Liquidators secure successful outcome in longest-running Cayman Islands trial

The Grand Court of the Cayman Islands has today found in favour of Liquidators from RSM Restructuring Advisory LLP (Bruce Mackay) and FRP Advisory LLP (Geoff Carton-Kelly) in the UK, and Chris Johnson Associates (Chris Johnson and Russell Homer) of the Cayman Islands who together are dealing with six defendant companies (known as “the AwalCos”) and are advised by Charles Russell Speechlys LLP (CRS) in the Islands’ longest ever trial (also one of the largest fraud trials ever litigated worldwide) – with circa US$9billion damages claimed.

The AwalCos, which are Cayman Island registered companies, formed part of the business empire of prominent Saudi businessman Maan Al Sanea. Their liquidations followed two of the biggest corporate collapses of the 2008-09 Global Financial Crisis – and the largest in Saudi Arabian financial history, those of the Ahmad Hamad Algosaibi & Brothers Company, known as “AHAB” and Al Sanea’s Saad Group.

The ruling in Ahmad Hamad Algosaibi & Brothers Company v Saad Investment Company Limited and Others means that the balance of hundreds of millions of dollars can be freed up from the estates of the liquidated AwalCo companies and ultimately returned to creditors. 

In an unusual twist for a fraud trial, the decision also raises serious concerns as to the integrity of the business practices of the Algosaibi family - one of Saudi Arabia’s wealthiest families - in the period from 1980 onwards during which, together with Mr Al Sanea, they have been found to have been complicit in a US$330 billion Ponzi scheme defrauding international lending banks, through AHAB’s so called Money Exchange business. 

Bruce Mackay, partner and joint-liquidator at RSM Restructuring Advisory LLP, comments: ‘This outcome vindicates the defendants’ robustly argued position throughout the 129-day trial, the longest running trial in Cayman Islands history. It is just reward for a huge team effort throughout the AwalCos’ team and the result means many millions of dollars will be returned to creditors.

‘At a total value of US$9.2billion claimed, the sums at issue during the trial made it one of the biggest ever recorded, and the case is one of the most complex pieces of cross-border insolvency litigation that my team and I have ever been involved in. With multiple defendant parties involved, the way in which the defendants worked together to defeat AHAB’s claims was an outstanding feature, especially given the sheer volume of documents in many different formats and multiple languages, the geographical span and the number of insolvency and legal practitioners involved in different countries globally.’

The Algosaibi family – a Saudi business dynasty – brought what have now been proven to be dishonest claims of fraud based on allegedly forged documents, only for documents to come to light which established that members of the family had themselves engaged in highly complex financial malpractice, defrauding local and international financial institutions out of billions of dollars over a period of thirty years, whilst seeking to project themselves as the victims. 

Chief Justice Anthony Smellie, in dismissing the claims against the AwalCos, held that: ‘The evidence reveals that the Money Exchange … has been used to perpetrate one of the largest Ponzi Schemes in history…  The fraud was perpetrated by AHAB and Al Sanea acting in concert against the banks, to obtain borrowing which would certainly not have been provided had the banks known the true financial position of the Money Exchange…  AHAB has concealed its active role in the fraud on the lending banks since 2009.  It has refused to make a clean breast and presented a dishonest case until the conclusion.’

Background to the case

RSM, FRP and CJA worked closely with the CRS UK legal team together with Cayman Island colleagues, local and UK Counsel and with CRS in Bahrain both in the years preceding the trial, and during the trial itself. CRS is the External Administrator of Awal Bank BSC (c) in Bahrain and the parent company of the AwalCos.

The impact of the geographic distances involved was significant. The Court in the Cayman Islands sat from 7am to 1pm to accommodate the 8 hour time difference between Cayman and Saudi Arabia whilst the Saudi Arabian witnesses – who claimed they were subject to a travel ban - gave their evidence. More broadly – the litigation proceedings involved 7 jurisdictions, with the UK, Cayman Islands, Saudi Arabia, Bahrain, Switzerland, Germany, USA all involved. 

The scope of the trial’s geographic reach was exceeded by the scale of the task before the Court. A 129 day trial conducted over the course of a year. Discovery included 2.5 million documents – 250,000 of which were included in a trial bundle. The courtroom itself was completely remodelled to cater for approximately 30 lawyers across 4 legal teams, including 5 Queen’s Counsel and the latest case management technology. 

FTI Ringtail provided a seamless, integrated platform that managed the vast array of unfiltered, uncoded documents and facilitated the targeted analysis that was necessary to deal with the Claimant’s evolving claims. During proceedings, the Opus2 ‘Magnum’ software provided a live audio feed and real-time transcript that were accessible around the world.  In Court, the legal team and the Judge had access to electronic trial bundles with 'personalised' versions of marked up documents whilst clients had access to iPads displaying the evidence currently under discussion. 

One of the central issues in the case was establishing that none of the monies misappropriated from the numerous financial institutions could be traced into the assets of the Awalcos. Working closely alongside FTI Consulting and CRS, the RSM team co-developed innovative command based software, known to the team as a 'Tracing Tool', which automated what would usually be a manual process of tracing monies through hundreds of bank accounts over decades.  In total, the Tracing Tool enabled the team to analyse over 1 billion lines of data and demonstrate to the Court in a robust and defensible way that none of the monies that had been misappropriated from the banks had been received by the defendants. 

This innovative and integrated approach was also evident in the way that the team set about rebutting the Algosaibi family’s case that they were innocent victims of a fraud perpetrated by Al Sanea, one of their inlaws. Together, the team systematically undermined the Claimant’s arguments, reconstructing complicated financial relationships going back twenty years to demonstrate knowledge and approval of increasing borrowings in the billions of dollars.