Saudi sheikh sues over BCCI fiasco

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IN A dramatic twist to the BCCI saga, Sheikh Khalid bin Mahfouz of Saudi Arabia will launch a writ this morning in London against Abu Dhabi, the majority shareholder in the disgraced bank, seeking an indemnity of dollars 10bn and further damages of hundreds of millions of dollars.

Sheikh Khalid, the former chief operating officer of National Commercial Bank of Saudi Arabia, is himself facing a dollars 10bn writ brought by the liquidators of BCCI, Touche Ross, over the Saudi bank's alleged role in the BCCI affair.

The move will increase tension between Saudi Arabia and Abu Dhabi, both of which were heavily involved in BCCI and blame each other for its closure.

It will also increase pressure on the liquidators and Abu Dhabi - currently locked in negotiations in an attempt to resurrect a dollars 1.7bn compensation plan scuppered last year by the Luxembourg courts.

Laurence Tribe, a professor at Harvard Law School, has flown into London to orchestrate Sheikh Khalid's legal action which falls into three parts.

First, the Sheikh is seeking several hundreds of millions of dollars in damages from the Abu Dhabi Investment Authority (ADIA) and its chief, Ghanim Mazouri, the chairman of Abu Dhabi's Department of Private Affairs and formerly on the board of directors of BCCI.

Second, Sheikh Khalid is seeking an indemnity from Abu Dhabi against the dollars 10bn writ launched by Touche Ross against himself and the National Commercial Bank.

Third, he is seeking an injunction against ADIA to prevent it from seeking any further deals with the liquidators. The recently overturned compensation agreement, which was to have been largely funded by Abu Dhabi, was rejected by the Luxembourg courts on the grounds that it unfairly favoured Abu Dhabi over BCCI's other creditors - including Sheikh Khalid.