Members of two of Kuwait’s richest families are being sued by an English bank over claims they engaged in deceit, a breach of contract and conspiracy over a $60m loan, court documents show.
Standard Bank, which also has representatives in Dubai, began legal action in the UK High Court in 2012 after Kuwaiti company EFAD Real Estate Company (EFAD RE) allegedly defaulted on its repayments.
According to a June 6 judgment that allows the case to continue in a UK court, EFAD RE, which is jointly owned by Kuwaiti families the Al Roumis and the Al Humaidhis, took out the short-term, sharia-compliant finance facility comprising $50m and AED36.73m ($10m) in a 2008 deal called the May Murabaha.
However, as the financial crisis hit, the company, which at one stage in 2007 had net assets totalling $2bn, defaulted on the repayment after its shares in The Investment Dar Company (TID), which were offered as security, fell to 57.25 percent of the facility amount.
In a subsequent restructuring agreement dubbed the December Murabaha, EFAD RE agreed to provide additional security, including shares in Adeem, considered the “jewel in EFAD RE’s crown” given its stakes in Grosvenor House Apartments and Aston Martin Holdings. It also repaid $8.3m and AED6.1m to Standard Bank that same month.
But in its statement of claim, Standard Bank has alleged that the share component in Adeem as well as promised real estate was never transferred and the company is accused of “stalling the bank” with “flimsy and apparently false excuses for not attending meetings at which the security documents were to be signed”.
As well as suing EFAD RE, the judgment shows the bank is also pursuing cousins Khalid Bader Al Roumi and Rezam Al Roumi as general manager and CEO of EFAD RE respectively and “key decision makers” of the company for damages “for deceit, procuring breach of contract by EFAD RE and conspiracy”.
Derrick Dale QC, for EFAD RE, argued there was no credible case of breach of contract as the December Murabaha did not proceed, while also rejecting that the two were personally responsible for the statements as they were not board members of EFAD RE and in law did not exercise control over the company.
In an application heard on May 23 this year, the pair challenged the jurisdiction of the English court.
However, in dismissing this in his June judgment, Justice Stephen Males said he was satisfied that Standard Bank “has at any rate a real prospect of establishing such personal liability” and that there may be “real value” in pursuing those claims.
He also noted that the Al Roumi cousins, despite being based in Kuwait, both spoke good English and came regularly to England, with Rezam Al Roumi a director at Aston Martin.
“The second and third defendants are wealthy individuals who come to this jurisdiction from time to time and it may be that they would not wish to have an unsatisfied judgment against them here or that they have assets here against which a judgment could be enforced,” he wrote.
The judgment said Standard Bank had commenced two criminal proceedings in Kuwait in 2009 and later in 2012, with the former dismissed on appeal and the second appearing to have “not been actively pursued”.