PRINCE JEFRI’S LEGAL PROBLEMS, SEIZURE OF HIS ASSETS AND FALL OUT WITH THE SULTAN

PRINCE JEFRI’S SUED BY LONDON TAILORS FOR RENEGING ON A $130 MILLION DEAL

In 1998 Prince Jefri was sued in London by Bob and Rafi Manoukian, Armenian brothers whom Jefri met at their London tailor shop, called Vincci. Mark Seal wrote in Vanity Fair, “The Manoukians went from selling the prince suits to selling him jewelry, cars, planes, boats, and real estate. But when Jefri allegedly reneged on $130 million in property deals, the Manoukians sued. Jefri countersued, charging that the brothers had breached their fiduciary duty by marking up the goods they sold him by anywhere from 100 to 600 percent. Jefri didn’t testify at the trial, but his lawyers, according to Fortune, presented the prince as “a sucker too out of touch to notice the markups because the Manoukians had posed as close friends.” [Source: Mark Seal, Vanity Fair, July 2011*=*]

“The case was settled, but the collateral damage was severe. Prince Mohamed launched what Jefri would call “an attack,” a palace coup, against him. “I believe the real reasons for the events of 1998 is the fact that there was a cash crisis within Brunei caused by the Asian financial meltdown of 1997–8 and the decline in the price of oil,” Jefri wrote in an affidavit from his case against Derbyshire and Zaman. “The payments made to the B.I.A. by Brunei Shell were greatly reduced. There were insufficient monies to fund the commitments entered into by A.D.C. and to pay His Majesty the money he required by way of Special Transfers at that time [approximately $83 million a month] In these circumstances, His Majesty commanded me to transfer assets I controlled to the B.I.A.” *=*

On the same event, Richard Behar wrote in Fortune, “In what was billed as the most expensive civil case in English history, a pair of Syrian-born brothers sued Jefri for reneging on two real estate deals; the prince countersued that he'd been fleeced for more than a decade by a pair of unscrupulous hustlers. The case was eventually settled, but not before revealing how P.J. and the Big One had shelled out roughly $1 billion for hundreds of luxury items that the traders--Bob and Rafi Manoukian--had marked up by 100 percent to 600 percent. Jefri, for example, had paid the Manoukians $5 million for ten luxury watches--set with precious gems--that showed a man and woman copulating mechanically on the hour. A set of louche pens, also featuring a copulating couple, had been crafted in white gold. "You could sell Jefri anything," sighs one of P.J.'s attorneys. "All you had to do was tell him it was good. Do you think he could tell what is good and what is bad taste? On what basis?" [Source: Richard Behar, Fortune, February 1, 1999 <+>]

“Jefri's lawyers argued, in essence, that their client was just a rube from the rain forest, a sucker too out of touch to notice the markups because the Manoukians had posed as close friends. "The Sultan and Jefri cannot tell the difference between a friend and a sycophant or a person who is trying to sell them something," says a member of the legal team. "They have no way to judge. The only real friends they ever had were each other." “ <+>

Prince Jefri Falls Out of Favor

Prince Jefri was fired from his post as finance minister in February 1997 and striped of his post as a head of the state investment agency B.I.A. in July, 1998 after the Amedeo Development Corp., the conglomerate he established collapsed, leaving behind $6 billion in debts and a trail of disgruntled creditors. Prince Jefri had channelled much of Brunei's oil and gas wealth into Amedeo. His problems began when Amedeo, damaged by the economic crisis in Asia in 1997, collapsed, forcing the Brunei government to bail it out. Prince Jefri was accused of wasting billion on bad investments and high living.

When the sultan found out about the degree of the waste he reportedly went into a deep depression. He was greatly embarrassed when he offered money to help his Southeast Asian neighbors with loans during the Asian economic crisis in 1997-98 but then realized he couldn’t come up with the cash because his brother had squandered their cash reserves.

The sultan’s and Prince Jefri’s brother “Mohamed convinced the sultan that Jefri was going to take them down,” said one insider told Vanity Fair. Mark Seal wrote in Vanity Fair, “ Launching an investigation into the B.I.A., the sultan dispatched 200 forensic accountants to examine its books and records. They said they discovered that during Jefri’s 15 years as head of the agency $40 billion in special transfers had been drawn from its accounts: $14.8 billion had been paid to or used by Jefri himself, $8 billion had gone to the sultan, and $13.5 billion remained unaccounted for. Jefri claimed that the sultan had authorized all withdrawals (“It is inconceivable that this $40 billion could have been withdrawn without anyone having noticed it over the previous 15 years,” he wrote); the sultan countered that Jefri had embezzled the money. [Source: Mark Seal, Vanity Fair, July 2011*=*]

“Jefri lamented that he had no means of protest, for he was a wazir, the highest officer in a Muslim government, “a pillar of support for the Sultan,” as he wrote in his affidavit. “My duty as a subject and a Wazir was to obey any commands of His Majesty Accordingly, when His Majesty indicated in 1998 that he wished assets under my control to be transferred to the Plaintiffs [the B.I.A.] or himself, I felt his request had to be carried through.” When the transfers didn’t occur fast enough, extreme measures were taken. “I was anxious to resolve this dispute in the ‘Bruneian way,’ that is between the parties involved without the intervention of lawyers and accountants who in my experience only complicated the issues.” Instead, the lawyers arrived in an onslaught. “On February 22, 2000, a Writ was issued from the Brunei Court against me and many members of my family alleging that I had misappropriated very substantial funds from the B.I.A.,” Jefri wrote.*=*

Richard Behar wrote in Fortune, the dispute “erupted into a virtual holy war, with physical threats, private eyes, frozen bank accounts, sex scandals, and enough mud to slide the entire kingdom back into the jungle. More than 200 accountants and staffers from Arthur Andersen and KPMG were feasting on the wreckage. Brunei has begun to feel like a screwball Hollywood comedy. "What you have are three children in a schoolyard fighting over whose piece of chocolate belongs to whom," says a former attorney for the Sultan who remains close to the fireworks. "It's Moe, Larry, and Curly. There is no realism." The Sultan put Mohamed in charge of fixing the economy, while Pehin Haji Abdul Aziz, the country's most powerful conservative, was given the helm of a task force assigned to investigate Jefri's spending at the Brunei Investment Agency (BIA). [Source: Richard Behar, Fortune, February 1, 1999 <+>]

It's hardly shocking that in a country like Brunei, a once-favored prince could fall from grace so quickly. That fact is proof of little more than the Sultan's short attention span. Unfortunately, the Big One, like Nero, may ultimately torch his entire kingdom. For Amedeo's demise has done no less than wreck the economy. The firm had employed as many as 20,000 people, mostly Thai construction workers, who suddenly found their work permits revoked. Given Brunei's population, that's like booting nearly 20 million workers out of the U.S. "Arthur Andersen is there to destroy the company, not help it," charges Wayne Tempero, an ex-Amedeo executive who says he had many fights with the accountants. "They are so intent on investigating that nobody is working. They were never even given a brief of what Amedeo consisted of or what it did." Tempero says he "barely escaped" Brunei in early September after the head of the secret police--improbably named Major Muslim--threatened to put him in prison. "They accused me of shredding," says Tempero, who denies any wrongdoing. Strangely, the accountants haven't even bothered to interview Danny Wong, who ran Amedeo for Jefri. "I'm in the phone book," says Wong, who lives and works in Singapore. "Nobody has called me." <+>

Prince Jefri’s Return to Brunei After He Falls Out of Favor

Richard Behar wrote in Fortune, upon his arrival in Brunei in 1998, “a police escort led P.J. to one of his many houses, which was surrounded by security forces. The prince wasn't sure whether the guards were there to protect him or to watch him. "There was a semblance of normality, but in a fairly unreal way," says a top aide. "They haven't exactly kissed and made up. Things remain tense because the economic situation is much graver than anyone imagined. The general feeling is that the Sultan is losing it, and that Aziz is increasingly running the show. The Sultan is still deeply confused in his own small brain as to why they suddenly haven't any money. Jefri's position is that he wants to do what he can to help his brother with assets they can liquidate to try and keep the thing afloat." [Source: Richard Behar, Fortune, February 1, 1999 <+>]

“Jefri hadn't been in Brunei long before Arthur Andersen sent him a letter--which he promptly ignored--requiring his presence at a meeting. "Jefri doesn't react to require-presence letters," says an adviser, who tried instead to organize a meeting of all the players in a neutral nation. But even that proved impossible. "It's spooky," says the adviser. "We're in a very unpredictable period. This is like one of those deals years ago with the Soviet Union, where everybody would sit and argue for weeks about where they were going to sit at the table." Will Jefri be sued? Charged with a crime? "It depends on who's calling the shots," says the source. "From the Sultan's standpoint, they can't--and they shouldn't. From Aziz's standpoint, it might just be dandy." <+>

“One thing is certain: If Jefri is taken down, he'll try to take everybody along with him. One of his aides provided FORTUNE with a document purporting to show that brother Mohamed still owes $10 million on a $40 million home-cum-banquet hall that Amedeo built for him--allegedly with government funds. And not long ago, one of Jefri's attorneys sent a pointed letter to Yusof, reminding the Sultan's confidant that Amedeo had built a home for him as well. P.J. wanted to know when Yusof was planning to pay for it. "I don't think, in the terms that you or I grew up with, that Jefri is a particularly good guy," says another lawyer. "But whatever he did wasn't any different from what his brothers did. The salient issue is that if this thing is ever fought, you'd have [legal] discovery of records, and they would have to lift the veil. I don't think they've thought this through too carefully. You're not talking about normal people." <+>

Sultan Orders the Seizure of Prince Jefri’s Assets

In 2000, the Sultan of Brunei and B.I.A. sued Prince Jefri for the embezzlement of $16 billion and impounded his passport. Three months later they temporarily settled the dispute in an out-of-court settlement under which the Brunei government agreed to drop its pursuit of Prince Jefri if the prince promised to give back all of his assets and agreed to live on a monthly allowance of $300,000. The prince had said he needed $500,000 a month for “ordinary living expenses.” People working for the prince had to ensure people working at the hotels that their jobs were secure and the hotels were not about to be seized.

B.I.A. believed it was entitled to billions of dollars from Jefri while the prince insisted the sultan had agreed that he could keep certain treasures to maintain his lifestyle. According to The Telegraph: “The peace quickly broke down. Prince Jefri's office in Brunei was raided – "they took all my things, they took my documents and personal belongings including jewellery" – as both sides accused each other of breaching the agreement. Prince Jefri claims that the 2000 settlement included a "lifestyle agreement" that allowed him to hold on to a number of US hotels and homes in London and Paris as well as a trust fund to provide for him and his family. He alleges the agreement has since been breached, however the BIA claim that Prince Jefri has failed to return assets as agreed in 2000. [Source: Richard Fletcher, The Telegraph, December 1, 2006]

Richard Behar wrote in Fortune, In May 1998, two months after the Manoukian case was settled, Bruneian authorities began freezing the domestic assets of Jefri's 27 local companies, known collectively as Amedeo. Conveniently, both the Sultan and Jefri were overseas at the time, but when the Big One returned, "Acting Sultan" Mohamed, who serves as Brunei's Foreign Minister, explained that Amedeo had collapsed under the weight of its own excesses. Jefri's camp insists otherwise: "The company had $100 million to $200 million in trade payables currently due, and there were adequate funds to pay it," says one of his advisers. "There was no debt and no sign of deterioration. The collapse was forced upon it."[Source: Richard Behar, Fortune, February 1, 1999 <+>]

“The Big One then seized nearly $2 billion in Amedeo's assets and issued an after-the-fact "emergency order" giving him the right to seize private companies. When Brunei's Law Minister, a friend of Jefri's, objected, the Sultan promptly abolished the minister's post. "I guess when you have the magic wand, you can do those kinds of things," says a Western ambassador close to the scene. By September 1998, conservatives clearly had the Sultan's ear. Gone were the pleasure domes and the palace discos, as well as the "special tea" (read: beer) once served quietly in Chinese restaurants. A nervous jeweler told me he could no longer openly display his crosses and Buddhas following a recent series of raids by the government's religious-affairs police. Gone, too, were the armies of precious-gem salesmen who, for the benefit of the royal family, used to transform the local Sheraton into a virtual jewelry convention. When I checked in, the hotel was instead crawling with boyish accountants from KPMG, flown in to investigate the BIA. A second team of numbers cops from Arthur Andersen were holed up just down the road; their job was to serve as the new managers of Amedeo. "Those poor Western accountants won't even know where to begin," one of Jefri's aides had laughed. "When you have no walls between what is state money and what is family money, it just gets used." <+>

Mark Seal wrote in Vanity Fair, ““Armed troops searched Jefri’s palace, and he was ordered to turn over his passport until he signed a settlement agreement in which he promised to return assets including “over 600 properties, over 2,000 cars, over 100 paintings, 5 boats and 9 aircraft,” as well as billions of dollars in possessions he had stored in 21 warehouses. After swearing to comply fully with the agreement, Jefri left the country. The sultan’s lawyers and accountants soon claimed that Jefri had been funding his supposedly successful company A.D.C., which employed thousands, not with profits from the business but with B.I.A. money. Once the funding stopped, A.D.C. wasn’t just insolvent—it was, the investigators claimed, more than $590 million in debt. Their uneasiness turned to panic when they pored over the list of assets Jefri had drawn up for them, in which he had promised to include everything. “The disclosure list provided by Prince Jefri was incomplete and wholly inadequate for a number of reasons,” the B.I.A.’s lead attorney, Richard Chalk, wrote in an affidavit. Entire companies had allegedly been omitted, as had account numbers and balances for the prince’s multiple bank accounts. There was no mention of the fabulous art and jewelry collections they believed he had acquired. “The list was mainly limited to information which Prince Jefri knew the [sultan and the B.I.A.] already had,” Chalk wrote. [Source: Mark Seal, Vanity Fair, July 2011*=*]

“Jefri’s spending continued unabated abroad, causing one B.I.A. representative to say that unless the prince had “won the lottery or had some good evenings in the casino” his lifestyle must still be funded by his B.I.A. assets. Jefri shot back that the sultan, in an unwritten pact he wanted kept secret, had allowed him to support himself by retaining six properties as “lifestyle assets”: the New York Palace hotel; Hotel Bel-Air; two palatial London residences, St. John’s Lodge and Clavell House; his home at 3–5 Place Vendôme, in Paris; and PT4200, a trust fund maintained by Citibank.

Selling Off, Auctioning and Packing Away Prince Jefri’s Stuff

As part of the Prince Jefri's out-of-court settlement with the BIA in 2000, the prince agreed to hand over $4.5 billion in assets. To pay off Prince Jefri’s debts 10,000 lots — from 16,000 tons of Italian marble to Mercedes-Benz fire engines - were sold at an auction in London in 2001 dubbed the "sale of the century." The trove was stored in 21 warehouses and included 400 Victorian lamp-posts, two unused Mercedes-Benz fire engines, several hundred Louis XIV gilt chairs, a fleet of forklift trucks, two Mercedes-Benz fire engines, hundreds of gold-plated lavatory brush holders and thousands of pieces of Asprey crockery.

Over $8 million was earned from the sale of things like 8,000 metric tons of fine marble slabs, state-of-the-art Italian marble-cutting machinery, pallets of teak and mahogany. Among the other items put up for auction were gold-trimmed jacuzzis, a pizza oven, scores of waste paper baskets, water tanks, compressors, floor polishers, electric saws, bathtubs, office equipment. fixings from his luxery homes, apartment towers, shopping centers and palaces. Three snooker tables sold for $7,060. A 21-foot dining table went for $20,000. A Fuji photo-processing lab fetched $10,000 and a shed full of toilet bowls and pipes snatched $1,176. Deals for items like the two Mercedes fire engines, chandeliers, a Comanche attack helicopter flight simulator, an Airbus A340 and a Formula 1 racing car were made through private tender.

Mark Seal wrote in Vanity Fair, In June 2005, Derbyshire and Zaman flew to Brunei to oversee the packing of the personal possessions Jefri had left behind in his two palaces and in his children’s palaces—the structures had about 1,000 rooms each. “Anything that could be salvaged Prince Jefri instructed be moved to [another] location in Brunei,” says Derbyshire. When they arrived, a crew was waiting to help. ‘The first thing that met you was this rock-crystal waterfall, probably 30 to 40 feet high, and in front of it was a life-size statue of Prince Jefri with a polo mallet in solid gold,” says Derbyshire. “That was on a crane that was being swung out the front doors, probably to be chopped up and sold.” They packed up art, furniture, and jewelry. Then they moved the cars—a total of about 2,300. “Every one of the cars was a Bentley, Ferrari, or Rolls-Royce,” says Derbyshire. “All had been built individually, where you open the door and along the running board it says, BUILT BY ROLLS-ROYCE FOR HIS ROYAL HIGHNESS PRINCE JEFRI, and you look at the odometer and it would be four miles. The rubber around the windows had melted in the heat.” Zaman says the tires were melting, too, because the air-conditioning had been cut off. (Stewart’s response: The state of the cars wasn’t due to lack of air-conditioning but to a “lack of necessary maintenance.” As to the contents of the palaces, they were legally Prince Jefri’s to take.) [Source: Mark Seal, Vanity Fair, July 2011*=*]

“According to Derbyshire, Jefri had instructed that all these possessions be taken to Gurkha-guarded warehouses, where they would be crated and shipped to other locations, then marketed. “I think it’s fair to say that, between 2004 and probably August 2008, there were still instances where suddenly we would become aware of blatant breaches by Prince Jefri of the freezing order, where an asset had obviously been sold,” says B.I.A. attorney Richard Chalk. It’s called “trickle feeding”: selling off assets bit by bit, in this case to avoid B.I.A. suspicion. Three of Jefri’s wristwatches, gem-encrusted and reportedly worth more than $850,000 total, were sold in November 2009 in London’s Hatton Gardens jewelry quarter. A collection of 48 rare “supercars,” including 27 Ferraris, was rumored to have been shipped out of Brunei for sale in Singapore. Diamonds and gold were sold through brokers in Britain, according to Derbyshire and Zaman. (Of Jefri’s alleged trickle feeding, Stewart says, “He didn’t need to,” since he had “a setup” with the New York Palace that paid his company Argent enough to cover his expenses. “It was running, safe to say, a million to a million and a half a month, and that’s how he was living.”) *=*

“Zaman and Derbyshire say that the art was sold in Paris, where Jefri’s fourth wife, the New Zealand-born Claire Kelly (who adopted the Bruneian name Madame Salma), lived with the prince in his palatial residence in the Place Vendôme. At the trial, Derbyshire testified that an important sale had been pending, which included one of Jefri’s most valuable remaining paintings, Jean-Léon Gérôme’s Napoleon and His General Staff, which he kept in a secure Swiss vault with more than 200 other paintings. (Stewart says, “Prince Jefri loved art and bought fantastic amounts of it. Actually had a pretty good eye. But Jefri had nowhere to hang a lot of it.”) *=*

“Micha Raines was concerned about the sale, since the British court was pursuing Jefri. “She did not want to see him committed to prison for contempt [should it be] discovered he was selling assets which he had never disclosed,” according to an affidavit submitted by Derbyshire, who called a meeting in Paris with Jefri and Claire Kelly. (Raines could not be reached for comment.) They agreed to stop the sale, but Jefri still wanted the entire collection appraised, because he planned to sell the art as a job lot—which he eventually did. (According to Stewart, the prince sent Derbyshire to sell the artwork, which had been a wedding gift to Claire Kelly.)

Defending Prince Jefri

Richard Behar wrote in Fortune, “t pretty hard to swallow the party line coming out of Brunei--namely, that Jefri lies at the root of the kingdom's troubles. As one of the Sultan's spokesmen in London took pains to explain to me, Brunei is a "happy country" with "prudent fiscal management" and "one of the most stable and vibrant economies." But Jefri, he said, his voice a cartoon of disapproval, is "a man whose lifestyle has proved to be rapacious." [Source: Richard Behar, Fortune, February 1, 1999 <+>]

“One of the first things a visitor to Brunei discovers is that Prince Jefri is capable of more than shopping. "Jefri is not a humanitarian, but he felt an opening up was needed if Brunei is going to survive in the world," says a top aide. "He felt there needed to at least be an appearance of popular participation." In an effort to liberalize the fiefdom, Jefri beamed satellite TV into Brunei, along with his favorite hip London radio station. ("I'm horny, horny, horny!" a pop star sang on the radio one morning--moments before the call to prayer filled the street outside.) He contributed a Western-style school, a modern hospital, and a Disney-like amusement park. He built an $800 million resort, still unfinished, that he hoped would become a magnet for tourists. And in what may have been the final break in their relationship, he beat out his brother Mohamed with a bid to modernize the country's telecommunications network. <+>

“Mohamed's dislike of Jefri had been fermenting since at least the mid-1980s. But in recent years he had come to see his brother not only as a personal threat but also as a national one--a fear shared by Brunei's Education Minister, Pehin Haji Abdul Aziz, the country's most powerful conservative. As it happened, two scandals would come along and annihilate the monarchy's reputation in the foreign press, leaving Jefri exposed and isolated. However conspicuous P.J.'s failings may have been, it's hard to avoid the feeling that fiscal responsibility is not what's driving the campaign against him. And sure enough, in mid-September, just one day after Queen Elizabeth ended a visit to Brunei and six days after Jefri won his injunction against KPMG, Aziz gave a rare briefing at a local university. Aziz warned the citizens to beware of falsehoods told through the foreign media. He invoked the name of God five times and declared that his investigation of BIA was being conducted "solely for the sake of Allah the Almighty." More specifically, he announced that the "misappropriation" of BIA's funds through Amedeo had been done "not only without His Majesty's consent but also entirely without the prior knowledge of His Majesty." <+>

“In London, Prince Jefri read Aziz's comments with alarm. In fact, those words lay behind his decision to end his "exile"--to fly to Brunei to warn his brother that he was being painted as a fool. If crimes were being committed right under the ruler's nose, what did that say about his ability to rule? "Jefri could see the beginnings of a setup against the Sultan," says one of his advisers. "He was ready to have it out with the Sultan and say to him, 'Do you realize where this leads?' " <+>

Prince Jefri: “I Am No Angel, but I Have Been the Fall Guy

In December 2006, after a decade of self-imposed silence, Prince Jefri said he had become the family's "fall guy". Richard Fletcher wrote in The Telegraph, “Other members of the ruling family were responsible for much of the excess that has led to his infamy, he claimed. "I am no angel for sure, but I have been the fall guy," he said, speaking publicly for the first time as the dispute heads back to the British courts.[Source: Richard Fletcher, The Telegraph, December 1, 2006 |=|]

“The day before Prince Jefri was given leave to appeal to the Privy Council in Britain in an attempt to win a more generous settlement from his family and persuade the council to overturn a ruling in the Brunei courts which could see his assets in the UK and around the world seized. During a bitter legal battle with his brother, tales of private yachts and fleets of private aircraft (including one Boeing 747 airliner allegedly converted to carry polo ponies) emerged alongside claims of high living. But Prince Jefri claims that many of the tales are exaggerated. "It is strange when you are reading it. It is upsetting particularly for my children," he claimed. He only used the infamous luxury yacht Tits (complete with the tastefully named tenders: nipple one and two) four or five times. "The whole family used it. I did not have time," he said. As for the pornographic watches that, reportedly, showed a couple copulating on the hour, these days his choice of watch appears to be much more restrained. |=|

“In person it is hard to reconcile Prince Jefri with his playboy image. He is impeccably dressed and incredibly fit for a man who celebrated his 52 birthday two weeks ago (his 17 children – aged between 1-33 – gathered in Paris to mark the occasion). But he is also short, quiet and restrained. He could, even, be described as shy. |=|

“Suggestions that he has hidden assets are rejected by Prince Jefri. "You cannot hide a hotel," he said. And he claims that although he may have legally owned assets – like the boats and planes – they were in fact used by other members of the family. For example, he claims, he bought a number of Old Master paintings for his brother. "I would buy them. He would keep them. He would come to the house and take what he wanted. It was between brothers. He knows what he took," he said. A spokesman for the Sultan of Brunei declined to comment. He has, until now, kept his own counsel in order to protect his brother. "I did not want to tarnish him. It would have reflected on him," he said. |=|

“It may seem a bizarre claim – given that they have been in dispute for almost a decade and have not spoken for over two years – but then Prince Jefri's relationship with his brother is complicated. In both his London and Paris homes there are numerous gold-framed official portraits of his brother in full military regalia on sideboards and tables. The two brothers were obviously close: playing on the same polo team for a number of years. "We were very close. He introduced me to the game," explained Prince Jefri, who lights up at the talk of polo. |=|

“But in recent months he has become increasingly concerned about his brother's rule of Brunei. In particular recent changes to the Brunei constitution have sparked concern. "I never thought he would go this far. You cannot even say anything bad about him. I would be imprisoned or fined if I said these things in Brunei," said Prince Jefri. "He can change almost anything he likes by decree. I worry about what will happen when the oil runs out – 90 per cent of the economy is dependent on oil and gas," added Prince Jefri, who argues that after four decades a "state of emergency" should be lifted. |=|

“But despite the attack on his brother's legal powers and immunities Prince Jefri still hopes to reach an amicable settlement: "I have tried to resolve this … I am still eager to deal with this." He added: "I am tired of lawyers. It is frustrating. It is sad. I have seen too many lawyers." He has not felt able to return to Brunei for a number of years and freely admits that he misses home. "I have lots of friends there. I would like to visit, my family is still there, but it is very difficult now." |=|

Prince Jefri, Sultan of Brunei Feud: the World’s Most Expensive Legal Battle

Mark Seal wrote in Vanity Fair, “The feud between the brothers would turn into the world’s most expensive legal battle as the B.I.A. and the sultan spent an estimated $400 million on tracking down Jefri’s wealth, much of which the B.I.A. would claim was squirreled away in bank accounts and shell companies registered in remote tax havens. Revising the Bruneian constitution in order to have absolute rule over his brother, the sultan, starting in 2000, froze Jefri’s assets through injunctions—to little effect. Jefri allegedly sold off untraceable hoards of art, cars, and jewels included in the freezing order and somehow milked money from his properties to keep himself and his family afloat. [Source: Mark Seal, Vanity Fair, July 2011*=*]

After his eldest daughter’s wedding in 2005, Prince Jefri was served with an eviction notice Fair,”According to Derbyshire, “After the second wedding, a letter comes through the B.I.A.’s lawyers, [essentially] saying, ‘Prince Jefri, sons Prince Hakeem and Prince Bahar, and Princess Hamidah: All of your property in Brunei is being repossessed, and you have until June to vacate.’ They were given about four weeks.” (Richard Chalk confirms the eviction: “Title had been transferred, but physical possession hadn’t. He was ordered to leave [the palaces] because he no longer owned them.”) Jefri was upset over the eviction notice, according to Zaman and Derbyshire. “This is an act of war,” they say the prince declared. (Stewart denies that Jefri declared the eviction notice an act of war.) Not only were his two sons being booted from their palaces, but his eldest daughter, “married to my sister’s son, pregnant with a child,” was effectively being evicted from her home as well. The fight with his brother had escalated from a legal battle to a personal war. “I am never going to put myself in a position again where he can tie up my assets,” Jefri said, according to Derbyshire, and he dispatched Derbyshire and Zaman to Brunei to pack up his belongings. *=*

“The sultan and the B.I.A. continued to press their case against Jefri in every court they could, and soon they would have contempt charges against him in England, meaning that he could be jailed if he set foot there. When he failed to respond to a British summons in 2008, the court issued a bench warrant for his arrest. Facing a potential two-year prison term for refusing to divulge his bank accounts.

“Jefri lay low in his five-star hotels and palatial homes until he finally reconciled with his brother and returned to Brunei, with an alibi for at least a small portion of the lost fortune: he hadn’t spent all of the money, he said; his lawyers Faith Zaman and Thomas Derbyshire had stolen at least $23 million of it in “seven breaches of trust, the seven frauds,” which his attorneys would detail in court and which Zaman and Derbyshire would contend were schemes to funnel money through them to benefit the prince.” *=*

Legal Action Against Prince Jafri in Brunei

In 2006, Andrew Alderson wrote in The Telegraph, “Once their long working day is over, the rival teams of British lawyers play golf, tennis and badminton in the palatial surroundings of their five-star hotel. After exercising, they can swim in one of the Empire Hotel and Country Club's eight luxurious pools. Each morning, at around 8.15am, the 10 barristers and solicitors, together with three appeal court judges, have been taken by a fleet of chauffeur-driven black BMWs and Mercedes from their hotel, nestling beside the South China Sea, to Brunei's High Court of Justice 15 minutes away. It is there, sitting in camera and with three uniformed guards on the door of the spacious courtroom, that Sir Derek Cons, the president of the appeal court, yesterday brought down the curtain on the latest round in a bitter legal battle. [Source: Andrew Alderson, The Telegraph, May 14, 2006 ^^]

“Since 1998, rival lawyers have represented the Brunei Investment Agency (BIA), the investment wing of the Sultan of Brunei's autocratic government, and Prince Jefri. The details that have emerged of profligacy and decadent lifestyles would make uncomfortable reading for the ruler of any country. For the royal family of staunchly Muslim Brunei, which once prided itself on its discretion, the events have proved cataclysmic. ^^

“Other cases in the appeal court had been cleared to allow the hearing to go ahead unhindered. Rumours abound that the Sultan wanted the legal action out of the way before July 15, so that it did not tarnish his 60th birthday celebrations. The judges, normally based in Hong Kong, sat beneath a giant photograph of the Sultan as they listened to evidence relating to Prince Jefri's appeal against two earlier judgments from the chief justice of Brunei. ^^

“The first appeal was against a ruling last year that refused to allow Prince Jefri to have his case heard in a foreign court. His lawyers, led by James Lewis QC, argued that the legal system in Brunei was not sufficiently independent of the Sultan to allow the Prince a fair hearing. In a second appeal, Prince Jefri's lawyers were trying to overturn a ruling made earlier this year entitling the BIA to issue orders against Prince Jefri to enforce the terms of the settlement agreement he signed in May 2000, including the transfer of £3 billion of his assets to the BIA. By the time it is over, the legal battle promises to be one of the most costly ever. Aides to Prince Jefri have estimated that the BIA's legal fees, including those of Freshfields Bruckhaus Deringer, the Sultan's London solicitors, could reach £200 million - a figure said to be "ridiculously high" by an adviser to the royal family. However, the final cost of the eight-year dispute could end up at between £250 million and £500 million. ^^

“Each side sees the dispute differently. Prince Jefri's camp tries to portray the legal action as a vindictive act by the Sultan against his younger brother. The Prince's lawyers had earlier argued that the transfer of acquisitions from the BIA was lawful and undertaken with the approval of the Sultan. The Sultan's lawyers, however, claim he is personally detached from the dispute and that the legal action was forced on the BIA by Prince Jefri's refusal to honour the settlement made six years ago. "This is not simply a spat between warring brothers," said an adviser to the royal family. "Prince Jefri has lost every substantive case and hearing since 1998 and his last hurrah is to say, 'I can't get a fair trial anyway'." ^^

Prince Jefri Dodges Possible Jail Time and Settles Dispute with the Sultan

In September 2005, Prince Jefri faced the possibility of British jail time after Court of Appeal judges ordered him to disclose details of how he funds his extravagant lifestyle. Fran Yeoman wrote in The Times, “The BIA claims that the Prince’s continued “lavish” lifestyle, which incorporates homes in London, New York and Paris, said to cost £275,000 a month, proves that he must have additional, undisclosed assets. In May 2005, Brunei and the BIA began contempt of proceedings against the Prince at the High Court, which he attempted to resist on the ground that forcing him to disclose how he funds his lifestyle would represent a violation of his right to privacy, protected by Article 8 of the European Convention on Human Rights. [Source: Fran Yeoman, The Times, September 11, 2005]

“In the Court of Appeal Lord Justice Tuckey dismissed the Prince’s plea as “totally unfounded”, opening the way for contempt proceedings. Sitting with Lord Justice Waller, the judge said that the scale of Prince Jefri’s spending since 2000 eliminated the possibility that his lifestyle is sustained by the generosity of relatives or other third parties. He ruled that the evidence put forward by Brunei and the BIA was clear and unambiguous, and “disclosed reasonable grounds for alleging contempt”. Prince Jefri is adamant that he has no further financial resources to divulge, but Lord Justice Tuckey stated that relatively few of the bank accounts disclosed to him so far show significant balances. Brunei and the BIA suspect, he said, that unless the Prince had “won the lottery or had some good evenings in the casino” he was maintaining his extravagant lifestyle using secret funds. [Ibid]

In 2007, Prince Jefri won a key victory in the High Court as the sultan’s lawyers told the judges they would not pursue the case any more. Andrew Pierce wrote in The Times, “The Sultan threw in the towel and admitted defeat in the legal battle, which had accumulated £1 million in fees. Martin Pascoe, QC, acting for the Sultan, was forced to announce before Mr Justice Etherton that the contempt action against Prince Jefri had been discontinued. The Prince’s costs would be paid in full. The defeat was an embarrassing setback for the Sultan’s legal team, which included Freshfields solicitors, one of the leading City law firms, which was acting for the BIA. Prince Jefri, who has not spoken to the Sultan for two years, will now try to clear his name, arguing that the acquisition of assets was made with his brother’s knowledge and with his full authority and approval. A spokesman for the Prince, who fears that he would be arrested if he returned to Brunei, said: ‘He has tried to talk to his brother but his overtures have been rebuffed. He would love the opportunity to sit down to try to resolve their differences.’” [Source: Andrew Pierce, The Times, February 7, 2006]

In late 2007, Dominic Kennedy wrote in The Times, “In a crushing judgment that resembled a losing hand in a game of Monopoly, Prince Jefri was ordered to hand over two hotels, three houses, diamonds, cherished paintings and cash. The Privy Council decision brought to an end a colourful dispute between one of the few remaining absolute monarchs and his once-favourite youngest brother. After the defeat, Jefri faces surrendering the New York Palace hotel, the Hotel Bel-Air in Los Angeles and residences in London, Paris and Singapore. "Prince Jefri contends that an oral agreement . . . had been reached between himself and the sultan, entitling him to retain in his ownership six very valuable assets in order to continue to fund a suitable lifestyle for himself and his family," the Privy Council said. Although the judges accepted the sultan had shown some sympathy for his brother, they said it was incredible and ridiculous to claim that such a deal had been made. The prince intends to continue his fight. [Source: Dominic Kennedy, The Times, November 9, 2007]

One of the prince advisors Faith Zaman told Vanity Fair: “Under the terms of the lifestyle agreement, the sultan had made it legally permissible for Jefri to maintain his lifestyle by keeping for himself certain assets, including the Palace and Hotel Bel-Air, and any assets in Jefri’s own name, including his jewelry and paintings. Insofar as Jefri’s argument that he was entitled to deal with these assets as his own, he was correct. To this day … Jefri has never been held in contempt in Brunei.” (The B.I.A. maintained that there never was a finalized “lifestyle agreement,” and a British court agreed.) [Source: Mark Seal, Vanity Fair, July 2011*=*]

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Fortune magazine, Vanity Fair magazine, Brunei Tourism, Prime Minister's Office, Brunei Darussalam, Government of Brunei Darussalam, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Foreign Policy, Wikipedia, BBC, CNN, and various books, websites and other publications.

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© 2008 Jeffrey Hays

Last updated June 2015

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