A Saudi billionaire arrested as part of the Desert Kingdom’s crackdown on its wealthy elite is accused in the English courts of a $650m (£495m) fraud that has triggered a battle between hedge funds and the French bank BNP Paribas.

Maan Al-Sanea was arrested by Saudi authorities in October on charges of evading justice and owing large sums of money to creditors. His detention is viewed as a prelude to last weekend’s purge of business and political leaders in what was billed by authorities as a strike against corruption.

Mr Maan’s $22bn debt-fuelled business empire, Saad Group, collapsed in 2009, triggering a long battle by creditors to recover billions he had shipped offshore to the Cayman Islands.

In a High Court trial, hedge funds led by Fortress Investment Group are pursuing BNP Paribas over its role in arranging a $650m sukuk, or Islamic bond, sold to them by a special purpose vehicle owned by Saad in 2007. According to court documents, the cash was paid by Saad to Mr Maan personally to lease land he owned.

Fortress alleges that BNP “negligently failed to take sufficient care or steps” to ensure that it had security over the land when Saad failed to keep up with payments on the sukuk. According to the court documents, a crucial promissory note that the hedge fund believed gave it rights to seize control was not valid under Islamic law because Mr Maan had not signed it with wet ink.