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Saudi Property Mogul Sues Barclays for $10B

MANHATTAN (CN) - Barclays betrayed a client by settling an old lawsuit against Saudi Arabia for the first banking license granted to a Western institution in decades, Mideast real estate giant Jadawel International claims in court.

Owned by Jeddah-based billionaire Mohamed Bin Issa Al Jaber, Jadawel International and its corporate parent MBI International says the seeds to its complaint filed Tuesday in New York County Supreme Court were sown decades ago.

It began with two residential compounds Jadawel built in Saudia Arabia in the early 1990s "to house hundreds of employees of two United States defense contractors working in Saudi Arabia," according to the complaint.

With Jadawel facing loan obligations related to its construction of the compounds, the developer created a financing vehicle to collect $1.4 billion in lease payments from the Saudi government in New York banks, according to the compliant.

Jadawel says Barclays took "a lead interest" in the transaction and ultimately headed the debt-financing transaction.

Barclays "aggressively solicited" Jadawel's business with a $450 bridge loan and led a syndicate of banks in another $900 million loan, the developer says.

Jadawel says the bank eventually had to file a $1.25 billion federal lawsuit on its behalf in Manhattan after the Saudi government defaulted on its obligations.

Around that time, however, reports emerged of the Saudi government's willingness to license a Western bank, the developer said.

Seizing an opportunity, Barclays abandoned the lawsuit and then paid millions to a Saudi prince's company for "advisory services," Jadawel alleges.

"Apart from this thinly disguised bribe to a member of the Saudi Royal family - who was also a senior governmental official - Barclays provided the Saudi government a further financial inducement," the complaint states.

Barclays and the Saudi government settled the lawsuit on undisclosed terms in 2006, Jadawel says.

"Barclays knew that any such license would be extremely lucrative and that its litigation against the Saudi government made obtaining such a license impossible," Jadawel's complaint states.

A report from the Financial Times on a federal probe of Barclays' actions allegedly made Jadawel aware of the bank's breach, according to the complaint.

Jadawel says the repercussions of Barclays' "greed and self-dealing" rippled beyond the original lawsuit, Jadawel says.

"Jadawel International was forced to sell its residential compounds in 2011 at a substantial loss - 75 percent less than their fair market value - to an arm of the Saudi Ministry of Finance," the complaint states.

It also claims to have lost "billions" in construction opportunities for the U.S. government and others.

Jadawel seeks at least $10 billion for six counts of breach of fiduciary duty, tortious interference, fraud and other charges.

It is represented by Craig Newman of Richards Kibbe & Orbe.

A Barclays spokesman noted that Jadawel and MBI's complaint "follows a failed attempt by the plaintiffs to obtain discovery of documents earlier this year, which the NY Supreme Court denied as it was an unmeritorious fishing expedition."

"Barclays believes the claim is without foundation and will vigorously defend it," spokesman Mark Lane added.

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