Dubai: Saudi Arabian conglomerate Ahmad Hamad Algosaibi & Brothers (AHAB) has filed a $9.2 billion (Dh33.78 billion) civil suit against Glenn Stewart, the former CEO of The International Banking Corporation (TIBC), in United States District Court for the Central District of California.
AHAB has allegedly lost billions of dollars siphoned by Ma'an Al Sanea, a Saudi businessman of Kuwaiti origin — owner of the Saad Group — who is married to an AHAB family member who gave him access to AHAB's network.
"This complaint concerns one of the largest financial fraud schemes in history," states a court document submitted under case number CV11 02596 on Monday.
It was filed in US District Court, Central District of California, Los Angeles, a copy of which was obtained by Gulf News.
Glenn Stewart, 55, who until last July ran TIBC, escaped from Bahrain last week and has filed a claim with the ICHR in Geneva, claiming that he was wrongfully banned from leaving the country after TIBC defaulted on its debts in May 2009. TIBC is at the centre of the biggest financial scandal in the Gulf, with its owners, the billionaire Algosaibi family, launching multi-billion dollar lawsuits against Ma'an Al Sanea.
The complaint signifies an important new stage in ongoing litigation between the Algosaibi family and Ma'an Al Sanea. The 44-page complaint gives new insight into one of the largest global Ponzi schemes in history and asserts that Stewart created and/or utilised a number of entities, particularly in Bahrain, to obtain lending through misuse of the Algosaibi family name, the proceeds of which were funnelled into the Ponzi scheme. Up to $1 trillion was then laundered through the US financial system.
According to the complaint, Stewart and Al Sanea raised billions of dollars in funding using falsified financial statements and forged AHAB guarantees. It also claims Al Sanea and Stewart falsely represented that TIBC had the backing of the Algosaibi family. In particular, the pair forged documents in order to create the impression that senior Algosaibi family members participated in TIBC's governance and sanctioned its commercial activities.
The claim's counts against Stewart include (1) aiding and abetting fraud; (2) aiding and abetting breach of fiduciary duty; (3) conspiracy to commit fraud; (4) fraud; and (5) unjust enrichment.
"The five claims asserted by AHAB charge that Stewart, an American citizen, assisted Ma'an Al Sanea in securing and misappropriating billions of dollars in borrowing — much of which was in AHAB's name or obtained using forged guarantees in AHAB's name," the company said in a statement.
Complex scheme
Stewart, who illegally fled Bahrain in May 2010, currently resides in Malibu, California. AHAB alleges that he constructed a complex scheme of offshore companies to skim phony commissions and other payments amounting to approximately $100 million.
"Beginning no later than 2000, Ma'an Al Sanea and his accomplices carried out a multi-billion dollar fraud against AHAB through the adverse domination, control and abuse of numerous corporate and other entities through the fraudulent misuse of AHAB's name and credit to secure unauthorised borrowing from over a hundred financial institutions around the world; and through the misappropriation of billions of dollars of proceeds of that unauthorised borrowing," says the court filing.
The filing accuses defendant Glenn Stewart of being the ‘Chief Architect" of the scheme, being principally responsible for borrowing funds in AHAB's name or ‘purportedly backed by the guarantee of AHAB or its partners" which it alleges "he knew were being siphoned off by Al Sanea and not used for any legitimate purpose".
Stewart was banned from travelling out of Bahrain, but according to his own accounts he escaped during that government's investigation into the collapse of TIBC and his dealings. He was charged by the Public Prosecutor of Bahrain on March 8 with criminal and regulatory violations in that country.
When asked by Gulf News about AHAB Group's debt to the business community and the banks collectively in the GCC and internationally, AHAB's lawyer Eric L. Lewis of Baach Robinson and Lewis LLP, told Gulf News, "As you know, these sums were borrowed without authority and the documents are riddled with forgery. AHAB did not receive material benefit from the lending, so AHAB's position is that it is not liable to any of these banks. "The Money Exchange records [which are not complete or totally reliable] indicate that at the time that the fraud was uncovered, there was approximately $9.2 billion in unauthorised credits."
Many banks in the UAE, including Mashreq and Abu Dhabi Commercial Bank, have been affected due to the scam that rocked the Gulf's banking and financial sector when it broke in 2009.
Most people are concerned about the recovery and if AHAB is in a position to meet its repayment obligations. "AHAB has made clear that it does not have repayment obligations but it is engaged in a dialogue with all stakeholders to find a commercial solution to the problems," Lewis said.
But the question remains — what happens if Saad and Algosaibi Group fail to recover the money from Ma'an Al Sanea? "We expect to obtain recoveries through litigation or settlement," he said. He also ruled out the possibility of AHAB seeking bankruptcy protection. "There has been no consideration of bankruptcy protection," he added.
"AHAB continues to run its core operating businesses which are well managed, have little debt and generate positive cash flows."
Glenn Stewart, whose whereabouts are unclear, could not be contacted for comment.
