September 12, 2011 11:19 pm

Banks target Mayfair homes in Saudi dispute

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A string of Mayfair properties are at the centre of an effort by banks to secure money owed to them by one of Saudi Arabia’s leading business families.

The Algosaibi family lost a $220m (£139m) lawsuit against HSBC and four other creditors in June, the first result from multibillion-dollar legal claims that have sprung from the Gulf’s biggest dispute arising from the financial crisis.

The banks are now trying to win a so-called charging order, which gives security over assets, to include five properties on London’s Grosvenor Square and Shepherds Place “worth an absolute fortune”, according to Mr Justice Flaux, who heard arguments in the High Court.

At issue is who has beneficial ownership of the properties, after it emerged that companies registered in Liberia, Jersey and the British Virgin Islands are documented as the owners.

“How did a company in Liberia come to own two properties in Mayfair worth an absolute fortune?” Mr Justice Flaux said on Monday.

HSBC argues that these companies are merely nominees for the Algosaibi family, who are the true owners, and that the offshore companies constitute a trust, over which charging orders can be made.

Mr Justice Flaux decided to adjourn judgment to give time to the Algosaibis’ lawyers to gather evidence.

The family argues that while they control the companies, it does not follow that they directly own the companies’ assets. A trial on the matter will be heard in December.

The judge also ordered the family to pay £150,000 within 28 days to the banks as security.

Ahmad Hamad Algosaibi and Brothers (known as Ahab) conceded a case brought by the banks in June because it became clear that the court could have found that the family should have been more aggressive in preventing huge loans allegedly secured by Maan al-Sanea, a fellow Saudi, Ahab’s lawyer said at the time.

Mr Sanea denies he used his role in Ahab to run a scheme of up to $10bn that left the company and his own Saad Group owing international banks an estimated $20bn.

HSBC and the banks, including Crédit Agricole and the British Arab Commercial Bank, are disputing who should lay principal claim to the properties – a matter over which Mr Justice Flaux reserved judgment.

“What we have been saying all along is that we want to discuss settlement, but people should not be rewarded for queue-barging; we want equitable allocation,” Eric Lewis, Ahab’s global legal coordinator, told the Financial Times.

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