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The Saudi-Bahrain Farmers association approached Salam Bank, which was
actively involved in agricultural financing to finance the wheat crop of its
members that was expected to be harvested in the beginning year of 2021 using
Salam Financing Contract. On 30 July 2020, Salam Bank entered into a Salam
financing contract whereby the bank bought from Saudi-Bahrain Farmers
association 100,000 metric tons of wheat (the specifica3ons of which are detailed
in the contract) for $200,000. It was also agreed that Farmers association would
deliver the wheat aNer 6 months from the date of signing contract. On 10 August
2020, Salam Bank paid full amount of the contract into the account of Farmers
association.
On 31 October 2020, Salam Bank managed to sign a separate parallel Salam
contract with Abu-Dhabi Company whereby it was agreed that the former sell to
Abu-Dhabi company 100,000 metric tons of wheat for $250,000. The
specifica3ons of the wheat are identical to those that will be supplied by Saudi-
Bahrain Farmers association and it was agreed by the two parties that Salam
Bank would deliver the wheat aNer 5 months from the date of signing contract.
On 1 November 2020, Abu-Dhabi company paid half of the amount of the
contract to Salam Bank. In addition to that, Salam Bank and Abu-Dhabi Company
mutually agree that Abu-Dhabi Company also pledge its financial assets as
collateral which is worth of another half of the payment.
On 31 January 2021, Saudi-Bahrain Farmers association delivered 100,000
metric tons of wheat to Salam Bank and the Bank delivered the wheat to Abu-
Dhabi Company. Meanwhile, Abu-Dhabi company then paid the remaining
amount of the wheat on the same date and retrieve his financial assets as it was
collateralized before.
