Jail and fine for Dubai Lagoons' former CEO

Jail and fine for "A.M." the former CEO of Lagoons.  The Lagoon site languishes on the outskirts of Dubai surrounded by huge hordings that were once covered with colourful pictures of the proposed site and the lifestyle it offered.  Most of the large posters have now gone, removed by wind, sand and sun, while the tattered remains of others cling to the boards.
Source: Gulf News
Picture: Sama website
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The former CEO of Lagoons, a Sama Dubai project, faces three years in jail after the Dubai Appeals Court scrapped his acquittal of committing financial irregularities yesterday.
Presiding Judge Mustafa Al Shennawi on Tuesday convicted the 43-year-old Emirati former CEO, A.M., of abusing his duty as a public servant and accepting bribe. He will be jailed for three years and has been fined Dh2.89 million and ordered to repay the same amount (the bribe amount) to Lagoons.
The Appeals Court overturned A.M.'s primary judgment, who had been pronounced innocent by the Dubai Court of First Instance in July last year.
Al Shennawi also sentenced Lagoon's former executives, 42-year-old Emirati M.M., his 23-year-old compatriot N.Q. and 28-year-old M.S. (who doesn't carry documents), to three years in jail each. They were also slapped a joint fine of Dh4.8 million and ordered to repay the amount to Lagoons.
M.M., Lagoon's former sales manager, M.S., the ex-sales executive, and Damac's former property development director, 32-year-old Syrian, A.H., will each spend a year in jail after the court convicted them of exchanging bribe worth Dh650,000. The Appeals Court ordered slapped them a joint fine of Dh650,000. Al Shennawi acquitted A.H. of aiding and abetting M.A. and M.S. collect a bribe worth Dh2.3 million over a three-land deal.
Moreover, the appeals court confirmed the acquittal of M.A. and N.Q. of revealing the company's secrets by providing an investment house with details about their clients, as well as information and prices of properties owned by Sama Dubai.
Defence lawyers are expected to appeal yesterday's judgment before the Cassation Court within 30 days.
At an earlier hearing, a prosecutor submitted an official letter stating that the funds of Sama Dubai are public and informed the Dubai Appeals Court that five executives of the company charged with financial irregularities are in fact public servants.
"We received an official letter from the Financial Control Department [FCD] at the Rulers Court confirming that the funds of Sama Dubai and Lagoons are public and that their employees are public servants," said the Public Prosecution's representative when he handed FCD's letter to Al Shennawi.
The five executives had earlier pleaded not guilty and refuted their charges.
According to the charges sheet, prosecutors had charged M.A., N.Q. and M.S. with taking Dh4.8 million in bribe against unlawfully selling/reselling lands belonging to Sama Dubai.
Lagoons' former CEO was charged with breaching his duties by requesting from one of his company's clients, five apartments worth Dh2.7 million and a cash sum of Dh200,000 in bribe against failing to preserve the rights of Sama Dubai and causing it to incur a loss of Dh137 million.
Charge
The Public Prosecution charged A.M. with preventing Sama Dubai from gaining a Dh4.6 million in ownership transfer fees.
A.H. was accused of accepting Dh650,000 in bribes from M.A. and M.S. and aiding and abetting them. M.A. and M.S. were charged with aiding and abetting A.H. in committing the bribe crime.
An Egyptian financial controller, from Dubai Government's Financial Control Department, testified that A.M., when he was Lagoons' former chief executive, should have preserved the company's rights and increased its earnings. "He caused Sama Dubai to incur a purported loss of Dh137 million," claimed the Egyptian.
An Emirati senior executive from Sama Dubai testified that A.M. failed to take the proper action against the company which was late in paying the instalments of certain properties.

Emaar merger likely to be "distressing"

A merger between Dubai's Emaar Properties and three local firms is likely to be more distressing than supportive due to strategy uncertainty and exposure to the suffering property sector, EFG-Hermes said.
Dubai Holding, owned by the ruler of Dubai, and Emaar said last month the builder of the world's tallest tower would merge with Dubai Properties, Sama Dubai and leisure developer Tatweer.
"While the merger might result in the creation of a stronger operational/financial entity with better access to funding and ultimately greater control over supply, there is no visibility regarding the strategy of the combined entity," EFG-Hermes said in a report.
The deal, which has an unknown valuation, could lead to a substantial dilution for Emaar shareholders, with Dubai Holding firms unlikely to bring liquidity to the new entity, the bank said.
It added the government ownership level in Emaar could rise to as much as 89 percent from 32 percent.
Emaar's shares have fallen nearly 25 percent since the merger was announced, and were off 6.95 percent at AED2.41 at 0849 GMT on Wednesday. Dubai's index was down 3.5 percent.Ratings firm Moody's Investors Service said late last month it placed Emaar on review for downgrade, and downgraded Dubai Holding to A3 from A2.
The increased exposure of the combined entity to Dubai's fragile real estate sector was also a concern, EFG-Hermes said.
Property prices in the emirate's once-booming real estate sector have fallen 45 percent from peaks in 2008 and are likely to fall as much as 60 percent overall, it added.
Dubai house prices will fall another 20 percent this year as the emirate continues to suffer a sharp economic downturn, a Reuters poll showed last month. (Reuters)

Share slump follows Emaar merger announcement

From ArabianBusiness.com 29 June 09
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Dubai's Emaar Properties said on Sunday the entity resulting from a proposed merger with three units of Dubai Holding, owned by the emirate's ruler, will have combined assets worth AED194bn ($52.85bn).
Emaar Properties' shares plunged after announcing merger plans, dragging Dubai's index to its biggest one-day fall for seven months.
Emaar, which is building the world's tallest tower in Dubai, and Dubai Holding announced a plan on Friday to merge the developer with real estate units Dubai Properties, Sama Dubai, and leisure developer Tatweer – all prominent players in a sector badly hit by the global financial crisis.
The new entity would have AED13.4bn of debt obligations, around 7 percent of total assets, Emaar chairman Mohammed Alabbar said in a statement on the bourse website.
The property developer also said its own total book value of assets at the end of March was AED68bn, with AED10bn of debt obligations.
"The proposed consolidation will create a robust and strategic asset base while joining the strengths of the management teams and employees of these companies," said Alabbar.
Dubai Properties, Sama Dubai and Tatweer had combined total assets of AED126bn at the end of last year, with around AED3.4bn worth of external debt obligations, the company said.
Property prices in Dubai have slumped since last year when the global economic crisis and a drop in oil prices ended an economic boom in the Gulf region.
Emaar, the largest listed Arab developer, which is 31.2 percent owned by the ruler, said the consolidation process will take around four months.
Tatweer said earlier this month the bankruptcy of its partner Six Flags, one of the largest theme park operators, would not delay a multi-billion dirham park project in Dubai.
Tatweer is building at least seven theme parks in the Gulf Arab emirate.
Dubai Holding said in February it would merge back-office operations at Dubai Properties, Sama Dubai and Mizin to cut costs.

Lawyers claim taking bribes on property deals not prohibited

From Arabian Business 16 March '09

Taking bribes and commission on property deals was not prohibited under UAE law, according to lawyers on Sunday who were defending seven former real estate executives charged with corruption.

The lawyers made the statement as five of their clients appeared before the Criminal Court of First Instance in Dubai accused of taking illegal commissions from the sale and resale of land owned by the government.

Four of the five in court were former employees of Sama Dubai, the property arm of the government-owned Dubai Holding, and the fifth was a former employee of Damac, one of the UAE’s largest private property developers.

The five pleaded not guilty to the charges and Judge Fahmi Mounir granted a defence application for an adjournment.

However, all five men were denied bail. The hearing will resume on Sunday, according to UAE daily The National.

Meanwhile, in a separate trial the two other defendants – former employees of Nakheel, the Dubai development company - were also charged with accepting illegal commissions.

The allegedly took an extra two percent for themselves on the sale of land on the Palm Jebel Ali development.

They both pleaded not guilty and were denied bail. The trial was adjourned until Mar. 29.

The two court cases are the first of many due to be heard after a widespread corruption investigation in the UAE, which has resulted in up to 30 executives from several companies being arrested and held in custody.

However, most of those taken in for police questioning have yet to be charged, despite some being arrested more than 10 months ago.

During the two trials the court heard some details of the alleged business practices unearthed by the investigation, such as an alleged AED5m ($1.36m) cash bribe being delivered to a defendant’s home in a black suitcase.

More on the Dubai fraud investigation

Wednesday, Feb 11, 2009
Financial Times: by Simeon Kerr in Dubai

Authorities have detained senior managers at Dubai Waterfront, one of the emirate's most ambitious property developments, as part of an investigation into bribery allegations. The detentions come amid a series of emirate-wide probes into alleged fraudulent activity at state-backed property developers and banks that has rocked Dubai in the past 12 months.

One of those detained, Matt Joyce, was managing director of the vast waterfront project until he was made redundant last month. Dubai public prosecution records show that Mr Joyce, an Australian national, and two others have been detained for questioning in relation to allegations of bribery.

The Australian foreign ministry has confirmed that two of its nationals were detained after questioning on January 25.

Nakheel, the government-owned parent company of the Dubai Waterfront entity, said it had "no information" about Mr Joyce.

The arrest of more real estate executives will, however, increase investor concerns about probity among Dubai's big developers, which are shedding staff as they attempt to cut costs in the midst of a price crash. A year-long clampdown on corruption and fraud has left more than 20 executives in jail on allegations mainly surrounding the former management of developer Deyaar and its parent Dubai Islamic Bank, but also extending into other parts of 'Dubai Inc'. None has yet been charged and no trial dates have been set.

Nakheel, which is also the developer of offshore ventures and has an $80bn (€62bn, £54bn) portfolio of projects, admitted some staff had been detained for questioning on fraud allegations last summer.

Government-linked developers Sama Dubai and Mizin have also had executives detained on allegations of financial irregularities.

It is unclear to what extent these investigations are linked.

The sprawling graft probe reflects the seriousness which the government has placed on cleaning up the real estate sector, but concerns have also been raised that some suspects have now been detained for almost a year without charge.

Morgan Stanley estimates that $263bn of real estate projects in the United Arab Emirates have been delayed or cancelled because of the global financial crisis.

But Nakheel insists that the waterfront development, a reclamation scheme that is about 30 per cent complete, is not one of them.

A property lobbying group has called on the government regulator to prevent a complete collapse in the real estate market by cancelling projects such as Dubai Waterfront until demand returns. Twice the size of Hong Kong, Dubai Waterfront is located on the border with the neighbouring emirate of Abu Dhabi. It is intended to house about 1.5m people, which is roughly Dubai's current population, on reclaimed land and alongside excavated canals cut through the desert.

Mr Joyce's position was last month merged into a neighbouring project, Palm Jebel Ali, as the developer delayed other projects and made hundreds of staff redundant.

The moves were part of a broader streamlining initiative to allow Nakheel to cut costs ahead of the refinancing of a $3.6bn Islamic bond in November.

Property freefall

Dubai real estate, the darling of foreign investors since the ruler opened the door to non-Gulf ownership in 2002, has plunged into freefall since last autumn when the global credit crunch finally punctured the property bubble.

HSBC estimates that house prices fell 23 per cent between the third and fourth quarters of 2008.

Brokers say prices on some of the higher-end developments have plunged even further as speculators, who had been used to "flipping" properties for a quick return, seek to exit their investments.

About half of the emirate's developments have since been put on hold or cancelled.

Sama Dubai: Shut down

Sama Contracting, the JV between Sama Dubai and the UK firm Murray Roberts, has been shutdown as of this morning. Sama was the name behind the much delayed Lagoons development in Dubai. Meanwhile, the developer behind the Lagoon project "....has said the local real estate market "badly needed" a correction in prices. Tahir Schön, chairman of Schon Properties said he was "unworried" about the downturn in the sector." (ArabianBusiness.com)

Mr Schön stands alone as the only person in the UAE unworried by the downturn.

In further developments, Arabtec (UAE's largest contractor) is pursuing the government owned Meydan Group for payments following the termination of the JV contract to build the new Nad al Sheba racecourse. The other JV partner, Malaysia's WCT Bhd, are reported to be poised to claim $84 million in compensation after the termination.

What's that Polish curse "May you live in interesting times"? We're certainly living in them!