TAGI wins damages from former firm
17 Mar 1994TALAL ABU-GHAZALEH International (TAGI) has won an award for damages against its former member firm in Kuwait, to end a legal dispute which has raged for more than 18 months.
The conflict arose in July 1992, when the partners of TAGI’s audit practice in Kuwait, Aldar Audit Bureau, dissolved its link with the network. According to Talal Abu-Ghazaleh, TAGI’s Chairman, “it seized the office with all its constituents and took over the entire activities” of the firm.
TAGI was awarded KD 472,328 (£ 1.1 million) by the Arbitration Board, the Kuwait body that deals with such matters, which was called in to resolve the dispute after Abu-Ghazaleh’s former partners refused to settle the issue out of court. The verdict, which is not subject to appeal, is binding under local law.
“The firm claimed that the partnership contract which was signed several years before the Iraqi invasion of Kuwait in 1990 was not binding after the conclusion of the Gulf War.” Abu-Ghazaleh explained.
“They thought we were easy prey. They never advised our clients that they had taken over the office and continued on as if nothing had happened.
“We tried to convince them to reverse this illegal act. I wrote letters to try and get them to put things back on track but they refused to answer me,” he said.
The award represents Abu-Ghazaleh’s share of the profits, his capital contribution and damage. The Arbitration Board also decided that the goodwill of the audit practice belonged to TAGI and not the three partners of the local practice.
Abu-Ghazaleh said TAGI has filed a claim with the relevant courts seeking $15 million (£ 1.1 million) worth of compensation for goodwill lost as a result of the whole affair.
The breakaway by Aldar also forced TAGI to plug the gap in its coverage by linking up with a new firm in Kuwait. Bouresli Auditing Office joined with TAGI on January 1 and according to Abu-Ghazaleh, the new firm already has 50 clients. It is now operating under the Aldar name and Abu-Ghazaleh said he expects to have revenues of $3 million by the end of 1998.
The new firm currently has a staff of 25, made up mainly of US and UK born professionals. Abu-Ghazaleh said the firm will eventually double its personnel numbers, to bring it up to the strength of TAGI’s Kuwait office pre-1992.
No official comment was available from Aldar at the time of going to press.
The conflict arose in July 1992, when the partners of TAGI’s audit practice in Kuwait, Aldar Audit Bureau, dissolved its link with the network. According to Talal Abu-Ghazaleh, TAGI’s Chairman, “it seized the office with all its constituents and took over the entire activities” of the firm.
TAGI was awarded KD 472,328 (£ 1.1 million) by the Arbitration Board, the Kuwait body that deals with such matters, which was called in to resolve the dispute after Abu-Ghazaleh’s former partners refused to settle the issue out of court. The verdict, which is not subject to appeal, is binding under local law.
“The firm claimed that the partnership contract which was signed several years before the Iraqi invasion of Kuwait in 1990 was not binding after the conclusion of the Gulf War.” Abu-Ghazaleh explained.
“They thought we were easy prey. They never advised our clients that they had taken over the office and continued on as if nothing had happened.
“We tried to convince them to reverse this illegal act. I wrote letters to try and get them to put things back on track but they refused to answer me,” he said.
The award represents Abu-Ghazaleh’s share of the profits, his capital contribution and damage. The Arbitration Board also decided that the goodwill of the audit practice belonged to TAGI and not the three partners of the local practice.
Abu-Ghazaleh said TAGI has filed a claim with the relevant courts seeking $15 million (£ 1.1 million) worth of compensation for goodwill lost as a result of the whole affair.
The breakaway by Aldar also forced TAGI to plug the gap in its coverage by linking up with a new firm in Kuwait. Bouresli Auditing Office joined with TAGI on January 1 and according to Abu-Ghazaleh, the new firm already has 50 clients. It is now operating under the Aldar name and Abu-Ghazaleh said he expects to have revenues of $3 million by the end of 1998.
The new firm currently has a staff of 25, made up mainly of US and UK born professionals. Abu-Ghazaleh said the firm will eventually double its personnel numbers, to bring it up to the strength of TAGI’s Kuwait office pre-1992.
No official comment was available from Aldar at the time of going to press.
TAGI has 33 offices operating out of 18 countries in the Middle East, providing audit, accounting, management consulting and legal services. The firm employs more than 700 staff, including 70 partners, and recorded revenues of about $20 million in 1993.
Published in The Accountant, March 1994.
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