Ahmad Hamad Algosaibi & Brothers Co, a Saudi investment
company that defaulted on billions of dollars of debt, said Wednesday it won’t
defend itself against a $250m UK lawsuit filed by HSBC Holdings and four other
banks.
Algosaibi switched course during a London trial after
deciding the judge would likely find the company hadn’t done enough to prevent
the fraud it alleges were behind the loans, the family said Wednesday
in a statement.
“It could be found in
this case that if the Algosaibis knew there was” improper use of loans “they
should have taken more aggressive steps to detect and prevent the massive
forged lending scheme,” said Eric Lewis, Algosaibi’s legal coordinator with the
law firm Baach Robinson & Lewis Pllc in Washington.
The case follows a global dispute between Algosaibi and
al-Sanea. Units of the conglomerates, both based in the Saudi oil city of
Al-Khobar, defaulted in 2009 after borrowing about $15.7bn from more than 80
banks.
The London case, stemming from the largest Saudi default to
come out of the credit crunch, includes HSBC’s $85m claim, British Arab
Commercial Bank’s $19m claim, Arab Banking’s claims totaling $140m and Credit
Agricole’s $6m claim.
“It now appears, after 14 months of bitterly contested
litigation and huge legal costs, that AHAB themselves have finally realized
their evidential case is completely unsustainable,” said Gregory Mitchell, the
lawyer for British Arab Commercial Bank, according to a transcript of the
hearing.
HSBC spokesman Brendan McNamara declined to comment on the
case until a judgment is handed down.
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