Last night Touche Ross confirmed it had launched writs against National Commercial Bank of Saudi Arabia and Sheikh Khalid bin Mahfouz, a former manager of NCB who resigned from the bank in July.
The writs seek some dollars 10.5bn of damages from NCB and Sheikh Mahfouz. Brian Smouha, the Touche Ross partner appointed by the Luxembourg courts as worldwide liquidator of BCCI, alleges in the suits that Sheikh Mahfouz broke US laws through racketeering and fraud. Because of the racketeering allegations, which in the US provide for triple damages, Mr Smouha could theoretically seek a total of more than dollars 30bn.
Touche Ross was confirming in London a report in the Washington Post newspaper. The firm had also issued writs in England, Switzerland and Jersey, it said.
The writs ask that Sheikh Mahfouz's cash and other assets be frozen so he cannot move them across borders. US District Judge Joyce Hens Green yesterday issued a temporary order restraining him from shifting his assets out of the US.
The Bank of England led the worldwide closure of BCCI on 5 July last year in co-operation with fellow regulators after the discovery of massive long-term fraud.
The liquidators are seeking to recover as many of the assets as possible on behalf of the creditors, who lost billions after the shutdown. Under a settlement still under consideration, the Sheikh of Abu Dhabi, BCCI's majority shareholder, has offered to pay creditors 30p-40p in the pound in return for a renunciation of all claims against Abu Dhabi.
NCB was not immediately available for comment last night.
Before he resigned earlier this year Sheikh Mahfouz was deputy general manager of NCB. He was indicted by a New York court in July with defrauding depositors and investors of dollars 300m in the BCCI affair. He has denied the indictment as 'completely unwarranted and without justification'.
At the same time the Federal Reserve Board imposed a dollars 170m fine against him for breaking US banking laws.
Sheikh Mahofuz is the leader of Saudi Arabia's most prominent banking family. His father founded the NCB, the country's largest bank and the one used by its royal family.
The writs filed by Touche Ross closely echo the allegations made by the Fed and the New York courts. They allege that Sheikh Mahfouz channelled nearly dollars 1bn through his bank to buy a stake in BCCI and in the parent company of First American Bankshares, a US bank.
This secret purchase of a US bank is one the central concerns of US investigators. The writs allege that he sold his First American shares back to BCCI for a higher price than he paid and agreed with BCCI's founder, the Pakistani tycoon Agha Hasan Abedi, that Sheikh Mahfouz would not report the sale to regulators.
Liquidators seeking to recover funds from Sheikh Mahfouz in the US may, however, already find the cupboard bare.Reuse content