An increasingly vitriolic war of words has erupted between lawyers for a private equity fund and those representing the Kuwaiti government in a $100 million legal case.
In a case involving Big Law actors Baker McKenzie and Crowell & Moring, as well as litigation heavyweight Kobre & Kim and offshore major Ogier, Cayman Islands-headquartered law firm Campbells accused the Kuwaiti government to “maliciously” prosecute the defendants in the case for $100 million.
The case has now reached the courts of the Cayman Islands.
Baker McKenzie, who represents plaintiffs the Kuwait Ports Authority (KPA) and the Public Institution for Social Security (PIFSS), claimed that Campbells was engaging in nothing more than a “public relations exercise”.
The story begins in Kuwait with the establishment of the Kuwait and Gulf Link Transport Company (KGL) in 1982. In 2007, the investment arm KGL Invest established the Port Fund, a buyout fund headquartered in the Cayman Islands .
In November 2017, the fund sold Clark Global City, a real estate investment in the Philippines, in which two state agencies, KPA and PIFSS, were lead investors.
Proceeds from the sale were transferred to the fund’s account at Noor Bank in Dubai, “but subsequently frozen by Dubai authorities due to allegedly suspicious activity, with Kuwait accusing the Port Fund of seeking to misappropriate funds to which KPA and PIFSS were entitled,” according to a statement from Campbells, who represents three of the four defendants in the case, Mark Williams, Wellspring Capital and KGLI Asia.
Immediately after the real estate project was sold, Marsha Lazareva and Saeed Dashti, then directors of the Port Fund, were arrested in Kuwait on charges, according to a person familiar with the matter.
Lawyers for the fund also argue that when Kuwaiti authorities continued to pressure the Dubai government to release the Clark funds, the ruler of Kuwait intervened in the case to declare that the proceeds of the sale were public funds n not owned by private investors.
The funds were unfrozen in January 2019, with KPA and PIFSS receiving distributions as investors in the fund.
Kuwaiti authorities then filed a lawsuit against the Port Fund’s general partner – represented by Kobre & Kim – in the Cayman Islands Grand Court in October 2020, joining Campbells’ three client defendants.
The defendants unsuccessfully sought to strike derivative claims against them on a summary basis, with judgment rendered on November 25, 2021. The Kuwaiti government is currently pursuing its $100 million claim against the fund in the Cayman courts, according to Campbells. .
Campbells Cayman office partner Andrew Pullinger said in a statement: “This is a malicious claim that stems from the failed attempts by the State of Kuwait to misappropriate funds from the sale of the Clark Global City. [for $496 million].”
“The Kuwaiti authorities have requested [over five years] to tarnish the reputation of our customers and that of the Port Fund, although there is no evidence of illegal activity.
Bader El-Jeaan, partner at Meysan Partners in Kuwait, acting as counsel to The Gulf Investment Corporation (GIC), a sovereign wealth fund owned by six Gulf Cooperation Council governments, and the General Retirement and Social Insurance Authority of Qatar (GRSIA), sought to emphasize the fact that its customers were not Kuwaiti entities, meaning that the dispute was not just a Kuwaiti affair.
“GIC and GRSIA have demonstrated in their court filings that significant sums were misappropriated from the fund by those who controlled it and their affiliates, including clients of Campbells, Mark Williams and parties associated with him,” it said. he declares.
“[Public relations spin cannot] hide the fact that, for more than a year, the manager of The Port Fund desperately tried to avoid disclosing even the most basic financial information about The Port Fund to its investors, until a court in Cayman Islands forces him to.
“The citizens of the State of Qatar and the State of Kuwait, whose hard-earned savings have been invested in The Port Fund, have a right to know what happened to their investment.”
The KPA and PIFSS are represented by both Ogier and Baker McKenzie, according to people familiar with the matter.
Baker McKenzie said in a statement that it was pursuing “extensive loss and damage [our clients] have suffered at the hands of the Port Fund, the general partner of the Port Fund (Port Link GP), and various persons and entities associated or connected with it.
Confirming that the KPA and PIFSS have commenced substantive proceedings in the courts of the Cayman Islands, Baker McKenzie added: “These courts will hear and adjudicate in due course the claims that have been made against the defendants, including the claims of willful breach of fiduciary duties. duty, conspiracy and fraud.
“We hope that the declaration [issued will be seen] for what it is, namely part of a public relations exercise.
Crowell & Moring in Washington DC represents former Port Fund director Lazareva.