Monday, 10 August 2009

Sunland claims Dubai developer sought $38m kickback

From The Australian 11 August 09
The Packer family-backed property company Sunland has claimed that a Melbourne developer and his old school mate from Geelong Grammar conspired to defraud the company in a complex transaction on the Dubai waterfront in 2007.
Documents filed yesterday in the Queensland registry of the Federal Court give details of a case involving Australians Matt Joyce and Marcus Lee, who were employed in 2007 on the Dubai Waterfront project, and Melbourne-based property developer Angus Reed, who went to Geelong Grammar with Mr Joyce.
The documents allege that Mr Joyce and Mr Reed, who were well-known to each other, failed to give any indication of this relationship to Sunland's representative in Dubai, David Brown, when he was negotiating to buy land in the Dubai Waterfront, then one of the world's most expensive projects.
The documents claim that Mr Joyce had told Mr Brown that Mr Reed had purchased a valuable piece of waterfront land and that Sunland had paid Mr Reed over $14 million for the right to buy the land, even though Mr Reed had never actually owned it or had rights to buy it.
They claim that in mid-2007 Mr Brown had asked Mr Joyce if there was any waterfront land left in Dubai, and a representative of Dubai Waterfront told him that an existing block was being reconfigured to create a new block, D17, which would have water views.
In August 2007, Mr Joyce allegedly told Mr Brown that Reed had already bought D17, and had secured it at $50 per square foot, well below the going rate in the area, which was around $57.
Mr Joyce gave Mr Brown the contact numbers of Mr Reed, who claimed that he was in the process of purchasing the land, but was willing to enter an agreement with Sunland to develop it.
Mr Brown allegedly received further phone calls from Joyce urging him to move quickly or the land could be purchased by "the Russians" for a considerably higher price. In September 2007, Mr Lee, a project manager at Dubai Waterfront, and lawyer Anthony Brearley from Dubai Waterfront, phoned Mr Brown to say they were concerned that "marketing people will sell plot D17 and we will have no control over this".
But Mr Reed and Sunland were unable to come to terms on purchasing the land, so Sunland offered to purchase Reed's company's rights to D17 for $6.5 million, plus the difference in property value for the area between the going rate and the price Reed was able to negotiate, a total of $14.3m.
But the documents also claim that in December of that year, Sunland's Mr Brown was told by officials from the Emirates audit office that Mr Reed had never purchased the property in question, and there had been no reason why Sunland could not have purchased the property in their own right.
The documents allege that if Mr Joyce and Mr Reed -- who failed to tell Mr Brown of their relationship -- had not made the representations, then Mr Brown would not have entered into negotiations with Mr Reed, and instead would have negotiated directly with Mr Joyce for the purchase of D17.
It also alleges that "Joyce and Reed both knew that their representations were false, or were reckless as to their truth or falsity".
Mr Reed has skipped the country and is in Melbourne, while Mr Joyce and Mr Lee, who is from Sydney, have both been kept in detention in Dubai for the past year.
Gold Coast-based Sunland has James Packer on the board, but has taken a beating in its Middle East property deals as the market has dived.

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