Al Sanea's opulent hospital on the line

The Saad Group's Health Science Centre gleams, exuding the ambience of a grandiose five-star hotel rather than what it is: a hospital wing in eastern Saudi Arabia.

In the reception, a huge chandelier hangs from the ceiling, the centre of which is decorated with an ornate, stained-glass dome. The walls stretching up the building's eight floors are clad in decorated marble.

The oncology centre is the latest addition to the more than 700-bed Saad Specialist Hospital, a two billion Saudi riyal (Dh1.95 billion) complex that dominates the buildings around it in Al Khobar, an oil town in Saudi Arabia's east.

It employs some 4,000 people and is a showpiece asset of Maan Al Sanea, the Saudi billionaire who is battling to save his business empire in the face of financial difficulties, allegations of fraud and a number of lawsuits.

In better days, the hospital was a place where Al Sanea welcomed royalty - it was officially inaugurated by Saudi Arabia's King Abdullah Bin Abdul Aziz (then crown prince) in 2003 - and is touted by his staff as an illustration of the businessman giving back to the community.

But more recently it has found itself embroiled in the financial crisis, with Al Sanea writing to staff to reassure them it would not be sold.

"You and your colleagues are bound to have anxieties, especially as new rumours about the hospital seem to emerge every day," the letter said, telling staff the future of the hospital "is paramount, and it is secure".

Speculation that the hospital might be sold surfaced after it emerged at the end of May that Al Sanea's personal bank accounts had been frozen by the Saudi central bank, while Saad Group, which he owns, was being forced to restructure billions of dollars of debt.

His predicament deepened when one of the kingdom's most prominent family businesses, Ahmad Hamad Algosaibi & Brothers (AHAB), filed a lawsuit accusing him of massive fraud that it alleges could amount to as much as $10 billion (Dh36.7 billion).

A Cayman Islands court has also ordered a worldwide freeze of $9.2 billion of Al Sanea's assets and dozens of his entities based in the Caribbean offshore centre in response to a complaint filed by AHAB.

The result is an increasingly bitter feud between one of Saudi Arabia's blue-chip merchant families, the Algosaibis - AHAB is also struggling with financial difficulties - and one of the kingdom's highest-profile international investors.

Sanea's empire stretches from the Saudi desert to Bahrain, the UK and Switzerland and two years ago he acquired a 3.1 per cent stake in HSBC.

The dispute is made more complex because Al Sanea, 54, previously worked for AHAB and is married to the daughter of one of that company's founders.

Saad spokesmen say the allegations made by AHAB "are based on spurious and scurrilous accusations," adding that the group will "respond fully to all of these claims through the proper judicial process and definitively demonstrate their lack of any foundation".

The battle between the Saad Group and AHAB looks set to drag on through the courts, with implications for dozens of international and regional banks that are estimated to have about $20 billion of exposure to the two groups.

In the kingdom, the ramifications are already being felt, with a Saudi-based analyst saying banks have tightened lending to other family businesses, stymieing economic recovery in the world's top oil producer.

- Financial Times

Riyadh (Bloomberg) Two Saudi family conglomerates, Saad Group and Ahmad Hamad Algosaibi & Bros, owe Saudi Arabian banks about $5 billion (Dh18.35 billion), Standard Chartered said.

"Although significant, the exposure must be put into the context of a system with equity of about $50 billion," Singapore-based analyst Victor Lohle said in an e-mailed report yesterday. "We expect most of the banks' financial profiles to remain sound."

International and regional banks are suing the Saudi groups for assets after both groups missed payments due from their Bahraini-based banking units, which are now under the administration of the central bank.

Court cases are also taking place between the two groups after the Algosaibi group claimed in a May 22 New York filing that Maan Al Sanea, the owner of Saad Group, used "falsified documents" to obtain $10 billion.

Units of the two Saudi family groups have borrowed at least $15.7 billion from more than 80 regional and international banks, including BNP Paribas, Citigroup and Arab Bank in Amman, Jordan, according to documents provided by lenders.