JEDDAH: The British Arab Commercial Bank (BACB) is seeking a claim of SR75 million with accrued interest of three percent annually against Algosaibi Group, a source told Arab News on Thursday. London-based BACB is a wholesale banking institution providing trade and project finance for Arab markets. The bank has empowered the law office of Khalid Al-Nowaiser to deal with Algosaibi Group and recover its defaulted debts.
According to the source, the law firm has started legal proceedings in the Kingdom to seek payment on the bank’s defaulted debt with the group. Many international and regional creditor institutions have instituted similar action against the group.
More than 200 international and regional debtors are queuing up to seek payment on their defaulted debts with Algosaibi Group, which according to reports total SR35 billion. This situation highlights alleged non-transparency inherent in family firms in the Gulf region and growing skepticism among international creditors. The BACB owns a claim of SR75 million with accrued interest against Algosaibi Group, which was funded by late Suliman Algosaibi.
According to sources, default on the pledged guarantee contained in an agreement between Algosaibi and the bank on April 28, 2007 required BACB to sue the group at the British Commercial Royal Court of Justice. According to the agreement, the parties involved were required to submit any dispute to English law. BACB has filed a case in a British court, too. Moreover, Bargan Bank of Kuwait may have similar issues with Algosaibi Group because it is in default of another loan. Mashreq Bank of Dubai has already filed a lawsuit suing 20 individuals of the Algosaibi family for more than $200 million.
The partners of Algosaibi Group previously decided that Yusuf Ahmed Algosaibi was to be appointed as chairman, Saud Algosaibi as managing director and Dawood Suliman Algosaibi as deputy-chairman. Saud Algosaibi was empowered to handle the situation. However, it has been reported that the Algosaibi family members are not on good terms with the deputy chairman, and Dawood’s services were terminated for making unauthorized and unacceptable announcements to the press. It is also reported that the legal status and structure of Algosaibi Group as a public firm may have contributed to the crisis since it is not bound to specific lines or limitations.