Oil trader widens legal threat against Lebanese bank over funds row

BankMed has denied claims that it failed to return $1 billion in deposits to oil trader IMMS. (AFP)
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Updated 14 December 2019

Oil trader widens legal threat against Lebanese bank over funds row

  • Protests that have swept Lebanon since Oct. 17 have heaped pressure on the banking sector

DUBAI: Oil trading company IMMS is considering launching more legal action against Lebanon’s BankMed, which it accuses of refusing to release funds on request.

In a statement to Arab News, IMMS said that it has instructed its lawyers to initiate legal proceedings in other jurisdictions where BankMed has a presence.

It follows the launch of proceedings in New York by IMMS against BankMed, which it claims failed to return $1 billion of its deposits when requested.

“By this action, plaintiff IMMS Limited (IMMS) seeks remedies against defendant BankMed SAL (BankMed) for BankMed’s brazen theft of more than $1 billion from its banking client IMMS,” the court filing said.

However, BankMed denies the allegations and said that it had discovered “material breaches of contract and attempts by IMMS to direct funds due to BankMed overseas” between Oct. 30 and Nov. 12, 2019, without providing further details.

An IMMS spokesperson told Arab News: “Since learning of the proceedings, BankMed has chosen to respond through the media in breach of its obligations of confidentiality to its customer. In doing so it has chosen to make the a series of unfounded allegations that it has not previously seen fit to raise with IMMS or its lawyers. Its response sits uncomfortably with its purported commitment to high standards of banking, the protection of its customers’ interests and its application of Lebanese laws and practices.”

Four major US banks, JP Morgan Chase, CitiBank, BNY Mellon and Standard Chartered Bank, have also been named in the suit.

According to court fillings, the four banks were correspondent banks for BankMed in New York. Bankmed used these banks to effect large transactions in US dollars, which include large deposits by IMMS that it claims BankMed has retained, as well as payments to IMMS customers which it alleges BankMed delayed and withheld.

Lebanon’s economy is in its worst state since the 1975-1990 civil war, with the political rise of Iran-backed militia Hezbollah and the neighboring Syrian civil war deterring foreign investment and putting pressure on the country’s liquidity-starved banking sector.

Protests that have swept Lebanon since Oct. 17 have added to the pressures, deepening the hard currency crunch and prompting commercial banks to put curbs on foreign currency withdrawals and transfers abroad.

OPEC faces a critical moment in its 60-year history

Updated 28 September 2020

OPEC faces a critical moment in its 60-year history

  • Pronouncements of the Vienna-based institution can still spark major price swings

LONDON: OPEC faces a critical moment in its 60-year history with the coronavirus crushing crude demand and prices, discord among its members, and threats from a world seeking cleaner fuels.

Founded on Sept. 14, 1960, OPEC currently comprises 13 members including nations from Africa and Latin America.

The 60th anniversary “comes at a critical moment in its history,” UniCredit analyst Edoardo Campanella said in reference to the Organization of the Petroleum Exporting Countries.

“Its ability to steer the oil market in its favor has never been put in question to the extent it is now,” he noted. The Vienna-based institution convenes for regular meetings to assess the state of supply and demand in the marketplace, and its pronouncements can still spark major price swings.

That ability has dimmed in recent years however, prompting it to join forces with ten non-OPEC producers including Russia to curb their collective output.

OPEC+ essentially wanted to counter surging energy supplies from shale rock in the United States and help clear a stubborn supply glut on world markets.

Today, OPEC pumps about one-third of global oil — but OPEC+ accounts for almost 50 percent, giving it greater clout.

Carlo Alberto de Casa, trader at Activtrades, insisted that the cartel retains a “relevant” function in the market, dismissing talk the organization was a “has-been.”

“They are slightly less influential compared to the past, also due to production of non-OPEC countries and new extraction techniques. But I still see a role for OPEC,” he told AFP.

The price war, in tandem with the worsening Covid-19 pandemic, sent oil prices off a cliff — and even caused New York’s light sweet crude contract to briefly turn negative in April — meaning producers paid buyers to take the oil off their hands.

After the unprecedented market crash, OPEC+ in May slashed up to a fifth of its output — a move that triggered a sharp rebound in crude prices to current levels around $40 per barrel.

Added to the supply backdrop, the United States, now the world’s biggest oil producer, curbed the pace of costly shale extraction.

Rystad Energy analyst Paola Rodriguez-Masiu, while noting that OPEC has lost market share in recent years, said the cartel still has an important role to play because it possesses the largest amount of accessible crude. This meant that extracting its oil resulted in fewer carbon emissions, she said.

“I would argue that OPEC would become more and more important” in the future, she concluded.