Bahrain-based bank TIBC files $720M claim against Saudi conglomerate linked to bank’s default

Bahrain-based bank targets its Saudi parent

CAIRO — An administrator appointed to run a bank that defaulted on more than $2 billion in debts said Thursday it was suing the bank’s former parent company over unpaid foreign exchange transactions — adding a new twist to a multibillion dollar fraud dispute between two Saudi families.

The International Banking Corporation’s administrator, Trowers & Hamlins, said it filed a $720 million claim with the Saudi Arabian Monetary Agency Committee on Wednesday against Saudi conglomerate Ahmad Hamad Algosaibi & Bros. The committee, linked to the Saudi central bank, has jurisdiction in such cases.

TIBC, which was owned by AHAB, was placed in administration by Bahrain’s central bank last year after it, and Awal Bank, which is owned by Saudi billionaire Maan al-Sanea, defaulted on billions of dollars in debts. AHAB has claimed in court filings that al-Sanea, a major stakeholder in banking giant HSBC, defrauded the company of billions of dollars — claims he has repeatedly denied.

The administrator said the claim was filed as part of a wider effort to recover money due TIBC’s creditors, and came after “unsatisfactory responses from AHAB and their representatives to questions relating to the assets of TIBC that we have repeatedly asked them.”

“These claims form the first in a series of litigation proceedings which will be brought in a variety of jurisdictions around the world against those debtors of TIBC including AHAB,” Abdullah Mutawi, who is heading the process at the firm, said in an e-mailed statement.

“Further claims will be lodged in the coming weeks and months,” said Mutawi.

The administrator declined to make available a copy of the claim and SAMA officials were unavailable for comment, with Thursday the start of the weekend in Saudi Arabia.

AHAB adviser James Courtovich said the company has only seen the administrator’s statement, but rejected the claims “on every level.”

TIBC’s troubles surfaced earlier last year. Its defaults, coupled with those of Awal Bank, were the catalyst for a spate of lawsuits and claims of fraud that spanned several nations.

AHAB has maintained in court filings in New York that the defaults are directly tied to al-Sanea, who once served as TIBC’s managing director.

The litigation has caught the attention of a top U.S. congressman who recently urged the Justice Department to investigate whether American banks played a role in the alleged fraud.

In a case that AHAB has used to focus attention on al-Sanea, the company was sued by Dubai-based Mashreq Bank over unpaid foreign exchange transactions linked to its money remittance business, the Money Exchange.

AHAB alleges that al-Sanea retained direct control over TIBC through subordinates even after he left his job, and that he also exercised similar control over the Money Exchange. It has submitted as evidence independent reports commissioned by Bahrain that look into operations at both TIBC and Awal.

Al-Sanea has acknowledged that he was employed at TIBC, but stressed that neither he nor his businesses now have “any business ties except on an arms length commercial basis” with AHAB.

Saad Group declined to comment Thursday, but has consistently denied similar claims in the past.

Bahrain, a major international Islamic banking center, has aggressively tackled the defaults.

Authorities in the tiny island nation have detained several TIBC executives, including the bank’s former head, for investigation. Bahrain central bank said the claim against AHAB was filed after it was referred to the country’s council of ministers.

(This version CORRECTS administrator name to Trowers & Hamlins.)