Pattaya Daily News

31 March 2011 :: 16:03:14 pm 52352

$9.2 Billion Lawsuit Against Former CEO Of International Banking Corp.

LOS ANGELES – A Saudi Arabian company, Ahmad Hamad Algosaibi & Brothers (AHAB), filed a lawsuit against Glenn Stewart, the former CEO of The International Banking Corporation (TIBC), seeking $9.2 billion in damages and suing him for staging one of the biggest global fraud schemes in history.
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The lawsuit filed in Los Angeles federal court Monday accuses Mr. Stewart for fraudulently obtaining loans while he was CEO of TIBC, which is the fourth-largest bank in Bahrain until it collapsed in 2009. 

The five claims against Stewart include (1) fraud; (2) conspiracy to commit fraud; (3) aiding and abetting fraud; (4) aiding and abetting breach of fiduciary duty and (5) unjust enrichment.

The case claims that Stewart ran a “sham bank” that collected more than $10 billion in loans from financial institutions.

“Mr. Stewart knew that it had no real customers, having played a central role in fabricating and documenting a portfolio of dummy borrowers to make it appear TIBC had real banking business,” and also falsely claimed that the prominent Algosaibi firm controlled the bank, according to the lawsuit.

Steward denied all the allegations and said the suit has no merit.

“These guys are lying through their teeth,” he told The Associated Press.

The Pacific Palisades resident faces criminal charges in Bahrain.  At the time, he was banned from travelling out of Bahrain but he escaped from the country last year and returned to the U.S, which has no extradition treaty with Bahrain. 

Stewart argued that Bahrain officials prosecuted him based on the request of the Algosaibi family and that he was illegally detained.  He is suing Bahraini officials in the International Court of Human Rights in Geneva.

Bahrain’s Central Bank ordered TIBC and Awal Bank to be put under outside administration after they defaulted on billions of dollars of loans in 2009.

 

Awal Bank is controlled by the leader of Saudi corporation Saad Group, Maan al-Sanea, who is also married to a member of the Algosaibi family.  Al-Sanea’s in-laws have accused him of defrauding them of billions of dollars through various means.  He has repeatedly denied all charges.

The dispute has expanded into an international lawsuit and countersuits tied to defaults in excess of $20 billion by the two companies to more than 100 banks worldwide.

A part from Stewart and al-Sanea, over a dozen other executives of the two banks have also been charged with crimes in Bahrain.

The Los Angeles lawsuit claims that Stewart was the “chief architect” of a fraud scheme that borrows funds through bank using falsified financial documents and forged AHAB guarantees, claiming it was controlled by Algosaibi.

TIBC actually was controlled by al-Sanea, but “the illusion of Algobaisi family backing was crucial to TIBC’s ability to borrow in the international financial markets,” the suit contends.

The money was siphoned off to al-Sanea and his companies of Saad group while Stewart collected about $100 million through phony payments and commissions, the suit claims.

“Once loans were obtained with the forged documents, Al Sanea, with Stewart’s knowing assistance, channeled some of the proceeds into servicing previously obtained loans and otherwise funding the operational costs of his fraud,” according to the complaint

Stewart said the battle is “basically a fight within the family” and denied that he or al-Sanea committed any crime.

“All of the money went to the Algosaibis … every single remittance,” he said.

The money was then lent again to al-Sanea’s businesses with the knowledge and authorization of the Algobaisi family, which eventually ran out of cash and defaulted, Stewart said.

“They got done in by the credit crisis and when the thing fell apart … blamed Maan for everything,” Stewart said. “There was no fraud.”

 Credit by :
www.washingtonpost.com

Category : World News

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