Mashreqbank’s US lawsuit based on forgery - Algosaibi

MANHATTAN LAWSUIT: Saudi Algosaibi says Mashreqbank lawsuit should be dismissed. (Getty Images)

Saudi family conglomerate Algosaibi says a lawsuit by Dubai's Mashreqbank over more than $200 million in foreign exchange trades is based on forged documents and should be thrown out.

Documents in the New York State Supreme Court cited affidavits in September by a handwriting expert and a doctor to support Algosaibi's argument for dismissing the case - one among several involving the financially-troubled Algosaibi and Saad Group conglomerates.

Mashreq said in a statement that Algosaibi wanted to deflect attention away from the bank's claim that the conglomerate and its banking unit, The International Banking Corp, defaulted on agreements by failing to pay Mashreq.

"It is up to the court to determine the veracity of the specific assertions made in AHAB's motion to dismiss our claim against the AHAB partners," Mashreqbank said in a statement.

Algosaibi lawyers wrote in a motion to dismiss the case dated Sept. 25 and entered in the electronic court record on Oct. 1: "The alleged signatory of one of Mashreq's key documents - a supposed 2000 Guarantee - was lying paralyzed and nonresponsive in a Texas hospital on the day he is alleged to have signed the document."

They were referring to the late Sheikh Abdulaziz Algosaibi of the Ahmad Hamad Algosaibi and Bros Co (AHAB) conglomerate, which was sued by Mashreqbank in June for what the bank described as irregular trades.

Underlying the dispute is Algosaibi's lawsuit against Maan al-Sanea, the billionaire head of the Saad Group, over allegations of $10 billion in loan irregularities. Maan al-Sanea is a former employee of AHAB.

"A second of Mashreq's exhibits - an alleged July 2008 facilities agreement - has been examined by a world renowned handwriting expert. She determined that the signature on that document was forged as well," said the motion.

Regulators and bankers are grappling with up to $22 billion of debt restructurings at Algosaibi and Saad, viewed by some Middle East experts as the biggest financial blow to that region since the global credit crisis began.

Some Gulf banks have said they face potential writedowns on loans made to Algosaibi and Saad.

HSBC analysts have estimated that Saudi banks alone face a potential $4 billion to $7 billion of losses.

The case is in New York because some of the parties and claims are located there. Litigation is also underway in Britain and the Cayman Islands.

The case is Mashreqbank PSC v. Ahmed Hamad Al Gosaibi and Brothers Co 601650/2009 and 601271/2009 in New York State Supreme Court (Manhattan). (Reuters)

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