Charles Russell Speechlys successful in longest-running Cayman Islands trial

The AwalCos formed part of the business empire of prominent Saudi businessman Maan Al Sanea. Their liquidations followed one of the biggest corporate collapses of the 2008-09 Global Financial Crisis – and the largest in Saudi Arabian financial history, that of the Ahmad Hamad Algosaibi & Brothers Company, known as “AHAB”.

The ruling in Ahmad Hamad Algosaibi & Brothers Company v Saad Investment Company Limited and Others means that the balance of hundreds of millions of dollars can be freed up from the estates of the liquidated Awalcos and ultimately returned to creditors.

In an unusual twist for a fraud trial, the decision also raises serious concerns as to the integrity of the business practices of the Algosaibi family - one of Saudi Arabia’s wealthiest families - in the period from 1980 onwards during which together with Mr Al Sanea they have been found to have been complicit in a US$330 billion Ponzi scheme defrauding international lending banks.

Stewart Hey, partner at Charles Russell Speechlys, said:

“This conclusion vindicates the defendants’ position after a 129-day trial, the longest running trial in Cayman Islands history, and we are delighted at the outcome for our clients which will allow many millions of dollars to be returned to creditors.

“At a total value of $9.2billion claimed, the sums at issue during the trial made it one of the biggest ever recorded, and the case is one of the most intricate pieces of litigation that we have ever been involved in - by virtue of the technical and financial complexity; sheer volume of documents in many different formats and multiple languages; geographical span; and the number of parties and legal practitioners involved in different countries globally.”

The Grand Court held that the Algosaibi family - a Saudi business dynasty - brought dishonest claims of fraud based on allegedly forged documents, only for documents to come to light which established that members of the family had themselves engaged in highly complex financial malpractice, defrauding local and international financial institutions out of billions of dollars over a period of thirty years, whilst seeking to project themselves as the victims.

Chief Justice Anthony Smellie, in dismissing the claims against Charles Russell Speechlys’ clients, held that:

“The evidence reveals that the Money Exchange… has been used to perpetrate one of the largest Ponzi Schemes in history…  The fraud was perpetrated by AHAB and Al Sanea acting in concert against the banks, to obtain borrowing which would certainly not have been provided had the banks known the true financial position of the Money Exchange…  AHAB has concealed its active role in the fraud on the lending banks since 2009.  It has refused to make a clean breast and presented a dishonest case until the conclusion.”

The Charles Russell Speechlys' team together with their clients are grateful to the Cayman Court. This litigation has marked the Cayman Islands out as a jurisdiction that is capable of dealing with the most complex and demanding multi-jurisdictional litigation, accommodating a year-long trial and embracing the use of cutting edge technology to facilitate the smooth running of proceedings.

Charles Russell Speechlys LLP is instructed by Bruce Mackay of RSM Restructuring Advisory LLP, Geoff Carton-Kelly of FRP Advisory LLP, both based in the UK, and Russell Homer and Chris Johnson of Chris Johnson Associates, based in the Cayman Islands. Together, these four constitute the Joint Official Liquidators of six Cayman Islands registered companies, known collectively as the AwalCos, who were among the 15 resulting defendants in the multi‑billion dollar trial.  The Charles Russell Speechlys UK legal team worked closely with Cayman Islands colleagues, London Counsel and with the Charles Russell Speechlys team in Bahrain both in the years preceding the trial, and during the trial itself.

An executive summary of the judgment is available here and the full judgment is available here.