AlGosaibi v Maan AlSanea – AlGosaibi’s Strategy with Creditors

In light of my recent post speculating that AlGosaibi was being pressured to accept Grant Thornton's "peace proposal" for a commercial settlement, this is probably an opportune time to take a close look at AlGosaibi's legal strategy. From a document concerned with the recent lawsuit by Trowers and Hamlins that I've seen, it's possible to reconstruct that strategy in more detail and to use AlGosaibi's "voice" in doing so.  Or at least it voice as channeled by US counsel.

Before we do that, a caveat.

What I'm about to present is AlGosaibi's side of the story. As you'd expect AlGosaibi's account is highly favorable to themselves as are statements made by their counsel – who they have hired to represent them.

Nothing surprising here.  This is the (adversarial) nature of the US legal system.  Long ago, AA was called for jury duty in a personal injury case. After the jury had been selected, the judge took us aside. He said that while each counsel had claimed that his sole purpose and desire was to obtain justice, this was not the case.  Each counsel was working for its client's interests, not for justice. And that, recognizing this fact, we should be duly skeptical of any statements made. Such is also the case here. It applies to all parties to the case: AlGosaibi, AlSanea, T&H, TIBC, Awal Bank and their respective management and officers as well as the counsel they have hired to represent them.

Now to AlGosaibi's strategy and rationale.

First, AlGosaibi's central thesis is that TIBC was "throughout its active life a criminal instrumentality operated apparently for the principal purpose of defrauding our client and third parties, incurring massive fraudulent debt in our clients' name and siphoning the proceeds to Maan AlSanea and his Saad Group of companies". In this regard they assert that TIBC was formed without AHAB's knowledge or authorization and that the pledge of shares which is listed as the source of equity for TIBC is not "legitimate." And that they do not "accept any debt owed to TIBC or the validity of any claims whatsoever asserted by TIBC" against AHAB. As part of this thesis, it's important to recall that AHAB also claim that the Money Exchange (through which the proceeds of alleged fraudulent commercial loans were passed) was also under the control of Mr. AlSanea and his confederates.  This thesis - that AlGosaibi itself was the victim of fraud along with the creditors - would also the basis for a less than 100% payback of the loans as I've noted before.  At least by AlGosaibi.

This is also the appropriate place to note that Mr. AlSanea and various other parties accused directly and indirectly by AHAB vigorously deny any wrongdoing.

Second, as a consequence of this (alleged) fraud, the proper response of T&H (and any creditor) is to join with AlGosaibi in pursuing the culprits and not the innocent victim - AlGosaibi.

Why?

"Litigating intercompany positions (e.g., TIBC and AHAB) will take years, if not decades and that such litigation only depletes resources that will be needed to effect a workable commercial settlement". Co-operation on the other hand "avoids wasteful and ineffectual expenditures and offers a potential for TIBC and its creditors to benefit from AHAB's recoveries and its potential commercial resolutions of claims with third parties." 

AHAB's counsel notes that even though AHAB rejects any TIBC claims against itself, it nonetheless has proposed that TIBC's creditors be included alongside its own in any settlement by a "substantive consolidation of all the creditor positions and the creation of a single fund". And that AHAB is creating a "fighting fund" of some US$150 million to use to pursue legal cases against Mr. AlSanea – which would relieve a burden on TIBC's creditors who no doubt would be reluctant to provide substantial funding for such an effort.

As well, it comments that commencement of legal action by T&H against AHAB could jeopardize its good will. And that a further danger to TIBC creditors is that any such legal action will require the presentation of original documents, which AHAB counsel asserts could be difficult to produce. And if produced, AHAB and its counsel are confident that the signatures thereon could be successfully challenged as forgeries.

Counsel also notes that it intends to raise these points with counsel for TIBC creditors, Clifford Chance Dubai.

The fact that T&H launched its suit roughly three weeks after this correspondence was sent indicates that it was not persuaded.

There are a couple of other points in the document - worthy of note and comment:

1. AHAB asserts that Saudi British Bank has refused to turn over to AHAB certain records pertaining to AHAB - which it asserts Mr;. AlSanea has removed from the Company and taken under his personal control and which include those relating to  the underlying pledge of shares which serve as the basis for the equity in TIBC. This is particularly perplexing. Why would SBB not provide duplicates of records to its client of record?  Or in other words, what would be the basis why SBB would refuse to turn over to its client duplicates of certain records pertaining to that client's business with it?
2. That AHAB counsel had proposed an information exchange protocol (apparently in March) under which AHAB and T&H would share information but with the stipulation that neither party would use the information so obtained in legal action against the other. It's perfectly understandable that T&H would not accept this. As the Central Bank appointed Administrator, it has a fiduciary duty to pursue claims against all debtors registered in TIBC's books. And certainly wouldn't want to expose itself to a TIBC creditor later suing it for failure to pursue one of the debtors because it unilaterally decided not to. The better path is to raise the claim.  Then let a Court determine whether the debtor has a defense against payment. This was, I am told, the tactic used in the liquidation of Petra Bank Jordan في الوقت المدثور . 

Stay tuned.  In a day or so, I'll post AlGosaibi's reaction to T&H's apparent rejection of its proposal for co-operation by looking at AHAB's 15 June submission to the NY Bankruptcy Court.

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.

AlGosaibi Offers Creditors 20% on the Dollar Plus Proceeds of Lawsuits Against Maan AlSanea

Quoting informed sources, Frank Kane at The National reports that AHAB has offered creditors a cash payment of US$1.8 billion on US$9 billion of liabilities plus up to US$4 billion hoped to result from AHAB lawsuits against Mr. AlSanea.   

As Mr. Kane notes and as I have as well before, Mr. AlSanea continues to deny AHAB's allegations against him.

The al Gosaibi family of Saudi Arabia is prepared to sell much of its 70-year-old business empire to help pay its creditors, informed sources say.

The proposed net payment is a minimum of 20% (US$1.8 billion) with a maximum of 64.4% (US$5.8 billion).

As the article points out, the net value of Mr. AlSanea's assets is not known. 

Assuming for a moment that AHAB would be successful in its lawsuits, I believe it would become another of Mr. AlSanea's unsecured creditors.   And would therefore be entitled to a proportionate share of the "estate".  As well, the resolution of the lawsuits is probably something that will require a very long time to settle.  In objecting to a potential suit against itself by Trowers and Hamlins,  AHAB is reported to have said that "litigating the intercompany positions will take years if not decades and that such litigation only depletes resources that will be needed to effect a workable commercial settlement".   One may perhaps safely presume that the same would apply to AHAB lawsuits against Mr. AlSanea.  

Putting aside the depleted resources argument, one might argue that the present value of the proposed settlement is therefore less, much less, than 64% or 20% for that matter (which will depend on sales of AHAB assets). 

NY Court Compels Release of AlGosaibi Bank Account Details

As per the Gulf Daily News,  Trowers and Hamlins won an important legal victory in US Bankruptcy Court.  The Court ruled that AHAB's New York bankers must disclose details of a key AHAB account.   One to which reportedly a large amount of funds were transferred.  As the article notes, Trowers and Hamlins have been requesting information on this account since last August.  

Trowers & Hamlins partner Abdullah Mutawi, who is leading the asset realisation strategy, said it was a significant development.

"This is the first time AHAB has been compelled to reveal details of any of its bank accounts," he said.

"It is particularly significant because AHAB has repeatedly refused to hand over important information relating to the operation of the account.

"The account is important because a substantial portion of TIBC's funds were remitted to it and the information should help reveal the ultimate destination of those funds."

As I noted in yesterday's post about First Gulf Bank's lawsuit against AHAB,  there seems to have been a change in the dynamic of this story.  The focus is now on AHAB's behavior - both in terms of responsiveness to requests from creditors as well as its role in the collapse.

I suspect this is going to get increasingly messy.  At the end few reputations may be left undamaged.

AlGosaibi v Maan AlSanea - Trowers and Hamlins Statement

One of my new and frequent commentators mused whether the fact that Trowers and Hamlins had launched a lawsuit against AHAB represented any sort of determination by T&H about the guilt or innocence of the parties involved in the case.

I had speculated that T&H was merely doing its job - going after the registered debtors of TIBC and pursuing collection of funds without making any such judgments.

That left us in a stand-off of opinions.

So, I posed a question to T&H through Hill and Knowlton.  Today I received the following response which I quote verbatim.

A Trowers and Hamlins spokesperson said: “Our investigations to date and other extrinsic evidence provided by third parties - which we are still considering - would suggest that there were irregularities in the manner in which the business of TIBC and other institutions connected with the AHAB / Saad situation was conducted.  However, investigation of fraud or other criminal activities and/or other material non-compliance by officers or other stakeholders of TIBC with the law or regulatory requirements essentially remains the remit of the public prosecutor and the CBB respectively and it is therefore not appropriate for us to comment or speculate further.”

As you'd expect a law firm to do, this statement is carefully crafted to avoid creating any unwanted legal problems for T&H.

There are several points I think are worthy of comment:

1. That at this point what T&H has seen suggests - though not conclusively - that there were "irregularities in the manner in which the business of TIBC and other institutions connected with AHAB / Saad situation was conducted".
2. That investigation of fraud, criminal activities or material non compliance with regulations is not T&H's responsibility but that of the "Relevant Authorities" in the Kingdom of Bahrain.
3. Accordingly, T&H will not comment on such matters.
   

Fugitive Banker Gives His Side of Story re TIBC

Frank Kane over at The National conducted an interview with Glen Stewart which was in the June 8 issue of The National.

To set the stage, as I understand it, there are two contentions central to the TIBC/Awal/AlGosaibi/Saad Group saga:

1. That there was massive fraud at the these entities which was the direct cause of their apparent collapse.
2. That Mr. AlSanea was improperly exercising control over TIBC and certain AlGosaibi units (the entity mentioned most was AlGosaibi's Money Exchange).  As noted in the article, a charge that Mr. AlSanea strongly disputes.

In his interview Mr. Stewart addresses the second.  He flatly contradicts the AlGosaibi's assertion that Mr. AlSanea was not authorized to exercise control over TIBC and the Money Exchange

What he does not appear to address in this interview is the first allegation.

I would also be very interested in Mr. Stewart's thoughts on the Ernst and Young report.  As per that report, it seems the CEO of TIBC had very limited authority.  Mr. Stewart deferred to Mr. AlSanea on decision making on just about every matter.  Beyond that there was the curious case of payment approvals.  E&Y stated that Mr. AlSanea used Mr. Stewart's password to release payments.  As I noted at the time I commented on the E&Y Report, it is very unusual for a CEO to be involved in  the operational aspects of releasing payments.  And giving another person one's password is generally considered a violation of segregation of duties and dual control.  

It would be highly useful to know how Mr. Stewart:

1. Saw his role as Chief Executive Officer at TIBC  and how that might compare and contrast to CEO's at other banks.  What precisely were the duties of TIBC's CEO and what were those of  Mr. AlSanea?  Is it good form for a CEO to give his password to a third party?  What does it mean when a person in the position of CEO apparently has no power to make any material decision? 
2. Understood  the requirements of Central Bank of Bahrain regulations regarding corporate governance. And, what if any, disclosures regarding Mr. AlSanea's role were made to the Central Bank.

Perhaps, Mr. Kane will have the opportunity to do another interview with Mr. Stewart.

One thing is abundantly clear from this interview and that is the emotional pain and suffering of Mr. Stewart.  Adding to that distress, we learn in this article that he felt abandoned by his own country in the midst of the "arbitrary actions and retaliations of the Bahraini legal system".   

Il Accuse! -- Former TIBC CEO Flees Bahrain

 Copyright Allied Artists

As reported in the Torygraph, Glenn Stewart has managed to escape from the apparently intolerable conditions he was being held under in Bahrain.  And has filed a formal charge with the International Court of Human Rights for false imprisonment designed to "deliberately inflict mental cruelty and torture". 

You'll recall (if you force yourself to think some rather unpleasant thoughts) that instead of being incarcerated in one of Bahrain's jails (by all means the sort of thing one should definitely avoid),  he was forbidden to leave the island while investigations into the collapse of TIBC were ongoing.  A sort of a modified house arrest with Bahrain as the house.  I guess the nearest comparative would be the French penal colony known as "Devil's Island" for more than one reason.

As he aptly put it, having escaped from these conditions of inhumane treatment, he is akin to a runaway slave.

If that weren't disturbing enough, from the article it's hard to avoid drawing the conclusion that the parties the Bahraini authorities have detained in connection with the collapses of TIBC and Awal believe they are victims of an unjustified conspiracy against them involving the Bahraini authorities, Ernst and Young, and Hibis and perhaps others.   The Bahraini Authorities would seem to include at a minimum, the Central Bank of Bahrain, the Attorney General of Bahrain and various investigative organs of the CID - though it is unclear whether other entities and individuals might be involved.  Nor how high up this goes!  I'd also hasten to add that it's unclear whether all these parties are alleged to have been active co-conspirators.  Or whether some of them may have been unwitting dupes.

According to direct quotes from Mr. Stewart it also seems this conspiracy has sinister undertones of persecution of "Westerners".

It's reports like this that make Abu Arqala wonder when justice will be done, if ever.

 

And finally a hat tip to Rupert Bumfrey, I would have missed this disturbing story if he had not reported it on his blog.  It doesn't seem to have been reported elsewhere yet. And that could, perhaps, be a chilling indication of the extent of this plot.  Or then again perhaps not.

AlGosaibi v Maan AlSanea - Allegations of Forgery - Evidence Inconclusive?

Here's an article from the Gulf Daily News in which a forsenic expert is quoted as saying that it is not possible to determine if Sulayman AlGosaibi's signatures were forged or not.

There are a couple of interesting things about this report.

In  the NY Supreme Court Case (601650/2009), as part of a forum non conveniens argument, the attorney for Maan AlSanea submitted a  sworn statement by one of AlGosaibi's lawyers, Andrew John Ford, given in connection with the suit of British Arab Commercial Bank and others against AlGosaibi.  This is Document 107-2 (Exhibit 25), which you can access by going to the Supreme Court of New York's website, and undertaking an Index Search using the above case number (601650/2009)

Here's paragraph #13 of the Ford statement.

"AHAB says that this borrowing was obtained by the forgery of the signatures of the chairman of AHAB by or at the direction of Mr AI Sanea on hundreds of banking documents. It has submitted many of the  banking documents to forensic examination by Dr Audrey Giles, head of the Giles Document Laboratory  and formerly head of the Questioned Documents Section of the Metropolitan Police Forensic Science Laboratory. Dr Giles' work has been hampered by the lack of original documents (many of which were  removed from the Money Exchange by Mr AI Sanea and which he has refused to return). Nevertheless she  has so far concluded that there is evidence that the signatures on at least 286 banking documents are not  genuine. On some documents, signatures have been applied by colour photocopying or by an inkjet printer and then traced over with a porous-tip pen; on others, the signatures are identical matches of those on  other documents and therefore highly unlikely to be genuine. In some cases the signatures were applied to  documents at a time when it would have been physically impossible for the purported author to have  signed because of incapacitating illness."

It's unclear if

1. Based on additional work, Dr.  Giles has changed her earlier findings.  
2. Or this refers solely to this particular batch of documents cited in the Gulf Daily News article.

Presumably, more information will be forthcoming.

The Investment Dar - More on the "Thanks"

The Arabic language version of TID's press release is on their site this AM.   I'm looking forward to the English language translation.

On the same topic, AlQabas (whose site I couldn't reach last night) ran the press release with a screen shot of TID's website with its headlines about 2007 results with the caption "The remembrance/reminiscence of 2007 profits continues".

Mashreqbank v The International Banking Corporation

This post reviews documents submitted in the case brought by Mashreqbank against TIBC in the Supreme Court of New York State (Case Index #601616/2009). This case has been stayed following TIBC's filing of a petition under Chapter 15 (Ancillary and Other Cross-Border Cases) of Title 11 (Bankruptcy) of the USC. Chapter 15 provides for USA recognition of insolvency or reorganization legal proceedings in other countries.  When that recognition is given then all legal proceedings in the USA are stopped pending the outcome of the foreign case.

As a foreword, there's no substitute for reading the original documents. So I recommend that you go to the NY Supreme Court website. Use the above Case Index Number to search for the case records. Note there are two cases with this Case Index Number. One in Nassau County and one in New York County. The latter is the TIBC case. Click on this one. On the next page look for the button for e-filed documents. It appears in the lower right hand. This earlier post has some instructions on how to navigate the NYSC website.

Here's a summary:

1. On 5 May Mashreq and TIBC entered into a split value FX deal. On 5 May Mashreq was to pay US$75 million to TIBC's account at HSBC NY. On 11 May TIBC would pay Mashreq SAR282.150 million to Mashreq's account with the National Commercial Bank Saudi Arabia. 
2. You will notice this is the exact same FX rate (3.762) that Mashreq applied in its transaction with AHAB. 
3. Mashreq made its payment. TIBC did not. 
4. On 11 May (from the documents in Exhibit B (Document 4-2), TIBC tried to transfer its remaining balance at Mashreq NY US$6.15 million to its account at Bank of America New York City. Mashreq canceled the transfer and offset that amount against the US$75 million. 
5. Thus, its claim is now US$68.85 million.
   

Looking at the other exhibits, specifically F and G (Documents 4-6 and 4-7), account information supplied respectively by HSBC New York and BofA New York on TIBC's accounts with them, we see that:

1. The US$75million received from Mashreq on 5 May 2009 was transferred to TIBC's account at BofA on 6 May. 
2. After various debits and credits during the month, at the end of the month TIBC had some US$57 million in its automatic investment account at BofA. An auto investment account is an account linked to the main clearing account. Each day after all transactions have been processed, the bank automatically debits the clearing account (above some agreed minimum balance to be retained and in agreed multiples) and transfers the funds to an interest bearing overnight deposit account. Each morning the funds are returned to the clearing account so that the bank can use them for its payments. 
3. At the end of May, TIBC had an approximate US$2.35 million credit balance at HSBC New York. This resulted from a credit of US$8.97 million on 20 May which partially covered a persistent overdraft of US$6.62 million in the account. Mashreq tried to seize the entire amount of the credit but HSBC had offset it against the OD. The parties agreed to recognize the Court ordered freeze on the US$2.35 million credit balance in Mashreq's favor and deal with the US$6.62 million later.  That is, whether HSBC had a right of offset against the OD on its books.
4. What precisely happened with these funds after the NY Supreme Court recognized the Bahrain legal proceedings under Chapter 15 is not clear to me.  Are the funds still in New York? Are they frozen in favor of Mashreq? Or frozen in favor of all creditors of TIBC?
   

Exhibit A (Document 4-1) provides a list of FX transactions undertaken between Mashreq and TIBC from January 2009 through 5 May 2009. 

1. There are 21. 
2. Only one was not a split value transaction. 
3. The countervalue (Saudi Riyal) amounts are not shown in this list so it's not possible to determine what the interest rates were on the loans that Mashreq was granting TIBC through this mechanism.

 
 

AlGosaibi v Maan AlSanea - Allegations of Forgery Confirmed?

If you've been following this legal battle, you'll know that the the key defense of the AlGosaibis is that there was widespread forgery of signatures of key members of the family on documents used to obtain loans from international and regional banks.  And that they never received the proceeds of the loans.   They have accused Mr. AlSanea of being the mastermind of this alleged plot.  Mr. AlSanea for his part has vigorously denied any wrongdoing.

On 5 April, the Kuwaiti newspaper Al-Seyassah published a lengthy account  (some five pages when printed out) of an alleged evidence file/document "T-1437" which was supposedly prepared by Bahraini criminal justice experts about the allegations of forgery of Sulayman AlGosaibi and Ahmed Al Gosaibi's signatures on a variety of documents.   As per Al-Seyassah's account the report supports the AlGosaibi's contention that there was forgery, though the report does not identify the forger or forgers.

Al-Seyassah states that it received the document from an anonymous source - apparently via an email.

The article also discusses the latest New York Court hearings related to Mashrekbank v AlGosaibi (to which AlGosaibi has added Mr. AlSanea as a third party defendant).

I've given the document a quick read and if I have time I may post a bit more on it later.  In  the interim, you can use the link above to read the document.  The print version of Al-Seyassah has some charts/illustrations. 

It's important to note that there is no way of knowing whether the document is authentic. And as Al-Seyassah notes in its article there is a "propaganda" campaign going on by partisans of either side.

It's also important to note that Mr. AlSanea vigorously denies any wrongdoing.  And that no Court has found anyone guilty or exonerated anyone in this case.

AlGosaibi v Maan AlSanea - Forum Non Conveniens?

Conveniens or Non?

Supreme Court of New York State 60 Center Street Manhattan New York City

Copyright Djmutex 

GNU Free Documentation License

 

The National has a report today that Judge Lowe seems to be leaning towards accepting Mr. AlSanea's argument that New York is a forum non conveniens.

One of the key arguments for that is that the principals in the case don't speak English well enough to participate in a US Court Case.  One wonders how they managed to conduct their global businesses,  though SMS is known to strike in the most unlikely places.

But could not a counterargument against forum non conveniens be made on similar grounds, arguing from the technical nature of the  matters before the Court.  This case involves rather complicated financial transactions that are relatively rare in occurrence.  Matters that are very likely not to be self evident.  Lots of complicated transactions to boot.

That has two major consequences.

First, with respect to the analysis of and  presentation of evidence.

1. A variety of experts are going to be required to testify on the data and give their analyses.   Many, if not most,  of these documents appear to be in the English language.  Not Arabic. Deal tickets for FX transactions, confirmations of those deals, records of conversations over the Reuters Dealing System.  Applications for letters of credit.  And note the application forms supplied by a Kuwaiti bank to its client in Saudi Arabia are in English!  And the correspondence between The International Banking Corporation (a bank in Bahrain) with the applicant on that letter of credit are again in English!   Copies of documents presented under those letters of credit.    Copies of instructions to transfer funds.  By the look of it The International Banking Corporation ("TIBC") had a high volume treasury.  US$ 6 billion or so  just in April 2009. More than 100 loan and customer files at TIBC.  No doubt multiple loan requests, interest payments, and other correspondence for each client and each loan.   Borrowings by TIBC or other entities with major international banks.  Complicated loan agreements subject to NY or English law.  Billions of dollars worth.   One might argue all highly technical documents.  And lots and lots of them.  Reams of pages.  Few in Arabic.
2. As well there are allegations that  signatures and documents were forged.  That transactions were fraudulent in the inception.  That what appear to be foreign exchange deals are in effect disguised loans.  That letters of credit were really not for trade transactions.  All matters requiring expert testimony to help determine if the allegations have merit.  Matters requiring the utmost precision in analysis. And clarity in testimony.
3. The experts with the greatest ability to speak to these issues are likely to be from the USA or Europe.  Why?  Sadly, these events occur more frequently here.  And thus US or European experts have more experience with these cases.  As a result, they have had more chances to develop their analytical techniques and skills.  And refine them including in the crucible of a courtroom setting.  One thing is for sure.  These witnesses do not speak fluent Arabic.   I'm willing to bet their Arabic is much worse than the purported unfamiliarity with English of some of the witnesses.  If the evidence is not properly presented, what chance is there of a fair trial?  And that applies of course to both parties - defendant and plaintiff.  And it's very likely the questions directed at them and their answers going to be at a much more technical than the questions posed to other witnesses.
4. One might also wonder about the translation of  these highly technical reports and testimony into Arabic.  Is the technical vocabulary as advanced as in English?  Is there an exact word in Arabic for the English term?  Will something be "lost in translation"? A subtle nuance glossed over? A technical explanation as to why a particular finding is justified made incomplete?  Will the translations reflect the specific limits of  the expert's analysis?

Second on the familiarity of the Courts with this sort of evidence.

1. I'd bet that more cases of this nature are held in New York State (USA#1!) than in the Saudi Courts.
2. As a result, NY Judges sitting in the Supreme Court of New York are going to be more familiar with the concepts, with the testimony and the ability to evaluate it.  As are the counsel of both parties and so better able to defend their clients' interests.   All officers of the court well versed and equipped to evaluate the case.  Experienced hands and minds.
3. Will a judge in Saudi Arabia or one of the parties' Saudi counsel have that same knowledge.? I think that's highly unlikely.  In the interests of justice would a judge in New York with  good old Midwestern common sense want to take that chance? 
4. In fact, it's a pretty well known that King Abdullah is engaged in an effort to bring the Saudi Court system out of the Middle Ages.  The Saudi Consultative Council just spent the early part of this year reviewing a comprehensive plan for such reform.  And here I'm talking about competence, training,  systems and equipment, etc.  Not the law to be applied.  But the ability to apply the law.  Judges are being sent abroad for training because they are not felt by the King to be up to the level he believes appropriate.  Additional resources are being provided to ease the burden of judges.  More and trained assistants.  Modernization of facilities, equipment and systems. 
5. Of course, neither of the two parties wants to disparage the Saudi Courts, though I suppose counsel have reviewed closely the comments on Saudi Law and enforcement in the Offering Circular for Golden Belt Sukuk #1 a US$650 million offering undertaken  for the benefit of Mr. AlSanea's company.  They are  after all good Saudi citizens.  Perhaps, one day they might well wind up in Saudi Courts on this or another matter and don't want any excess baggage in the courtroom with them.  Major law firms no doubt don't want to needlessly burn any bridges with negative comments.  But who could argue with the concept of greater familiarity with technical matters?  Familiarity which will give the NY judges an advantage in sifting through the evidence.   If a Saudi has a heart problem and needs mitral valve surgery, his decision to go to Cleveland for an operation would probably be considered a wise one.   The Cleveland Clinic has a world renowned reputation in that field.   Not a condemnation of Saudi medicine.  Just a choice of of the surgeon and hospital with greater experience.  More successful operations performed.
6. What might give pause to the forum non conveniens argument is the famous case in a neighboring Kingdom where when confronted with a forward FX transaction the learned judge asked "Who buys fish in the sea?"   A country whose judicial system is considered more advanced than that in Saudi.

Deutsche Bank v The International Banking Corporation

This post reviews documents submitted in the action commenced by Deutsche Bank against The International Banking Corporation in the Supreme Court of New York (Case Index # 601471/2009). This case has been stayed following TIBC's filing of a petition under Chapter 15 of Title 11. Chapter 15 provides for USA recognition of insolvency or reorganization legal proceedings in other countries.  When that recognition is given then all legal proceedings in the USA are stopped pending the outcome of the foreign case.

As before I recommend that you review the documents yourselves. You can do this by going to the NY Supreme Court website and using the above Case Index Number to search. As you progress from page to page, look for the button for e-filed documents. This earlier post has some instructions on how to navigate the NYSC website.

While this case has been stayed, it does provide a bit of additional information, though this is more just on the existence of the debt.

Here are DB's allegations:

1. On 6 April 2009, DB and TIBC entered into two equal forward US$/Sterling foreign exchange transactions.  DB was obligated to pay TIBC US$59,762,440 and TIBC to pay DB Sterling 40,000,000 value 8 May 2009. 
2. These were not "split" value date transactions. Both parties were to settle on the same day. So there is nothing unusual. These appear to be "garden variety" forwards. 
3. DB delivered on its side of the transaction by paying the funds to TIBC's account at HSBC New York. 
4. TIBC did not pay the Sterling DB.
   

DB is claiming a total of US$74,232,440. 

1. This is equal to the US$ side of the defaulted FX forward plus termination fees estimated at US$14,470,000. 
2. There isn't a detailed explanation as to how this latter amount was calculated. I presume it refers to DB's cost of closing out other forward FX transactions with TIBC and represents the difference between the contractual rate with TIBC and the market rate at closeout. 
3. Clearly, since TIBC has defaulted on the two 8 May settlements, DB has no desire to make additional payments since it believes (and probably rightly so) that TIBC would not honor its side of these transactions. 
4. The dealing relationship between the two banks is documented by an ISDA Master Agreement which gives either party the right to terminate any outstanding deals if the other to the agreement fails to perform. The Master Agreement also provides that the defaulting party must pay the "break" or "replacement" costs of outstanding deals which the other party cancels as a result of the default as well as any legal costs related to enforcement of the MA.
   

There's not a lot more to note here.

Cayman Islands Court Declares Maan AlSanea In Contempt

The Financial Times reports that a Cayman Islands Court has declared Mr. AlSanea in contempt for violating the US$9.2 billion asset freeze it imposed.

Two violations were cited:

1. Transfer of US$60 million to the Saad Specialist Hospital last July
2. Putting one of his companies, Singularis, into voluntary liquidation.

Mr. AlSanea offered the following defenses.

Re the SSH transfer:

1. He was not aware that the freezing order applied when he made the transfer
2. His net worth is US$12.4 billion and so the transfer of US$60 million has no material impact on the freeze.

Re Singularis:

1. He was merely following legal advice and did not know that placing the company into liquidation violated the order.

The Court apparently did not buy these arguments. Here's the FT's characterization of the Court's assessment.

The judgment said it was "clear that an order for imprisonment would be futile and in any event perhaps unjustified", but the court found that "specific breaches of its orders" had "amounted to contempt

In light of the Court's reaction, I think it is really unfortunate that the FT didn't provide a bit more on Mr. AlSanea's defense regarding the requirements of the freezing order.   He certainly deserves his day in Court - including the Court of Public Opinion.

I would like to know if Mr. Al Sanea's is asserting that:

1. The legal draftsmanship skills of the Cayman Islands' Court are so poor that the Order was unclear.
2. The Order was clear but the Court delayed in communicating it to Mr. Al Sanea and his counsel.
3. The Order was clear and promptly delivered to his counsel, but they failed to notify him in time, i.e. before he took these actions.
4. Or the Order was clear, delivered to his counsel promptly and they relayed it to him promptly with sound legal advice, but the chap in the mail room forgot to bring it to him in time.
5. Or the Order was clear, delivered to his counsel promptly, relayed to him promptly and delivered by  that mail room chap the same day, but his counsel misinterpreted the Court Order.  And thus gave him what turned out to be faulty legal advice.
6. Or the Order was clear, delivered to his counsel promptly, relayed to him promptly with sound legal advice, delivered the same day by the mail room chap, but that he  simply forgot.  This is perhaps the most tragic explanation of all:  senior manager syndrome.  Or "SMS" as it's known to corporate lawyers.  It's as pernicious as Alzheimers, though it appears to be work related, not genetic. 

I have seen the most senior levels of my home country government or senior executives at major multinational firms  forced by relentless questioning in Congress to admit the terrible toll their office has taken on them.  That is, they are under such pressure from the volume and highly stressful critical nature of their work that their memories are affected.  Not only can they not remember what was discussed at a meeting, they may not even recall the meeting took place.  They don't  appear to remember much of what they do or why they did it.  Entire days or issues disappear from recollection.  I recall seeing one Harvard JD holding the most senior legal position in my country being forced by heartless Congressman to reveal that he really couldn't remember much of anything.  A rather pathetic sight, though luckily, he apparently still knew his own name.  Perhaps a sign that there is a hope for reversal. 

What's even sadder is the lack of public concern or compassion.  During the entire health care reform debate, I did not hear a single politician - conservative or liberal - raise the plight of this group - many struck down by SMS in the prime of their careers.  I believe that Aristotle said something on how one could judge a civilization by how it treated a certain group. I'm sure this is the group he was thinking of.