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Sarasin DIFC unit defaults major payment

|By Arabian Post Staff|Bank Sarasin-Alpen (ME) Limited, the former Middle East affiliate of co-defendant Swiss Private Bank J. Safra Sarasin, has failed to deposit $35 million in damages by the deadline of February 1, 2016 as per the order of the DIFC Court, the aggrieved party announced.

The case relates to one of the biggest financial mis-selling cases in the GCC region. The defendant bank apparently failed to deposit the fine in view of the appeal pending against the DIFC verdict.

In November 2015 the DIFC Court determined that the two banks should pay the Al Khorafi family more than $70 million to cover financial losses resulting from the sale of $200 million structured investment products between late 2007 and early 2008.

Bank J. Safra Sarasin immediately paid its share of the damages into court pending the hearing of its appeal against the award of damages. However, Bank Sarasin-Alpen (ME) Limited did not pay its share and sought a stay of the order to pay the damages which was denied on 18 January 2016.  Bank Sarasin-Alpen (ME) Limited was ordered to make a similar payment into Court by 1 February 2016 and has failed to do so.
This latest development in a long-running legal battle between a wealthy Kuwaiti businessman and the notoriously secretive private investment banking industry, in theory, exposes Bank Sarasin-Alpen (ME) Limited to the possibility of further proceedings and throws the appeal against damages, which is expected to be heard by the DIFC Court of Appeal in March 2016, in doubt.

The claimants said they will now seek to enforce the next step in securing the sum through the DIFC Court.
According to Hamdan Al Shamsi Lawyers & Legal Consultants, the firm acting for the Al Khorafi family, the case is being closely observed by the international banking world as setting a precedent within a region where Middle Eastern investors meet Western financial institutions responsible for managing their investments into overseas markets.

This is not the first time questions have been raised about the powers of financial regulators and the
governance of investment banks internationally. In April 2015, the DFSA ordered a record fine of US $8.4 million against Deutsche Bank’s Dubai branch (DBDIFC) for inadequate controls over money laundering, the scale of the penalty reflecting “serious contraventions . . . including misleading the DFSA” following an investigation that was protracted by DBDIFC’s failure to cooperate with the regulatory body, a release by the lawyer firm said.