Al Gosaibi family spat may test waters

Some observers see a long-running dispute involving two of Saudi Arabia’s leading business families, about 100 foreign banks and billions of dollars of debts as a test-case of the kingdom’s willingness to open up to foreign finance.

Since 2009, the Al Gosaibi trading family and the Saad Group have been locked in a corporate “frozen war” that has left global and Saudi banks out of pocket to the tune of more than $15bn. It has also led to accusations that the Saudi financial and legal system is loaded against foreigners in favour of domestic banks.

“The issue is simple,” says one executive involved in the dispute who does not wish to be identified. “Will Saudi financial institutions adhere to the spirit of their commercial and Sharia laws by taking part in meaningful talks to resolve this long-running situation, which risks the reputation of the entire Saudi financial system?”

Ahmed Hamed Al Gosaibi and Brothers (Ahab), the partnership that owns the business interests of the eponymous business family, is offering creditors 20 per cent of obligations, plus some of the proceeds of any successful litigation against their protagonist in the affair, the businessman Maan Al Sanea, who owns Saad.

Some 87 out of a total of 108 claimants have agreed to discuss the Ahab terms, presented at a meeting in Dubai last year, but the initiative has been deadlocked by the stance of a group of Saudi creditors who are owed about one-third of total Ahab indebtedness of $5.9bn.

The Saudi banks are taking separate actions in the kingdom against Ahab and have won claims against the family, but so far these claims have not been enforced.

Further creditor meetings will take place this month with the aim of producing a final term sheet to international creditors.

Ahab executives hope this could then get the blessing of the Saudi authorities, which in turn could exercise pressure on the Saudi banks to take part in the process.

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