A court in Dubai’s financial centre
ruled in favour of Kuwait’s prominent Khorafi family on Thursday in a suit
against Switzerland’s Bank Sarasin over $200 million of investments that went
bad.
The Dubai International Financial Centre court found Sarasin
sold unsuitable investments to family members in 2007 and 2008, and should pay
compensation to the family, deputy chief justice John Chadwick said.
No figure for compensation was set but the family has been
claiming over $26.5 million. Sarasin has 14 days to appeal, court officials
said.
In a case originally brought several years ago, Rafed Abdel
Mohsen Bader al Khorafi, his wife and his mother alleged that Sarasin failed to
give them enough advice and warn them of risks in the complex investments.
They said they borrowed money from Al Ahli Bank of Kuwait to
invest in real estate-related products through Sarasin, which lent the wealthy
family additional amounts.
According to court documents, the Khorafis said they were
told they would “never lose money” and that the risk of their
investments not appreciating in value was “negligible” – claims that
were “hopelessly over-optimistic”.
As the global financial crisis erupted in late 2008,
dragging down real estate prices around the world, Sarasin asked the Khorafis
for extra collateral to back their loans and eventually liquidated their
investments at a loss.
Representatives of Bank Sarasin, which had denied that it
broke any regulation or failed to meet any other obligation, could not
immediately be contacted for comment.
In 2013, Bank Sarasin merged with another Swiss bank to form
the J. Safra Sarasin group, according to the group’s website.
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