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Judge blocks former Saudi ambassador from moving funds

A US federal judge has temporarily blocked Prince Bandar bin Sultan, the former Saudi ambassador to the US, from removing real estate sales proceeds from the US pending resolution of a class-action lawsuit.

The suit filed last September by a tiny Michigan city retirement system accuses current and former directors of BAE Systems, a giant British defense company, of breaches of fiduciary duties in connection with US$2 billion or more in alleged illegal bribes paid to Bandar in connection with a US$86 billion BAE arms sale to Saudi Arabia in 1985.

Bandar also is named a defendant in the suit, along with the former Riggs Bank of Washington and its successor, PNC Financial Group.

BAE and Bandar have strongly denied that illegal payments were made to Bandar.

Without ruling on the merits of the case, US District Judge Rosemary Collyer said in a temporary restraining order, signed on Tuesday, that the suit by the City of Harper Woods Employees' Retirement System raises serious questions of law that warrant a temporary order keeping Bandar from taking the proceeds of real estate sales out of US-based accounts.

The order directs that such sales proceeds "be deposited and/or invested pursuant to a prudent man standard" in US accounts, but specifically notes that it "does not prevent him from selling real property" and "only interferes with his ability to invest and/or deposit any sales proceeds in a minimal way."

The order further notes that "it may, of course, be terminated or modified upon application to the court by Prince Bandar." A hearing was set for Thursday on whether to issue a preliminary injunction extending the temporary order.

The retirement system suit maintains that Bandar used funds illicitly obtained from BAE Systems to acquire US real estate, including a Colorado ranch and mansion once placed on the market at US$135 million and the former William Randolph Hearst mansion in California, offered for sale last summer at US$165 million.

Harper Woods is a community of 14,200 people bordering the northeast corner of Detroit. It is the home of Eastland Center, one of the Detroit area's first enclosed shopping malls.

Bandar had denied previously through a London law firm that he received improper commissions through accounts at Riggs Bank in Washington.

"The accounts at Riggs Bank were in the name of the Saudi Arabian Ministry of Defense and Aviation. Any payments into those accounts made by BAE were pursuant to the al-Yamamah contracts and as such would not in any way have been secret from the parties to those contracts," Bandar's statement said.
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