At 21.40 hours on 7 Aug 1940 the Mohamed Ali El-Kebir (Master John Pratt Thomson, died) was hit in the starboard quarter by one of two stern torpedoes fired by U-38 about 230 miles west of Bloody Foreland, while steaming on a zigzag course at 15 knots under escort by HMS Griffin (H 31) (LtCdr J. Lee-Barber, DSO, RN). The ship settled by the stern and sank by the stern at 23.40 hours, just before the destroyer was able to go alongside. The destroyer first attacked the U-boat and chased it away and then began picking up the survivors from 11 lifeboats and over 20 rafts and set out two whale boats. The destroyer constantly dropped depth charges to scare away the U-boat and searched the area until the next morning when no more survivors were found and then left for Greenock, arriving on 9 August. The master, nine crew members, four naval personnel and 82 troops were lost, 33 bodies were washed up two weeks later on the shore of Donegal. 154 crew members, one gunner, 549 troops and 62 naval personnel were rescued by the destroyer, among them 62 wounded men.

The 697 troops on board were from following units:
706th General Construction Company, Royal Engineers: 6 officers and 243 ratings
15th Company, Royal Pioneer Corps: 6 officers and 289 ratings
Royal Navy draft: 2 officers, 44 ratings and 20 marines
Miscellaneous Royal Artillery and Intelligence Corps: 97 officers and ratings