Business: An Arabian Crime Story

Born  in  Kuwait,  he  married  into  a  rich  Saudi  family  in  1980  and  built  up  his  own  corporate  empire  in  the  east  of  the  country.  The  banks  were  in  awe  of  his  fabulous  wealth,  but  in  reality  he  was  a  master  at  obtaining  credit.  118  large  banks  had  given  him  loans  of  approximately  20  billion  dollars  –  believing  in  the  security  supposedly  provided  by  his  family.  But  his  system  turned  out  to  be  a  house  of  cards.

For years, the Saudi Maan Al Sanea enjoyed generous provision of credit from the big banks. Until his creditors took action against him in the US Congress over the largest fraud in history.

Sulaiman’s Signature

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he stopped breathing. On the last day of his life, the 82-year-old Saudi had no idea that his empire was on the brink of collapse. Just a few weeks after his death, Ahmad Hamad Al Gosaibi and Brothers (AHAB), his family’s conglomerate which had been worth billions, reached the end of the line. Banks were worried about their loans, special auditors struggled to make sense of the financial structure, two financial institutions crashed and the rating agencies assessed the creditworthiness of the company at rock bottom. The son-in-law was responsible for the disaster, explained the male heads of the family. Maan Al Sanea, a native of Kuwait, had messed everything up, destroyed the good name of the Al Gosaibis and orchestrated a credit fraud of astronomical proportions. Since then, the Al Gosaibis and the Kuwaiti who had married into their family have been at war. The Central Bank of Bahrain led the investigation, a 50-strong team from the auditors Deloitte’s was commissioned to look into the business dealings of Al Sanea. Fraud experts from Ernst & Young and Kroll Associates were appointed, legal firms and

Sulaiman Al Gosaibi was in a bad way when he arrived at Zurich University Hospital in early February 2009. He had to be admitted to intensive care and fell into a coma. On 22 February 2009,

investigators began work all over the world, including in Switzerland. Investigation reports, court records and collections of evidence that BILANZ has in its possession paint a picture of a fraud of a size previously unknown: over nine billion dollars of lost credit, swindled from 118 banks on five continents. “One of the biggest cases of fraud in history”, say the victims in their bill of indictment. Hundreds of forged loan documents, minutes of invented meetings and a phantom bank.

Bigger than Madoff. The New York criminal lawyer Eric Lewis has been leading the fight to clear the name of the Al Gosaibi family. After 27 years of legal practice involving cases of fraud, he has seen many things. In the nineties he investigated the crash of the Bank of Credit and Commerce International (BCCI) and he is currently representing the liquidators in the Madoff case. But when he appeared at a hearing of the Finance Committee in front of the US Congress in September, he said: “This is probably a bigger case of fraud.” Approximately one trillion US dollars had been laundered and the victims had lost over 20 billion dollars. Then Simon Charlton, a fraud investigator from the London office of Deloitte’s, told the US parliamentarians about the network that Maan Al Sanea had built up, which extended

over the Gulf states, Switzerland and theCayman Islands, and how he exploited the reputation of the Al Gosaibi family. “His fraud operation was highly sophisticated, he used high-tech equipment and specialist knowledge”, explained Charlton, who has been investigating the case on behalf of the Al Gosaibis. Almost 500 loan documents were identified by the renowned signature expert Audrey Giles as suspected forgeries. Contract documents worth billions. Maan Al Sanea, the son-in-law, sees things differently. Robert Serio, his New York lawyer and also a “super lawyer”, wants to “make clear that Al Sanea energetically refutes all of the accusations made by AHAB and by its lawyer Lewis.” He denies any involvement in fraud. No court has yet found in favour of the accusations against Al Sanea. It is “a personal and business dispute between two diverse, multi-billion-dollar corporations that are based just two miles apart in Al Khobar.” The cause of the conflict according to Serio: both corporations suffered “liquidity problems” in the aftermath of the global credit crisis. The Al Gosaibis wanted to blame Al Sanea for their insolvency. In the High Court in London, Al Sanea’s lawyer Tom Beazley sought to justify the living costs of his client in a trial attempting to freeze assets worth 9.2 billion dollars. The judges were considering a personal spending limit between 10,000 dollars a week and one million a quarter.

ZURICH  UNIVERSITY  HOSPITALAl  Sanea’s  father-­‐in-­‐law,  Sulaiman  Al  Gosaibi,  is  supposed  to  have  signed  agreements  and  other  documents  worth  billions  while  he  was  being  treated  at  the  University  Hospital  in  Zurich.  According  to  BILANZ,  he  is  supposed  to  have  given  general  approval  to  documents  tabled  in  a  meeting  of  the  supervisory  board  on  21  February  2009.  In  fact,  the  82-­‐year-­‐old  Sulaiman  spent  four  hours  on  the  operating  table  that  day.    According  to  the  medical  report  of  the  surgeon  Pietro  Giovanoli,  he  had  been  in  intensive  care  since  2  February  –  “with  an  abdominal  cavity  that  was  completely  open”.  He  underwent  eight  operations  in  this  period  and  was  in  a  coma  throughout.  Until  he  died  on  22  February  at  4  a.m.

FINANCIAL  SERVICES  IN  GENEVAThrough  the  Geneva-­‐based  company  Saad  Financial  Services,  Al  Sanea  was  active  in  the  Swiss  Tinancial  centre.  The  American  investment  banker  Christopher  Hart  worked  for  him  there  as  general  manger.  The  directorships  were  held  by  Al  Sanea  with  business  lawyers  from  the  Froriepp  Renggli  practice,  who  still  represent  the  company  today.  

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Business: An Arabian Crime Story

Too little, Beazley thought, far too little: “He spends 800,000 dollars a month on electricity, gas, telephone calls, water and satellite communications”, they noted. “He owns a zoo, My Lord”, the lawyer explained to the judge, and added meaningfully: “The zoo has lions and giraffes.” Al Sanea’s media office refused to answer questions from BILANZ. Instead, his London media lawyer sent a warning letter. Al Sanea was innocent until proven guilty.The Kuwaiti married Sana Al Gosaibi, a daughter of the family patriarch Sulaiman, in 1980. A good match: the Al Gosaibis were an institution in Saudi Arabia, their wealth legendary, their business stable. Sana had significant holdings in the conglomerate, which was rich in tradition. In Al Khobar, in the east of the country, the family built up its wealth. They had started, in the nineteen forties, with shipping transactions with Aramco, then followed production under licence for PepsiCo, container and cargo services, retail, plant construction and, as a symbol of their affluence, the Al Gosaibi Hotel, a luxurious five-star palace. Following his marriage to Sana, Maan Al Sanea was given the job of running a small division of the AHAB corporation: the group’s money exchange. This was where the cash transactions of expatriates were completed, the proper Islamic name for which is hawalaIn 2003, Sulaiman Al Gosaibi became head of the family. Al Sanea worked on his reputation

REMOTE  CONTROLLEDThe  American  Glenn  Stewart,  whose  private  home  is  in  Malibu  in  California,  was  employed  as  head  of  the  bank  in  Bahrain.  His  computer  in  the  bank’s  headquarters  was  controlled  remotely  using  the  software  package  PCAnywhere.  In  a  memo  to  Al  Sanea,  he  suggested  giving  the  location  of  meetings  of  the  supervisory  board  on  minutes  as  Al  Khobar  in  Saudi  Arabia,  to  make  it  look  as  if  the  chairman  Sulaiman  had  attended  them.  In  reality,  the  latter  knew  nothing  about  them.  Following  the  intervention  of  the  Central  Bank,  Stewart  was  indicted  in  Bahrain.  He  was  released  on  bail  and  Tled  to  the  USA  in  2010.

CARIBBEAN  HUBUgland  House,  the  top  address  for  trusts  on  South  Church  Street  in  George  Town  on  the  Cayman  Islands,  was  used  by  the  billionaire  Maan  Al  Sanea  as  the  preferred  domicile  for  his  investments.  He  set  up  holding  companies  there,  such  as  Singularis  Holdings,  that  invested  throughout  the  world  in  diverse  areas.  For  example,  he  held  a  3.1%  share  in  the  British  Tinancial  institution  HSBC  for  a  time,  which  was  worth  6.6  billion  dollars.  His  holdings  on  the  Cayman  Islands  included  the  airline  Saad  Air,  which  operated  two  brand  new  Airbus  planes  for  him  with  luxury  Tittings.

as a rich investor. He became a Saudi citizen and appeared in position 62 on the Forbes rich list in 2009 with a fortune of seven billion dollars. An accolade in the world of finance.Al Sanea built up his money exchange division and moved it into new offices in Al Khobar, two miles away. He forbade his staff from having any communication with the managers of the other divisions. All of the important lines of communication had to go through him. Through the Saad Group, he established his own investment empire. He invested in luxury property in London and the energy business in Sydney. He invested in the diamond business and owned two Airbus

planes that were serviced in Basel and were often seen in Switzerland. In 2007, Al Sanea bought a 3.1% share package in the banking giant HSBC. Its value at that time: 6.6 billion dollars. He was now more powerful than his father-in-law. In Geneva he set up the finance company Saad Financial Services with directors from the legal firm Froriep Renggli. The lawyers still work for the company. They declined to answer questions from BILANZ.

A Bank of His Own. In 2003, Al Sanea registered his own bank: The International Banking Corporation (TIBC) on the twelfth floor of the Sheraton Tower in Bahrain. The Al Gosaibi family accuse him of having already built up a small portfolio of fictional credit agreements, a trial-run, they suspect, that went unnoticed. Up to 2005, Al Sanea managed TIBC himself, but then he took a back seat. His father-in-law Sulaiman Al Gosaibi was now registered as its chairman. In May 2009, his system collapsed. In fact, Al Sanea had controlled all of the important transactions himself until the end, as an investigative report on behalf of the Central Bank by the auditors Ernst & Young established, which examined the transactions of TIBC in the first quarter of 2009 as a sample. The Al Gosaibi family denies that Sulaiman or other family members knew of the operations of TIBC. They claim that everything went on behind their backs.

George  Town,  Cayman  Islands

Company Registered  Office

At  the  height  of  his  powerPrevious  holdings  of  Maan  Al  Sanea

Sydney,  Australia

London,  UK

London,  UK

Hamilton,  Bermuda

St.  Helier,  Jersey

Milton  Keynes,  UK

Kings  Langley,  UK

Sources:  company  reports,  invesJgaJon  reports,  company  databases.  As  of  2008.

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The  inves1gators  were  more  interested  in  what  they  did  not  find:    a  proper  bank.

The investigators were less interested in what they found at TIBC. They were struck more by what they did not find, namely a proper bank. They discovered 64 PCs, six laptops and four servers. But the customers were fictitious, loan agreements were forged, minutes of meetings tampered with. “The staff who were questioned were not able to confirm the existence of a single customer”, the auditors noted, “they said that they did not have any contact with customers.” They “did not see” documents about security for credit, the auditors wrote, “we were not in a position to confirm the existence of security.” Everything seemed to have been organized outside the bank, probably in Saudi Arabia. IT investigators discovered that important computers had been controlled externally with the remote software package PC Anywhere. SWIFT payment transfers were made from outside and the CEO’s computer was remotely controlled. Investigators from Deloitte’s travelled to Saudi Arabia to take a look at the offices and projects of the supposed borrowers in so-

called drive-by visits. Their efforts were Their efforts were “fruitless”, the auditors reported, as the borrowers could not be found at the addresses given. One surprising find was provided by a “credit assistant”. As a wise precaution, she had kept certain files to one side. The woman took the investigators

into an underground car park. She had hidden the documents there in a plastic carrier bag in the boot of her car. She said that she had been instructed to tamper with documents. The nasty suspicion in the end was that the institution was a fictitious bank. The investigators state that TIBC obtained the Al Sanea’s banking connections read like a who’s who of the financial industry: HSBC, UBS, Credit Suisse, Clariden Bank, Citibank, Deutsche Bank, Dresdner Bank and Commerzbank, BNP Paribas, Raiffeisen Central Bank of Austria, Bayersiche Hypo- und Vereinsbank and the German regional bank WestLB. In good faith these institutions handed out credit worth billions like a baker sells bread rolls. 118 banks, more than 20 billion dollars. They do not have much to say about the matter now: “no comment” was the response of HSBC. Others, like UBS, invoke banking confidentiality. The American Glenn Stewart, the CEO of TIBC, arranged for the loan agreements to be chauffeur-driven from Bahrain to Al Khobar in Saudi Arabia.

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Business: An Arabian Crime Story

From there the papers came back overland with the signature of Sulaiman on the bottom. The Sulaiman signatures immediately seemed suspicious to the investigators. They looked like a copy-and-paste job. Forensic scientists eventually came to the conclusion that Sulaiman’s signature had probably been forged many times. The same applied to the meetings of the bank’s committees. One of the meetings, which he had attended according to the minutes, took place on 21 February 2009. At that time, Sulaiman was lying in the University Hospital in Zurich, one day before he died. During his treatment in intensive care, on 12 February, he is supposed to have signed the annual accounts of TIBC as its chairman. Several weeks before that, on 9 January, he was supposedly still signing loan authorisations.

Money in a black hole. By contrast, the flows of money were real. The investigators were therefore able to trace how billions taken in from the banks via TIBC as loans simply disappeared. The largest proportion of this flowed into the money exchange division in Al Khobar and from there on to Al Sanea. “Some of the methods used were simple”, reported Deloitte investigator Simon Charlton, “Al Sanea wrote cheques drawn against the accounts of the money exchange to his firms, or he withdrew cash from bureaux de change in Saudi Arabia”. These cheques were issued on a daily basis. Al Sanea withdrew more than

two billion dollars in this way. Other withdrawals were organised in a more complex way: with letters of credit, for example, as payment for phantom goods delivered to AHAB, or through vehicles that allegedly followed the rules of Islamic banking. Al Sanea paid his debts for existing loans with new credit. The system only collapsed when he was unable to arrange new loans to meet his obligations quickly enough during the months of crisis. Maan Al Sanea is still a free man, with only a travel ban to restrict him. He goes about his business in Al Khobar and leaves his lawyers to deal with the trials. Apparently, he no longer enjoys publicity. An extensive Wikipedia entry about him has been reduced to a couple of sentences, in which only his charitable work is mentioned. All other information and links have been removed for legal reasons.

The Al Gosaibi family is attempting to assert its rights abroad, in courts in the USA, the Cayman Islands and England. Initially, it tried to get the help of the royal family in Saudi Arabia during proceedings to freeze all transactions, after Saudi Arabian banks had also demanded their money back. The king set up a committee of investigation, but it had no powers under criminal or civil law. It was a uniquely secretive body: ”Its exact rules and aims and the scope of its role and authority were not made known to the parties involved or to the public”, explained the Saudi lawyer Abdulaziz Hamad Al Fahad, a graduate of Yale. Nobody was allowed to see the files. “Kafka has nothing on this”, says the Zurich forensic expert Andrea Galli from the investigating company Scalaris, who also examined some aspects of the case himself. “Anyone who is looking for the protection of the law in Saudi Arabia will be looking in vain.” The Central Bank of Bahrain put TIBC into compulsory administration. Al Sanea was indicted in Bahrain, together with a dozen associates. Stewart, his CEO, was arrested in Bahrain, but released on bail. In 2010 he fled to his native California, where he has luxury homes in Malibu and Pacific Palisades. Proceedings have been taken against Stewart by the AHAB Group in the USA. “There was no fraud”, explains the defendant.

New  credit  to  service  exis1ng  loans  –  un1l  the  con1nuous  flow  of  money  dried  up.  

AT  HOME  IN  SAUDI  ARABIAAl  Sanea  controlled  his  billion-­‐dollar  deals  from  Al  Khobar  in  the  east  of  Saudi  Arabia,  which  is  where  he  still  lives  today.    Bank  documents  were  taken  there  from  Bahrain  by  chauffeur-­‐driven  car  and  provided  with  the  signature  of  Al  Sanea’s  father-­‐in-­‐law,  Sulaiman  –  allegedly  forged.

BAHRAIN:  SCENE  OF  THE  CRIMEIn  2009,  Maan  Al  Sanea  set  up  the  Tinancial  institution  The  International  Banking  Corporation  (TIBC)  in  Bahrain,  but  soon  withdrew  from  all  functions  on  its  governing  bodies.    OfTicially,  his  father-­‐in-­‐law  Sulaiman  Al  Gosaibi  ran  the  business  thereafter.  In  2009,  the  bank  collapsed.  The  Central  Bank  of  Bahrain  appointed  Ernst  &  Young  to  compile  an  investigative  report  (right).  The  amazing  result:  there  were  no  customers  or  customer  contacts  and  hundreds  of  credit  documents  had  been  tampered  with.  The  bank  was  put  into  compulsory  administration.

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