Gulf investor asks US court to subpoena Kuwait lobbying records

A multinational investor in a Kuwait-linked investment fund has asked a US court to subpoena US banks over allegations of misconduct by the fund.

al-monitor A general view of Kuwait City Nov. 10, 2012. Photo by REUTERS/Stephanie Mcgehee.
Aaron Schaffer

Aaron Schaffer

@aaronjschaffer

Topics covered

investors, miscon, banks, public relations, investments, lobbying

Jan 3, 2020

A Kuwait-based corporation is asking a US court to shed light on the multimillion-dollar lobbying and public relations effort launched by Kuwait-based KGL Investment (KGLI) and its Cayman Islands-based Port Fund on behalf of its former executives, Marsha Lazareva and Saeed Dashti, who are accused of swindling investors. The Gulf Investment Corporation (GIC) asked a federal court last week to subpoena a dozen banks in New York as part of a potential lawsuit against the Port Fund.

The GIC has notably asked for “documents and information” regarding US dollar transactions between “Port Fund companies” and lobbying and public relations firms, arguing the lawsuit is expected to address “the potential misappropriation of Port Fund assets to fund payments to lobbying and public relations firms who were hired (a) without the knowledge or consent of the Port Fund’s limited partners, and/or (b) to disparage the reputation of the State of Kuwait (one of GIC’s owners) in an attempt to secure the release from prison of KGLI principals Lazareva and Dashti.”

At the heart of the dispute are discrepancies over Port Fund investments in the Philippines, the profits of which the GIC says were not fully distributed to investors. The GIC also claims that “suspicious litigation in Dubai” by the Port Fund’s fund manager led to an “uncontested award of $57 million to the fund manager that was concealed from the Port Fund’s limited partners.”

In a statement to Al-Monitor, the Port Fund said “all the transactions are legal, fully documented, legitimate and within the authority granted to the Port Fund managers. We are surprised that a prestigious company like the Gulf Investment Corporation has allowed itself to become associated with these false allegations, especially after the Port Fund returned a significant profit to all investors.”

The GIC, which is owned by the six Gulf Cooperation Council states, is considering suing the Port Fund in the Cayman Islands, but a federal law from 1948 makes it possible for foreign actors to request discovery in the United States. The requested subpoenas could shed light on the activities of high-level lobbyists, including former Senate Majority Leader Trent Lott, R-Miss., former Veterans Affairs Secretary and Republican National Committee Chairman R. James Nicholson and former Associate Deputy Secretary of Energy Randa Fahmy. Their respective firms — Squire Patton Boggs, Brownstein Hyatt Farber Schreck and Fahmy Hudome International — were listed in the court documents, along with law firm Crowell & Moring, all of which formerly lobbied for the Port Fund and now work for KGLI. PR firms Sanglier Media and Tricuro, which work directly for Lazareva, are also listed.

KGLI and the Port Fund have spent more than $4 million on lobbying since 2018. Transactions with lobbying and public relations firms are being sought from five banks: Bank of New York, Citibank, HSBC, JP Morgan and Standard Chartered.

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