Barely three months after J. William Middendorf took control of Financial General Bankshares Inc. last year, dissident shareholders tried to oust him as president of the $2.2 billion Washington bank holding company, court documents filed yesterday revealed.
After that effort failed, Middendorf's rivals became involved with Bert Lance, a London bank and a group of Arab investors in an alleged bid for control of Financial General.
These and other previously undisclosed details of the power struggle at Washington's biggest financial institution were disclosed by lawyers for Financial General. The company is suing Lance and about a dozen other persons to block their alleged attempt to control the company.
The Securities and Exchange Commission has been looking into the Financial General situation since last August and will take action in the next few days, it was learned.
Details of the impending SEC moves could not be determined. The commission is investigating charges that the Lance group failed to disclose an attempt to gain control of the company and failed to offer all stockholders an opportunity to sell their sheres on an equal basis.
The central issue in the SEC investigation - and in the company's civil lawsuit - is whether Lance and others acted as a group to seek control of Financial General. Attorneys for the defendants contend Lance was only an agent for four independent Arab investors.
The Arabs - each of whom has bought about 4.9 per cent of the bank's stock - are Kamal Adham, head of Saudi Arabia's CIA; Abu-Saud alFulaij, a businessman from Kuwait, and two sons of Sheik Zayed Bin Sultan, ruler of Abu Dhabi.
One of Sheik Zayed's sons, Mohammed, is only 4 years old, according to MidEast Reports, a New York newsletter specializing in Arab world financial affairs. Nearly $3.5 million worth of Financial General stock has been (See LANCE, E2 Col. 4) (LANCE, From E1) purchased in the name of the 4-year-old.
The court documents filed yesterday by Financial General trace the struggle back to a meeting last June at the Watergate Hotel of dissident stockholders. At the meeting were two defendants in the lawsuit, Eugene Metzger, a Washington Attorney, and Jackson Stephens, & Little Rock, Ark., investment banker.
Metzger and Stephens were part of a group, led by Middendorf, which in April 1977 gained control of Financial General by purchasing about 22 per cent of the company's stock.
According to the court papers, based on hundreds of pages of sworn testimony from persons involved in the case, Metzger and Stephens quickly became dissatisfied with Middendorf's ability to run Financial General.
At the June meeting, they allegedly planned to force Middendorf to give up the job of president of Financial Genral and replace him with G.J. Manderfield, president of American Bank of Maryland, a Financial General subsidiary. That plan - and other ttempts to influence Financial General's management - failed.
Lance became involved in the Financial General case this fall, when the former budget director was negotiating to sell his stock in National Bank of Georgia to Ghaith Pharaon, a Middle Eastern investor. To discuss that deal, Lance and Stephens met in Atlanta with Aga Hassan Abedi, a top executive of Bank of Credit and Commerce International (BCCI) a London bank owned primarily by Arabs.
Both Lance - who had purchased NBG from Financial General - and Stephens, allegedly suggested on Nov. 29 that stock in the Washington company might be available to Arab investors. A couple of days after that meeting, Abedi arranged to transfer $1.3 million from London to Metger to try to buy Financial General stock.