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Qatar sues Luxembourg, UAE, Saudi banks in manipulation case

April 8, 2019 at 6:42 pm

Qatar filed lawsuits on Monday against three banks, accusing them of causing billions of dollars of damage to its economy by what it called overseas currency manipulation in the wake of an Arab boycott against Qatar in 2017.

The cases, filed in London and New York, name Luxembourg-based Banque Havilland, the United Arab Emirates’ First Abu Dhabi Bank (FAB) and Saudi Arabia’s Samba Bank, according to filings seen by Reuters and a statement from Qatar’s government communications office.

First Abu Dhabi Bank declined to comment, while Banque Havilland and Samba Bank did not immediately respond to requests for comment.

In the case, Qatar alleges Banque Havilland devised a plan to weaken the country’s riyal currency on key composite indices by submitting thousands of “fictitious and depreciated” quotes, according to the court filings.

“But the quotes were phoney, as FAB, Samba Bank, and others repeatedly refused to transact with counterparties at the prices they were quoting in public,” the filings stated.

The lawsuits are the latest fallout in a protracted Gulf row that began in 2017 when Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed an economic boycott on Qatar in 2017, accusing it of supporting Islamist militants and Iran.

READ: Luxembourg announces boycott of 8 Israeli companies, including 5 Banks

Qatar, a small Gulf state but major gas exporter, denies the charges and says the boycott is an attempt to impinge on its sovereignty.

The currency manipulation was intended to “deplete Qatar’s financial reserves so that it would be unable to complete its preparations to host the 2022 FIFA World Cup games, and would be forced to share the games with Saudi Arabia or the UAE,” the filings stated.

UAE sports chief Mohammed Khalfan al-Romaithi has said his country and other Gulf states could co-host an expanded World Cup 2022, a measure global soccer body FIFA is expected to vote on in June but which Qatar holds the final decision over.

Qatar liquidated nearly $3 billion in US treasury investments and drew down over $40 billion in foreign reserves after the alleged manipulation in a bid to support its currency, the filings stated.

With more than $300 billion in central bank reserves and sovereign wealth fund assets, bankers say Qatar has sufficient financial firepower to block attacks on its currency.

READ: Qatar set to be knocked off its position as richest country in the world

Its central bank began a probe into the alleged manipulation in late 2017 after it said unidentified banks were looking to attack the riyal by trading it between themselves offshore at artificially weak levels – to create an illusion Qatar’s economy was crumbling.

“Qatar seeks to hold FAB, Samba Bank, and the unknown John Doe Defendants who conspired with them liable for the billions of dollars in damages that they have caused to Qatar, plus punitive damages and statutory interest,” the filings stated.

They added elsewhere that Qatar also sought to hold Banque Havilland similarly responsible.