On Monday 2 May 2016 in the DIFC Courts, Sarasin Alpen (ME) Ltd, the Dubai based affiliate of the Swiss Bank J Safra Sarasin Ltd went into liquidation as a result of its failure to pay its share of the record judgment awarded against it by the DIFC Courts last month.


Sarasin Alpen (ME) Ltd is 60% owned by J. Safra Sarasin Ltd, a Swiss based bank controlled by the Safra family. The other 40% of the company is owned by Alpen Corporation Limited, a Dubai based financial services company chaired by Mr Rohit Walia.

This long running saga that began in 2008, when members of the wealthy Al Khorafi family of Kuwait were referred to Sarasin Alpen (ME) Ltd for investment advice. Calling itself Bank Sarasin Alpen, the company promised capital guaranteed products which would pay a minimum guaranteed interest rate. Acting on this advice, and facilitated by the company, the Al Khorafi family invested USD 200 million, much of it borrowed against their extensive property investment portfolio, to invest in these so-called “higher yielding guaranteed” products.

The products were in fact a series of highly risky leveraged investments based upon the performance of various underlying indices and marketed by Bank Sarasin Limited, now Bank J. Safra Sarasin. Bank Sarasin Alpen forged documentation which classified the Al Khorafi family as experienced investors. Forms which the Al Khorafi family had been advised to sign and return, were completed in handwriting by Bank Sarasin Alpen staff purporting to be members of the Al Khorafi family.

When challenged over this misrepresentation, Bank Sarasin Alpen continued to assert that the Al Khorafis had themselves written the mentioned statements. When challenged that the forms made absurd claims, such as that Mr Rafed Al Khorafi, who was only 42 years old at the time, had 40 years of banking experience, Bank Sarasin Alpen maintained that the forms had been completed based upon the information received from the Al Khorafi family.

The original trial was heard before Sir John Chadwick, a former Judge of the Court of Appeal of England and Wales, and the (now recently retired) Deputy Chief Justice of the DIFC Courts in Dubai. In a scathing judgment delivered to Bank Sarasin Alpen, Justice Chadwick declared that:

I found that the First Defendant, Bank Sarasin-Alpen (ME} Limited, had deliberately decided to act in breach of the regulatory regime applicable to those institutions providing financial services in the DIFC. It had chosen to accept these Claimants as "Clients" in circumstances in which it had no reason to think that they qualified as clients under that regime. In order to achieve that end, the First Defendant deliberately falsified documents, known as AGBC's, to make them appear as if they had been completed by the Claimants in their own hands in circumstances in which there were employees in the employ of the First Defendant's offices who must have known that that was not the case.

Justice Chadwick was particularly critical of the evidence of Bank Sarasin Alpen’s Managing Director, Rohit Walia, who the judge said gave evidence which was “self-serving, evasive, self-contradictory and unreliable”. The Judge further found that Mr. Walia had concealed his financial interest in the company during proceedings before the Court.

As for Bank Sarasin Limited,  now Bank J. Safra Sarasin Limited,  which both lent money and provided the products, Justice Chadwick found that it was content to allow the mis-selling to take place and had failed to exercise any adequate supervision over employees of Bank Sarasin Alpen “whom it held out as its own Client Relationship Managers.”

Based upon those findings, Justice Chadwick ordered both Banks to pay a total of USD 70 million, which included in the case of Bank Sarasin Alpen, double damages.

Both Banks appealed against liability and lost. The Court of Appeal, in a comprehensive 120 page judgment dismissed the appeal based upon all grounds and resoundingly approved the earlier Judgment as “unassailable”.

In the meantime, Bank Sarasin Alpen failed to pay its USD 35 million share of the judgment and has; therefore, been liquidated accordingly. Neither of its shareholders have stepped in to pay the damages, choosing instead to set up new companies in the DIFC:  J Safra Sarasin Asset Management (Middle East) Limited and Alpen Asset Advisors Limited.

Lawyers for the Al Khorafi family, Dr. Ghandy Abuhawash, Senior Partner, Hamdan Al Shamsi, Lawyers and legal Consultants, Dubai, comments:

“Our clients are incredibly disappointed that an organisation which held itself out to be a responsible financial institution, called itself a Bank and claimed to be affiliated to a reputable Swiss Bank whose products it marketed, has refused to pay the amounts awarded against it.

Bank Sarasin Alpen has fought the judgment with a series of unmeritorious and inconsistent arguments on liability, all of which have been rejected.

We are particularly concerned that those behind Bank Sarasin-Alpen, who benefited enormously from selling products to customers in this region, are prepared to walk away from their responsibilities. We will now look extremely closely at the actions of the directors of this company and will carefully investigate the actions of the new companies that Alpen Corporation Limited and Bank J. Safra Sarasin Limited have set up.”


Source: TheContent Factory