Kuwait pays for investment company ills

In 1999, Global Investment House in Kuwait established a proprietary investment operation with just over $30m in seed capital. A decade later, the division has brought the investment house, one of the best known in the Gulf, to its knees.

Pumping billions of dollars of borrowed money into investments, ranging from stakes in Tunisair to the Asian Finance Bank, ensured that Global was known far outside the borders of Kuwait, and generated enviable returns for investors and shareholders for much of the past decade.

But the credit crunch has hammered the investment company. In December, Global suffered the ignominy of becoming the first Gulf-based financial institution to default on its debts since 2002, after it was unable to make repayments on about $2.7bn of short-term debt to local and international banks.