Man Group Found Liable by Judge for ‘Breathtaking’ Kuwaiti Bribery

The world’s largest listed hedge fund group was among dozens of defendants caught up in a sprawling London lawsuit over a bribery scheme orchestrated by the fund’s now-deceased former director general, Fahad al Rajaan. Kuwait’s Public Institution for Social Security alleged that al Rajaan plundered the fund for years, extracting hundreds of millions of dollars in illicit payments from financial firms seeking its business.A London judge ruled on Thursday that Man Group and several other defendants must repay the Gulf state fund. A further court hearing in November will decide how much the fund group must pay.

Its shares fell as much as 5.9% on Friday in London, the most since April 23.

“While we disagree with the decision, this is a legacy matter relating to a terminated contract entered into over 30 years ago,” a spokesperson for Man Group said in an emailed statement. “This matter is not reflective of our business then, or now.”

The judge found that two former Man employees were aware that an intermediary was bribing al Rajaan and therefore found two of the group’s subsidiaries liable, alongside the estate of the former PIFSS director general. The company has the right to appeal and is “evaluating its full range of options,” according to its statement.

French Chalets, Thai Villas

The judge said in the ruling that the Kuwaiti fund is entitled to recover around $155 million from Man Group, but that number will likely change given other defendants settling the case during the trial.

PIFSS was run by al Rajaan from 1984 to 2012, when he was suspended from office over concerns he was corrupt. His assets were frozen and a request for his arrest was issued with Interpol following criminal complaints into his tenure at the fund. He was convicted on corruption and embezzlement charges by a Kuwaiti court in 2016, and died in London in 2022.

Al Rajaan used the money he received from the secret commissions to buy a villa in Thailand, a £6.7 million ($9 million) house in Knightsbridge and two chalets in France.

“This case involves proven corruption on a breathtaking scale, involving many individuals who had reached senior positions in public office or the financial services industries of fund management and banking” Judge Richard Jacobs said at the start of an 800 page ruling. “He appeared to live a luxurious lifestyle, well beyond the reach of the salary that he was paid as director general.”

The trial was the longest in English civil litigation for more than two decades, lasting for a year. The trial saw evidence given by Man Group’s now Chief Executive Officer Robyn Grew, its previous Middle East Head Antoine Massad and its former chairman Lord Stanley Fink.

Grew gave evidence in the trial, as she was the firm’s global head of compliance when Man Group launched an internal review into its relationship with one of al Rajaan’s key fixers.

Grew supervised the compliance officers conducting the review, who were criticized by the judge for exhibiting confirmation bias in their investigations. That review ultimately cleared anyone from wrongdoing and allowed the relationship between Man Group and al Rajaan’s intermediary to continue.

The judge did not directly criticize Grew’s role in that review.

Fink gave evidence in support of the character of Massad, who he said was of good character and unlikely to participate in a bribery scheme. While not criticizing Fink, the judge found that Massad had knowingly participated in the bribery and rejected his account as unreliable. Massad was found personally liable for $155 million, though the exact figure he will have to pay is not yet determined.

“I do not accept that his integrity was as complete as Man’s evidence sought to suggest,” Jacobs said of Massad in his judgment. There is cogent evidence that Massad and another Man employee “were aware that bribes were being paid to Mr. al Rajaan.”

Photograph: Skyscrapers in the City of London financial district, in London; photo credit: Chris Ratcliffe/Bloomberg

Topics Legislation