Dubai-based Bank Sarasin Alpen (ME) has been placed into liquidation by the DIFC Courts after it failed to pay US$35 million in damages to a group of Kuwait investors for mis-selling financial products.
The liquidation of the private bank is the first non-voluntary winding up of a DIFC company to be ordered by the free zone’s courts. The petition for the closure was filed by the company’s creditors, as opposed to by the company itself.
Bank Sarasin Alpen (ME) was ordered by the DIFC Courts in November to pay damages to Rafed Abdel Mohsen Bader Al Khorafi and two members of his family, after the courts found the bank and its majority shareholder Bank Sarasin & Co of Switzerland (now known as J Safra Sarasin) guilty of mis-selling investments following a bitter six- year legal battle.
The bank, which has had its business licence revoked by the Dubai Financial Services Authority, failed to pay the requested damages within the specified timeframe, leading the Kuwaiti investors to file a petition in February to have the bank would up.
Justice Omar Al Muhairi granted the order for winding up on Monday, dismissing the bank’s attempt to have the petition thrown out.
“I am satisfied that it is just and equitable to make a winding up order both in the public interest and perhaps more particularly in the interest of the DIFC,” said Justice Al Muhairi.
“It is impossible for the respondent to continue in business as its licence has been withdrawn by the DFSA and it is unable to meet the judgment debt owed to the petitioners.”
The winding-up order is not subject to appeal.
Shahab Haider of Sajjad Haider Chartered Accountants has been appointed as the company’s liquidator.
Bank Sarasin Alpen (ME), which ceased operations in 2014, is 60 per cent owned by J Safra Sarasin and 40 per cent owned by Dubai-based Alpen Corporation.
The Al Khorafi family launched legal action against Bank Sarasin Alpen (ME) and Bank Sarasin & Co in 2009, accusing the institutions of misleading them into making $200m of highly risky leveraged investments, and forging documentation classifying members of the family as experienced investors.
The court found in favour of the Al Khorafis (in December), ordering Bank Sarasin Alpen (ME) and Bank Sarasin & Co to pay damages of $70m. An appeal by both banks was rejected in March.
“Our clients are incredibly disappointed that an organisation which held itself out to be a responsible financial institution … has refused to pay the amounts awarded against it,” said the Al Khorafi family’s lawyer Ghandy Abu Hawash, senior partner of Hamdan Al Shamsi.
“We are particularly concerned that those behind Bank Sarasin Alpen … 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 and Bank J Safra Sarasin have set up.”
“Sarasin Alpen (ME) ceased its operations in 2014 and is no longer owned by Bank J Safra Sarasin,” said a spokesperson for J Safra Sarasin.
“The amount of $35m is not due or owed by Bank J Safra Sarasin.”
Alpen Corporation did not respond to a request for comment.
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