Revealed: Sanea's Cayman cash pile

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Accountants investigating the affairs of Maan al Sanea, the Kuwait-born entrepreneur involved in the Middle East's biggest corporate scandal, have unearthed more than US$6.2 billion (Dh22.77bn) of assets in his Cayman Islands holding company, The National can reveal.

The news will be welcomed by creditors of Mr al Sanea's Saad GroupSaad Group, who are owed up to $10bn by the businessman based in Saudi Arabia.

However, liabilities against these assets, and other constraints on their disposal, mean the 50-plus international banks lining up for repayment are likely to receive only a small proportion of their money back.

The snapshot of Mr al Sanea's financial difficulties was contained in a report delivered last week by Grant Thornton, an accounting firm, to creditors in the Cayman Island and London. Grant Thornton has been appointed liquidator to the Cayman holding company, SaadSaad Investment Company Limited (SICL).

The assets are mainly held in the form of cash, investments in shares, bonds and other financial instruments as well as property in Saudi Arabia and elsewhere. But liabilities - principally unpaid corporate loans and other bank debt - reduce the net value of Mr al Sanea's Cayman's businesses to $2.21bn.

In a further blow to Mr Sanea, the liquidator concludes: "Material uncertainty exists surrounding the realisable value of most of SICL's assets. It is therefore extremely difficult for [us] to form a realistic view at this time as to the extent of the assets which will be available to meet the claims of creditors."

A spokesman for Mr al Sanea yesterday declined to comment.

The Grant Thornton report represents the most thorough examination yet of Mr al Sanea's businesses outside Saudi Arabia, where he is involved in a bitter confrontation with the al Gosaibi family. The main growth area for his business in recent years was overseas financial operations until the first difficulties arose in May.

The liquidator warns: "It is impossible to assess the position of SICL in isolation ... [We] have seen evidence of substantial inter-company transfers, asset transfers, cross-lending, guarantees and purported trust arrangements.

"There is legitimate cause for question over the manner in which the group's affairs have been conducted and how the rights of creditors have been affected."

The report shows a group of companies reeling under the effects of the global financial crisis and ambitious expansion plans. Net assets were more than halved in the first eight months of this year.

The report was compiled with the help of SaadSaad Financial Services (SFS), a company based in Geneva and formed to provide back office services to SICL and other al Sanea companies, although that work was hampered by the "incomplete state of records" held by SFS.

Last June, the report alleges, a substantial volume of SICL's books and records were removed from SFS control by Mr al Sanea and not returned.

As of August 5, when Grant Thornton first went into the Cayman companies, the biggest chunk of SICL assets - some $1.42bn - was held in the form of share investments and options traded in 18 countries. Most of these were held in Saudi Arabia and the UK, where SaadSaad had big interests. Saudi shares and derivatives account for $1.12bn of the total.

"It is not yet possible to comment on likely realisable values," said the liquidator.

The second-biggest class of assets is in the form of "cash and cash equivalent" due from banks and other financial institutions. These amount to $1.13bn after allowing for "uncertainty over the existence and/or recoverability of funds held for SICL with three institutions, one of which is now subject to insolvency proceedings".

The report says other "recoverability issues" relate to $176 million of cash placed with The Investment Banking Corporation of Bahrain, which has been placed into administration by the Bahraini central bank, and $598m of cash with The Money Exchange, owned by the al Gosaibis.

The report alleges that another $60m cash was transferred from an SICL bank account in Switzerland to a Saudi account believed to be owned by Mr al Sanea. Other cash assets are also held in Swiss banks and shielded by the country's banking secrecy laws.

Other assets held by SICL include $183m of hedge fund and $151m of private equity investments as well as $358m of fixed-interest bonds. On all these, Grant Thornton raises doubts about "recoverability".

"Substantial" property holdings in Saudi Arabia comprise three greenfield sites with a book value of $893m, a flat in London's West End and an interest in a Portuguese holiday development.

The report also gives a value of $1.32bn to "investments in associates", mainly the 48 per cent stake held by SICL in Awal Bank of Bahrain. This too was put into administration by the Bahrain central bank. "It is unlikely that SICL will receive any recovery from its investment," Grant Thornton says.

By Frank Kane

© The National 2009