An article in today’s Guardian newspaper has shed further light on the enormous property empire covertly built up in London by the ruler of Abu Dhabi, Sheikh Khalifa.
According to the paper, its value now exceeds even the famous Grosvenor Estate belonging to the Dukes of Westminster and comprises huge swathes of Mayfair and the smartest parts of London. Only the Crown Estate owns more London property in terms of worth.
Yet, until recently, the beneficial ownership of all these buildings was held secretively offshore through a network of BVI companies, thereby saving the billionaire ruler vast potential capital gains taxes given the soaring value of his acquisitions.
“It was created in a subterranean way through stealth-like deals, quietly put together over many years,” said a source familiar with Khalifa’s business dealings….
Despite the size of the portfolio, for decades the owner’s identity was a closely guarded secret. Business was done secretively via a constellation of British Virgin Islands companies, handled by a small army of discreet intermediaries including lawyers from elite UK firms such as Eversheds and Fox Williams.
The advisers and lawyers were careful never to name the UAE president, simply referring to him as “The Client”. [The Guardian Newspaper – read the article here]
However, the law firms themselves were of course fully aware of the identity of their multi-billionaire client. They had a duty to be. Eversheds, who manage 80% of the £5 billion portfolio, have been engaged to do so for a number of decades.
Eversheds also represents 1MDB and the Malaysian Government in its case against the Abu Dhabi sovereign fund IPIC (presently suspended in the London courts pending ‘negotiations’).
Given IPIC is headed by the same royal family it would appear the firm represents both parties. However, the connection to this royal property portfolio has only recently emerged so any potential conflicts were not public at the time Evershed’s took on that case.
Sarawak Report has reported on the law suit that first brought to light Khalifa’s property empire in the UK and also exclusively exposed how documents submitted to the court show how the IPIC boss Sheikh Mansour acquired total control of these private interests owing to a Power of Attorney granted in 2015.
The alleged reason for the Power of Attorney is that Sheikh Khalifa is now incapacitated and can no longer manage his affairs, according to the defendants in the case, Lancer Property Management.
However, a whiff of scandal attaches to the arrangement in that the transfer document, which purports to have been signed by Khalifa himself in fact appears to have been signed instead by Sheikh Mansour’s brother, the Crown Prince Sheikh Mohamed.
Both princes are deeply involved in the Malaysian case against Abu Dhabi. Sheikh Mansour was the Chairman of the Abu Dhabi sovereign fund IPIC, which is the defendant in the billion dollar fraud allegations brought by 1MDB and the Government of Malaysia.
The Crown Prince himself came to KL in 2013 to sign a ‘Strategic Partnership’ between Abu Dhabi and 1MDB which underpinned the relationship that resulted in the scandal.
It is thanks to this background that the ‘Chinese Walls’ of the law firm Eversheds are now being put to the test, because in 2018 when the incoming PH government launched its legal case to retrieve those billions from IPIC it hired this very law firm.
The accusations by the new Malaysian administration could not have been more damning against the Abu Dhabi sovereign fund and its royal managers whom it accused of being complicit in the theft and subsequent fraud and cover up.
After all, half a billion dollars in kickbacks went into a Luxembourg bank account from which $160 million alone was used to pay off the loan on Sheikh Mansour’s yacht. In January this year a secret telephone recording was made public by the Malaysian authorities in which the now convicted Najib Razak appeared to conspire with the Crown Prince to cover up the scandal, apparently because people dear to them were both involved.
Given the Power of Attorney over Khalifa’s properties was handed to Sheikh Mansour in 2015 thanks to a signature from the Crown Prince, Eversheds were clearly aware from that date that they were acting in the interests of these two powerful princes with respect to billions of dollars worth of real estate business in London from that time.
Equally clearly they had known they were representing the secret interests of the Abu Dhabi royal family’s leading member for decades prior to that.
It begs the question why Eversheds agreed in 2018 to represent Malaysia against these very same entities? Did the law firm inform its new Malaysian clients that they represent a multi-billion pound property portfolio in London by then secretly under the control of Sheikh Mansour as authorised by Crown Prince Mohamed ?
Certainly Eversheds knew the rest of the world had no reason to be aware of these major established clients whom they were about to sue on behalf of Malaysia.
Sarawak Report has confirmed through its enquiries that Evershed’s Malaysian clients were totally unaware of the potentially competing interests of the firm. Sources close to the matter say that 1MDB and the Government of Malaysia would never have hired Eversheds to represent them in the billion dollar case being heard in London had they known the firm was secretly acting for the same IPIC bosses with respect to a multi-billion dollar property empire in the same city.
Our enquiries confirm the relationship was only discovered in Malaysia after Sarawak Report reported on the court case in August, which was several months after the two countries agreed to once again negotiate the matter out of court following the backdoor coup in Malaysia and the return of an UMNO dominated government.
That development has not served Malaysia well, according to those close to the former government. 1MDB has a strong case it was defrauded by IPIC and the UK Appeal Court had upheld its right to challenge the Abu Dhabi fund in open court where Malaysia was demanding billions in damages.
The sudden decision to step back and negotiate has removed all Malaysia’s bargaining power those sources say. Indeed, as the negotiations have dragged on for months it has emerged Abu Dhabi is seeking to drive a hard bargain involving a minimal settlement to Malaysia.
It certainly places Eversheds, who still represent Malaysia in the matter, in a somewhat awkward situation. The Abu Dhabi princes whose properties they also represent will be looking to escape the Malaysia situation as unscathed as possible.
Were Sheikhs Mansour and Mohamed to find themselves forced into humiliating terms by Eversheds instead …. well there are plenty of other London lawyers to manage their multi-billion dollar portfolio.
Eversheds have not responded to enquiries by Sarawak Report on the matter of these apparent conflicting loyalties between their opposing clients. However, they told the Guardian the law firm has “acted “strictly in accordance” with its legal and regulatory obligations at all times”.
It is now a full year since 1MDB won its landmark appeal judgement to bring IPIC back into open court and no settlement is reached.
See the full article by the Guardian on Sheikh Khalifa’s secret London property empire that has been managed by Eversheds over many decades.