Seven charged over alleged $501m Dubai fraud

From the Financial Times 9th March '09

Dubai's public prosecution has charged seven businessmen with crimes related to an alleged scheme to defraud Dubai Islamic Bank of $501m, official records show.

The bill of indictment, seen by the Financial Times, alleges the crimes were committed between 2004 and 2007 by two former employees of the bank and five businessmen linked to trade finance company CCH and a real estate project in Dubai, the Plantation.

The case, expected to go to court soon, is likely to become a high-profile test for the emirate's judicial system as questions swirl about the rule of law in the Gulf's commercial centre, hit hard by the global financial crisis.

The move, after an investigation of more than a year, lays the ground for the long-awaited conclusion of the DIB fraud case, central to a broader clean-up at state-linked companies, including DIB's real estate arm Deyaar.

International censure has mounted against the government's decision to hold without charge some executives for almost a year. Zack Shahin, former chief executive of Deyaar, has via US lawyers complained about his extended detention, claiming he had been tortured and was being victimised to protect senior locals.

The Dubai authorities countered saying the investigations have been carried out according to United Arab Emirates law.

The public prosecution document accuses Charles Ridley and Ryan Cornelius, both Britons, and Erin Nil, a Turk, of forging documents to defraud the bank of $501m via CCH, a trade finance company owned by Mr Nil and linked to Messrs Ridley and Cornelius.

The document alleges that the two former DIB executives, Rafatul Islam Usmani and Omair Mooraj, both Pakistanis, solicited and received bribes of $950,000 and $750,000, respectively, to facilitate the alleged embezzlement. The public prosecution document also claims that Zia Usmani, a US citizen, defrauded DIB of $2m.

Arthur Fitzwilliam, the British developer behind the polo-themed Plantation, is accused by the prosecution of aiding Messrs Nil, Ridley and Cornelius to carry out their alleged fraud. Mr Mooraj, who was working for JPMorgan when he was detained last year, is represented by Habib al-Mulla, who said: "We deny the accusations as matter of fact and law. We are going to defend him vigorously with all legal means."

Rafatul Islam Usmani's lawyer declined to comment. None of the other defence lawyers could be reached for comment.

Mr Mulla expects the cases to be heard at a Dubai court soon, but no date has been set. Two of the suspects, Mr Nil and Zia Usmani, have left the country, the document says.

DIB yesterday said it had made impairment provisions of Dh496m ($135m, €106m, £97.8m) related to its exposure to "CCH and related individuals". The bank said it had foreclosed on the Plantation and was pursuing other securities related to this transaction.

Other cases are moving to trial, lawyers say, including alleged financial irregularities at Sama Dubai and Mizin, property developers owned by Dubai Holding.