Al Sanea kept secret ledger, says court filing

Maan al Sanea, a prominent Saudi businessman, kept records of a multibillion-dollar fraud in a secret set of books, according to documents filed.

Maan al Sanea, a prominent Saudi businessman, kept records of a multibillion-dollar fraud in a secret set of books referred to as "Ledger 3", according to documents filed in a New York court last week. Mr al Sanea, the chairman and founder of the Saad Group, a large Saudi conglomerate, is accused of siphoning an estimated US$10 billion (Dh36.73bn) from Ahmad Hamad Al Gosaibi and Brothers (AHAB), another Saudi conglomerate.

The court documents claim he committed the fraud when he headed AHAB's financial services arm, Money Exchange, and used ledger 3 to hide the transfers for decades. Mr al Sanea was unavailable for comment. "The results of al Sanea's fraudulent transactions were not recorded in the ordinary books and ledgers of the Money Exchange," the documents say. "Ledger 3 was not shown to AHAB's board of directors or principals."

Mr al Sanea was in charge of Money Exchange from 1981, AHAB's court filings say. They say the fraud began "no later than the early 1990s", meaning it allegedly stretched over nearly two decades before the financial crisis helped bring it to light this summer. The court documents allege Mr al Sanea used the Money Exchange to take out loans using forged documents and diverted the proceeds to his personal accounts and companies.

They allege Mr al Sanea also concealed his actions by forging signatures and keeping tight control on information going into and out of the Money Exchange. He kept a close eye on employees, according to court documents, and even allegedly wrote a memo in July of 2006 directing them to send all correspondence addressed to AHAB executives to him instead. AHAB also alleges Mr al Sanea or his employees repeatedly forged the signature of Suleiman al Gosaibi, the company's former chairman, who died in February.

"Over a period of at least three years and possibly much longer, al Sanea forged Suleiman al Gosaibi's signature on hundreds of official documents," AHAB alleged. The new documents were filed last Wednesday in a New York court as part of a lawsuit brought by Mashreqbank, a lender based in Dubai, against AHAB. Mashreq sued AHAB because AHAB allegedly defaulted on a $150 million currency exchange agreement in May.

Mashreq said that under the terms of that agreement, it sent $150m to an account in New York owned by AHAB on April 28, with the expectation that AHAB would send Mashreq the equivalent amount in Saudi riyals on May 5. Mashreq filed a lawsuit against AHAB in May after saying it had failed to do so. The Mashreq case is one of several legal battles that AHAB and the Saad Group are embroiled in. Mashreq has sued The International Banking Corporation (TIBC), a Bahraini bank owned by AHAB, over a separate $75m currency swap agreement.

Deutsche Bank has also sued TIBC in New York, and Germany's Commerzbank has filed a lawsuit in London. AHAB and the Saad Group are also both undergoing debt restructuring amid a spate of defaults on financial obligations. @Email:[e-mail]