By Estelle Shirbon
LONDON (Reuters) - Two Saudi princes on Tuesday sought to extricate themselves from a London legal battle with a Jordanian businessman who accuses them of laundering money for Hezbollah, an allegation their lawyer called "fanciful".
Prince Mishal bin Abdulaziz al Saud, a brother of Saudi Arabia's King Abdullah, and his son Prince Abdulaziz bin Mishal, had previously argued they had sovereign immunity from suit but the courts rejected that stance.
They also tried to keep details of the case secret on the grounds that making the allegations public would damage Saudi relations with Britain and the United States, which considers Hezbollah a terrorist organisation, but that failed in the Court of Appeal last week.
The Hezbollah allegation is likely to raise concern in Saudi Arabia, because Hezbollah is backed by foe Iran, and Hezbollah fighters are supporting President Bashar al-Assad in Syria while Saudi Arabia is a major backer of rebel forces.
John Wardell, a lawyer for the princes, told the High Court on Tuesday that Faisal Almhairat, an estranged business partner of Prince Abdulaziz, had fabricated "incredible tales" that were "fanciful", and argued that his clients should not be parties to the case at all.
He said Global Torch - the British Virgin Island company the younger prince is said to control - and not the princes should be the party at the trial when it comes to court in January.
CLAIMS AND COUNTER CLAIMS
The complex legal dispute stems from a tussle between Prince Abdulaziz and Almhairat over control of Fi Call Limited, a joint venture registered in London in 2009 and aimed at developing software to allow free calls over the Internet.
Global Torch, a shareholder in Fi Call, initiated the court proceedings, and Almhairat responded with several counter-claims about the princes. None of the main individuals involved has attended court.
Judge Geoffrey Vos said the allegations may seem "far-fetched" but that did not mean they were untrue. He said it would be for a trial judge to decide that.
In a court document filed in December 2011 and seen by Reuters, Almhairat says Prince Abdulaziz instigated a deal in Beirut in March 2010 whereby Fi Call issued a $5 million bank guarantee to a Hezbollah intermediary named as Abdul Razzak.
Almhairat says this was part of a money-laundering arrangement that earned Prince Abdulaziz $5 million, and that when Almhairat questioned the deal he was threatened with death.
"We deal with whoever we want to deal with, whether it's Hezbollah, the Mafia or even the Jews," Prince Abdulaziz was quoted as saying in a phone call to Almhairat.
"Do as you are instructed. Otherwise your head will be at my feet without your body," the prince was alleged to have said.
Almhairat has said he recorded conversations with the princes on his telephone and made transcripts of what was said, but that the recordings were later stolen.
The document also quotes Prince Mishal telling Almhairat during a separate conversation at a Dubai hotel in April 2011 that he was involved in money-laundering.
Prince Mishal, 86, is a former defence minister and now chairs the Allegiance Council that will oversee the succession to the Saudi throne.
"You know that I move huge amounts of money for people like our friends the Mubaraks. We've been doing this business for years. We can move money for everyone, including the Iranians, because nobody dares to challenge us," Prince Mishal was quoted as saying by Almhairat.
In the document, Almhairat also alleges that in early 2011, Prince Abdulaziz arranged for Fi Call to pay $202,000 for a chartered flight from Nairobi to Amman, supposedly to transport the prince's camping equipment.
Almhairat says he discovered the true purpose was to smuggle minerals and precious stones from Congo worth hundreds of millions of dollars for the benefit of Prince Abdulaziz and possibly his father.
The hearing, scheduled to last three days, continues.
(Editing by Mike Collett-White)