Jadawel International claims bank "hatched a fraudulent scheme" to secure a rare Saudi banking license
A Saudi real estate company has sued Barclays for
$10 billion, claiming the bank ceased pursuing lease
payments due from the Saudi government on military complexes in the kingdom in
order to obtain a lucrative banking license there.
The company, Jadawel International, a unit of
London-based MBI International Holdings Inc., claims Barclays "hatched a
fraudulent scheme" to secure the rare Saudi banking license, selling out
Jadawel in the process, according to the lawsuit filed in New York state
Supreme Court last week.
"Barclays believes the claim is without
foundation and will vigorously defend it," the bank said in an emailed
MBI, founded by Sheikh Mohamed Bin Issa Al Jaber,
built two compounds and leased them to the Saudi government in 1999 to house
US defence contractors working in the region, the lawsuit said. The payments
should have totalled more than $2 billion through 2017, it said.
When Jadawel sought to refinance in 2001, Barclays
helped assemble a group of lenders, according to the lawsuit. In 2002, the
government partially defaulted and Barclays assumed responsibility to collect,
it says. As a result, a lawsuit was filed in Manhattan federal court seeking
damages from the Saudi government.
Barclays later caused the lawsuit to be withdrawn,
the new complaint said, and sought a bank license from the Saudi Capital
Markets Authority, which was considering granting one to a Western financial
institution for the first time in decades.
"Barclays knew that any such license would be
extremely lucrative and that its litigation against the Saudi government made
obtaining such a license impossible," the lawsuit said, accusing the bank
of dropping the lawsuit and compromising the claims for its own benefit.
In addition to being deprived of hundreds of
millions of dollars in lease payments, Jadawel said it sold the compounds at a
The bank, meanwhile, also was reported to have
bribed a Saudi prince and government official to help obtain the license, the
In 2012, Reuters reported that the US was
investigating whether Barclays Plc paid bribes to win a banking license in
That October, Barclays disclosed that the US
Department of Justice and Securities and Exchange Commission were investigating
the British bank's relationships with third parties who helped it win or retain
business and whether such relationships violate the Foreign Corrupt Practices
Act, a law that bars bribes to officials of foreign governments.
In November 2012 responding to a newspaper report,
Barclays said it did not make any illegal payment to get a Saudi license.
The lawsuit seeks damages of no less than $10
billion for Barclays alleged breach of fiduciary duty, fraud and interference.