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Damas bosses fined heavily with two tonnes of gold still missing

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The Dubai Financial Services Authority has issued a landmark ruling that fined the three brothers who ran the Nasdaq-listed Damas jewelry company more than $3 million and requires them to repay $99 million in cash and almost two tonnes of gold ‘borrowed’ from the group.

They will also be banned from directorship of any company in Dubai for up to 10 years. The case is now past over to the Dubai Police and Dubai Public Prosecution to consider possible criminal charges that could carry a custodial sentence.

Swift action

The DFSA is the regulatory authority within the Dubai International Financial Centre where Damas had listed its stock on the Nasdaq Dubai exchange. Its justice has been commendably swift in this case, the sort of legal case that might have dragged on for many years in more developed countries.

For their part the Damas bosses – Tawfique, Tawhid and Tamjid Abdullah – have previously promised to pay back all the monies taken from Damas and are now under court order to fulfill this promise.

The regulator discovered some 2,200 debit transactions between July 2008 and October 2009 ranging from petrol bills to 50 property deals, including twin 49-storey towers on the Sheikh Zayed Road. The two tonnes of gold, which has not yet been paid back was used to make ‘certain personal investments’ reported the DFSA.

DIFC chief economist Nasser Al Saidi told The National: ‘The Damas case is a very important reminder to the boards of regional companies of the directors’ duties and liabilities. This action will remind directors of public companies that they owe a duty to the company and to all their shareholders, which supersedes any duty they have to their own private interests’.

Outstanding litigation

Dubai is now moving as fast as it can to clear up the mountain of legal cases that remain outstanding in the aftermath of the real estate slump that began 18 months ago with the global financial crisis.

News on the rescheduling of $26 billion of debt owed by Dubai World real estate subsidiaries is keenly awaited this week. This is not yet the subject of litigation although the DIFC courts have been given special competence in the event of a liquidation.

The jury is still out on whether Dubai can emerge from its real estate crash with an enhanced reputation for corporate justice. But such landmark decisions as the Damas ruling do at the very least show that issues of corporate governance are now being taken very seriously.

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Written by Peter Cooper

March 22, 2010 at 8:39 am

One Response

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  1. The Dubai government is to be highly commended for their swift and just decisions/ actions in this case.

    Fraud & Corruption in the West:
    Sadly, in many western countries, esp. the USA, those who committed massive fraud, or were engaged in massive corruption and cover-up are being rewarded. This is true for government officals, government employees as well as those in private industry. Fraud and corruption seem to be the biggest exports that the USA has to offer.

    An Apropos Joke
    There’s this cartoon that shows a young man talking to his father about a possible career in crime.
    Son: “Since fraud and corruption seem to be highly profitable, with no down-side risk, I think I’ll pursue some job that involves fraud.”

    Father: “In government, or in private industry, son?”

    obewon

    March 22, 2010 at 10:10 pm


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