The liquidators of the Bank of Credit & Commerce International (BCCI) have been awarded a $2,100 million claim for damages against Saudi businessman Ghaith Pharaon by a court in the Cayman Islands. The court ruled that Pharaon had tried to hide the ownership of shares in a Pakistani oil firm by a company associated with BCCI. The award should mean more money for BCCI’s thousands of creditors, though the bank’s liquidators, accountants Deloitte & Touche, are not expecting to recover the full amount.
‘This is a significant step towards the recovery of damages from Ghaith Rashid Pharaon, arising from his role in a number of alleged fraudulent conspiracies with companies within the BCCI Group,’ said Michael Mackey of Deloitte & Touche in a statement. A spokesman for the liquidators says his assets around the world include real estate and hotels, and that ‘a few hundred million [dollars]’ could be recovered, if not the whole amount.
The claim for damages relates to an 88 per cent shareholding in Attock Oil Company (AOC), also known as Attock Pakistan, which has upstream and refining interests in Pakistan. The liquidators say that AOC was secretly owned by a company called International Credit & Investment Company (Overseas – ICIC), which was very closely connected to BCCI. This ownership would have been in breach of capital and liquidity rules in the Cayman Islands, so it was hidden by the use of a company called Finance & International Investments (FIIL). ICIC controlled FIIL through three nominees, including Pharaon.
The court found that after BCCI was shut down in 1991, Pharaon moved 88 per cent of the AOC shares out of FIIL and into a series of companies that he controlled, without paying anything for them. ‘Mr Pharaon was found to have participated in a conspiracy to conceal ICIC’s ownership of oil interests held by AOC. Damages were awarded for loss in value of the AOC shares and the increase in the deficit of ICIC,’ the liquidators said. The other 12 per cent of AOC’s shares was moved to the control of the other two nominees, who have since returned them to ICIC to be added to the pool of assets available for paying compensation to BCCI’s creditors. Pharaon, however, has not returned the bulk of the shares and it is this loss of value that the court ruling covers.
Pharaon himself, a close associate of BCCI’s founder Hassan Abedi, now lives in Saudi Arabia and cannot be extradited. In a letter to the Arabic daily Al-Hayat on 7 September, he said that he would appeal against the court’s judgement and was seeking damages from the liquidators to cover ‘almost a billion dollars’ which he had on deposit with BCCI before its shutdown. Pharaon has four criminal indictments against him in the US, all connected to BCCI, and fines totalling $37 million have been levelled against him by the US authorities because of his part in schemes by BCCI to illegally gain control of banks in the US (MEED 14:2:97).