Brunei in legal battle over Prince Jefri's use of funds

Lawyers for the New York Palace Hotel and the Bel Air hotel in Los Angeles have filed suits against Brunei in the latest twist…

Lawyers for the New York Palace Hotel and the Bel Air hotel in Los Angeles have filed suits against Brunei in the latest twist to a multi-billion-dollar legal dispute dividing the Sultan of Brunei's family.

The two hotels are seeking to set aside an injunction filed last month by Brunei which they say is invalid and could hurt their operations, Mr John Callagy, a lawyer with the New York firm Kelley Drye & Warren LLP said.

Brunei's injunction, dated February 21st, seeks to freeze billions of dollars of assets which the sultanate says were misused by Prince Jefri, the Sultan of Brunei's youngest brother.

Brunei is suing Prince Jefri in the Brunei High Court for alleged misuse of public funds. He has denied the allegations.


Mr Callagy said lawsuits were filed this week in New York and Los Angeles on behalf of the two hotels naming the state of Brunei and the Brunei Investment Agency (BIA) as defendants.

A third lawsuit relating to residential property in Las Vegas was filed in that city, Mr Callagy said.

"We are seeking confirmation from the courts that the injunction is invalid," he said. The filing with the New York Supreme Court says Brunei's legal action involves "tracing $40 billion in assets purchased and allegedly concealed during a period of over 10 years through hundreds of different companies in at least five different countries worldwide".

Mr Callagy said he believed "Prince Jefri ultimately is the beneficial owner" of the two hotels and the Las Vegas property, while Brunei says it owns the assets.

Prince Jefri was Brunei's finance minister from 1986 to 1997. He was sacked in 1998 as head of the BIA, which manages Brunei's overseas investments, after his conglomerate Amedeo collapsed, leaving $6 billion in debts and legions of unhappy creditors.

Prince Jefri says he owns the two hotels. His other interests include the Plaza Athenee hotel in Paris and Asprey Plc, jeweller to Britain's royal family.

The plaintiffs in the New York case, Amedeo Hotels Ltd Partnership and its general and limited partners, said the Brunei injunction would "severely restrict Amedeo Hotels and its partners from running the Palace Hotel" by barring them from dealing with the hotel and threatening them with jail.

They said "the Brunei injunction and allegations . . . have materially impaired the value of the Palace Hotel".

The New York Palace asked the court to direct three of its former directors to return $10 million which the hotel alleged they had taken from the accounts of the hotel and its owners.

The hotel also asked the court to order the three former directors to pay unspecified exemplary and punitive damages to the hotel and its owners.

Brunei comprises two tracts of land on the coast of Borneo. Rubber is farmed, and there are major petroleum deposits along the coast. The country is one of the major exporters of liquid gas.