Saudi family obtains UK court order for return of 'misappropriated' millions

Monday, 20 June 2016

The England and Wales High Court has summarily ordered Jordanian businessman AMR El-Rashid to return EUR35 million that was transferred to his Swiss bank account by the Saudi Arabian bin Mahfouz family as part of an oil deal.

In July 2011, El-Rashid invited Sheikh Abdulrahman Khalid Bin Mahfouz and some of his family to his home in London to discuss a profitable oil deal. El-Rashid claimed to have made arrangements to buy cheap oil through a company called RAM Oil, but that he would have to pay EUR75 million up front to secure those contracts. He asked Mahfouz to fund EUR35 million of that deposit. Mahfouz agreed and contracts were signed, with El-Rashid giving a personal guarantee that he would repay the money if the deal did not deliver as promised.

The bin Mahfouz family duly paid EUR35 million into a Swiss bank account on 22 July 2011. They believed at the time that this account was operated by the oil producer involved in the deal, but in fact it was El-Rashid's own bank account.

The money was never paid to any oil company. In fact, as soon as it was credited to the Swiss account, El-Rashid immediately 'went on a spree spending the money for his own private purposes', including purchases at Harrods, on buying luxury vehicles, and buying the very house where he was living at the time the deal was signed.

El-Rashid stalled for several years but ultimately the Saudi family lost patience and demanded their money back. It never materialised, having long since been spent.

The bin Mahfouz family applied for a freezing order and took him to court in London, where El-Rashid put forward an alternative explanation for the EUR35 million transfer. This was that that he had information contained in a 'secret red file' that he kept in his bedroom in his London house, regarding assets that had been hidden by Sheikh Abdulrahman Khalid Bin Mahfouz's father. These assets supposedly included: Rubens, Picasso and Van Gogh paintings; gold bullion; bearer shares; treasury bonds and cash, all held in deposit boxes across the world. El-Rashid claimed that the Sheikh gave him the EUR35 million as a gift in return for sight of this information, and for a safe deposit box key. The court stated: 'In a nutshell then, the defence put forward by the defendant is that the sum of EUR35 million was given to him as a gift in return for sight of some information about property of the first claimant's father contained in a secret red file. In recognition of this gift, the defendant allegedly handed over the key to a safe deposit box.'

Leggatt J in the England and Wales High Court dismissed this defence in decisive terms, describing it as 'fanciful', 'incredible and incapable of being taken seriously'.

'I am entirely satisfied, for at least six reasons, that there is no substance whatever in that defence and that it is a figment of the defendant's graphic imagination', said Leggatt J. He therefore granted summary judgment to the claimants in the sum of EUR35 million together with interest on that sum (Mahfouz v El-Rashid, 2016 EWHC 1380 Comm). How much of it is recoverable is yet to be revealed, since El-Rashid claims he does not have enough money even to pay his current solicitors, Baker & McKenzie but suggests 'that money will shortly come through which will enable him to fund his defence'.

Sources

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