Monday 2 November 2009

Al Sanea operated $10bn ‘Ponzi scheme’, says Al Gosaibi

Maan al Sanea, the head of the embattled Saad Group of Saudi Arabia, “operated one of the largest Ponzi schemes in history”, according to documents filed in a New York court.

“He fraudulently arranged for the borrowing of billions of dollars from dozens of banks, steadily increasing the loan levels year-by-year,” the filings allege. It is the latest legal broadside from the al Gosaibi family, which is locked in a bitter dispute with Mr al Sanea over what it claims is a US$10 billion (Dh36.73bn) fraud.

A Ponzi scheme is a type of fraud in which investors are paid out of illusory profits which are actually fresh money injected into the business by new investors. The most famous example is the $68bn fraud by the disgraced US financier Bernard Madoff.
The claim, which Mr al Sanea has denied, came amid a flurry of legal action in New York late last week. The al Gosaibis made fresh allegations against Mashreqbank of Dubai in the ongoing battle between them over $400 million in disputed foreign exchange transactions.

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