Bahraini Court Sentences Former Bank CEO To Prison Term

Wednesday, Jun 27, 2012

DUBAI (Zawya Dow Jones)-A Bahraini court has sentenced the former chief executive of the island's Bank Alkhair to four years in prison, according to the text of a court judgement, the biggest ruling yet in one of the kingdom's most heated financial disputes.

The charges against the former chief executive, Majid al Refai, were not detailed in the judgement issued by the Bahraini criminal court on Tuesday. But Bank Alkhair said in a statement that Mr. al Refai was found guilty of embezzlement, misappropriation, destruction of documents and obstructing access to the bank's records.

Mr. al Refai continues to deny all allegations against him, according to a person familiar with his position. He remains in Kuwait and has no plans to return to Bahrain, the person said.

The legal fracas started when Mr. al Refai sued Bank Alkhair claiming he was improperly dismissed two years ago. The bank followed up with numerous civil actions of its own in the Bahraini courts.

The bank also submitted a criminal complaint to Bahrain's General Prosecutor after hiring the accountancy firms PwC and Ernst & Young to conduct investigations of Mr. al Refai's activities when he was chief executive, Bank Alkhair said in its statement.

The General Prosecutor then commissioned Deloitte to do an independent investigation, which the bank said turned up 58 alleged criminal offenses by Mr. al Refai and his associates. They related mainly to alleged transactions by Mr. al Refai that were not approved by the bank's board, the bank's statement said.

Bank Alkhair said in its statement that Bahrain's Chamber of Dispute Resolution in March dismissed a claim by Mr. al Refai for compensation of 1 million Bahraini dinars ($2.65 million) related to his dismissal. The bank said Bahrain's Supreme Fifth Civil Court also in May dismissed a claim filed by Mr. al Refai and three associates.

"We are glad that this case has finally been concluded and we can continue to focus our efforts on growing our business," Yousef Al Shelash, the chairman of Bank Alkhair, said in the statement.

Bank Alkhair, formerly known as Unicorn Investment Bank, is an Islamic wholesale bank founded in 2004. It is part-owned by Mr. al Shelash and his family, who also hold a large stake in Dar Al Arkan (4300.SA), Saudi Arabia's second-biggest listed real estate developer.

-By Asa Fitch, Dow Jones Newswires, +971 4 446-1685, asa.fitch@dowjones.com; Twitter: @ZDJnews