The High Court in London has upheld a freezing order granted to Bahraini carrier Gulf Air against its former in-flight entertainment manager and his alleged associates in a scheme to fraudulently obtain a US$22 million content services contract with the airline.
In his 3 May decision, Mr Justice Simon Picken rejected claims by a former shareholder of the UK company at the centre of the alleged fraud, a related Singapore entity and its Seychelles owner, that there was no risk of them dissipating their assets. He also denied applications by the companies for a declaration that the court had no jurisdiction to hear the claims against them.
The case has its roots in a 2015 contract for in-flight entertainment services struck between Gulf Air and Global One Media, a company which, unbeknownst to the carrier, didn’t exist. The services under the contract were in fact allegedly provided by a company called One Inflight and a deliberately similar-sounding, but distinct, entity called Global One Media Ltd (GOM), which later changed its name to Inflight Global. Gulf Air says all the companies were corporate vehicles of the senior manager of its in-flight products team, Mohamed El Assaad and his associates.
At the time the contract was struck, One Inflight was co-owned by El Assaad and his wife, as well as their associate Amir Hirani, who had a 15% shareholding. The carrier alleges that El Assaad “manipulated the tender process” to insert GOM into the supply chain and award it the contract while hiding the fact that he, his wife, and Hirani held interests in it.
He went on, the complaint says, to authorise advance payments to One Inflight, via GOM, by which the full US$22.1 million under the four-year contract was transferred in just over two years. All the payments were directed to accounts either in a local branch of HSBC or Singapore-incorporated Inflight Global, which Gulf Air claims was controlled by Hirani, and which is a subsidiary of Seychelles-based company Epcon, owned by Hirani’s brother.
Gulf Air applied for the global freezing order against One Inflight, El Assaad, his wife, Hirani, Inflight Global, Epcon and GOM on 5 December 2017, and it was awarded by Justice Simon Bryan, along with an order compelling the parties to hand over certain electronic devices, later the same day.
One Inflight, the El Assaads and GOM, collectively represented by DLA Piper, filed their defence in January and had a hearing before Patricia Robertson QC in March. While they didn’t ask to have the freezing order set aside, they requested, and were granted, certain amendments to its terms.
Hirani, Inflight and Epcon – represented by London fraud law firm Byrne & Partners and Andrew Pearson of 7 King’s Bench Walk – had a later hearing before Picken J, in which they applied to have the freezing order set aside, and the two overseas companies challenged the court’s jurisdiction.
Hirani claimed Gulf Air had failed to demonstrate that there was a real risk of him dissipating his assets, arguing that the carrier’s as yet unproven allegations alone weren’t enough to justify the freezing order. Rather, he drew the court’s attention to the test established by Justice Stephen Males in his 2008 decision in Congentra AG v Sixteen Thirteen Marine, where he said “it is necessary to scrutinise the evidence to see whether the dishonesty in question does justify a conclusion that assets are likely to be dissipated”, saying Gulf Air’s case lacked such “solid evidence”.
Picken J, however, referred to his own interpretation of Males J’s principles in his 2016 judgment in PJSC TATNEFT v Bogolyubov & Ors, where he said the scale and complexity of the scheme advanced against the defendants adequately made out the risk of dissipation. “It seems to me that the same conclusion is reached in the present case,” he said, pointing to the “not inconsiderable amounts of money” that was transferred and the alleged “subterfuge” of the parties. He also said that the fact that Hirani’s alleged fraudulent behaviour was limited to a short period in early 2015 and that, after the freezing order came into effect, he had told the court of assets in the US that he had forgotten to disclose at an earlier date didn’t argue against the risk of dissipation and upheld the order against Hirani.
Similar objections by Inflight and Epcon, which were shown to be strongly connected to Hirani with the claims against them having “a sufficient 'common thread'” to those against the other defendants, were also thrown out.
Such connections were also sufficient to dispose of jurisdictional challenges raised by the two companies, the judge found, as they satisfied the twofold test set out in the UK Civil Procedure Rules, that there is a “good arguable case” against them and that they were “necessary or proper” parties to the proceedings.
In the England and Wales High Court
Gulf Air BSC(C) v One Inflight Ltd & Ors
- Justice Simon Picken
Counsel to Gulf Air
- Charles Russell Speechlys
Stephen Cogley QC and Erin Hitchens at XXIV Old Buildings
Counsel to One Inflight, Mohamed El Assaad, Sara Abdallah Abdala and Global One Media
- DLA Piper
Counsel to Amir Hirani, Inflight Global and Epcon
- Byrne & Partners
Andrew Pearson at 7 King’s Bench Walk