crime

Dubai Ruler’s Court settles case involving Dh23 million

Case was filed by a businessman against his partner for breach of trust and misappropriation of funds

Staff Report
18:07 October 6, 2017

Dubai: The Dubai Ruler’s Court settled a case filed by a businessman against his partner for breach of trust and misappropriation of funds exceeding Dh23 million.

Hashem Salem Al Qiwani, director of the Disputes Settlement Department of the Dubai Ruler’s Court, said the businessman does not permanently reside in the UAE, and is linked to his business partner through a separate contract between them. The partner’s name is not mentioned in the commercial licence, the company’s establishment contract or any of its accounts.

The claimant had met the defendant, who is an old friend, in 2003 during a visit to Dubai. They agreed to set up an engineering company, and signed a contract that states that the partner with the capital, the claimant, would receive 80 per cent of the company’s gross profit, while his partner, the defendant, would receive 20 per cent for managing the company.

Due to the claimant’s reputation and widespread connections, the company was able to acquire a number of projects and opened numerous branches in the country, in addition to a branch in an Arab country. The claimant eventually asked the defendant to brief him on the company’s performance, and the defendant avoided the question. He would then inform the claimant that the company was not doing well, which aroused the suspicion of the claimant, especially since the construction sector was quite active during that period.

The claimant decided to send in his auditors to the company, but the defendant refused to cooperate with them. Upon the insistence of the claimant, the defendant allowed the auditors to look into the company’s performance. The defendant provided them with false and conflicting information, and the auditing report showed that the accounts were tampered with, but the auditors were not able to determine the exact amount. Following persistent inquiries from the claimant, the defendant sold the company’s assets, shut down its branches and cancelled the licence by taking advantage of the powers granted to him by the claimant.

The defendant changed his name and phone number, and vanished for many months, which prompted the claimant to file a complaint against the defendant, accusing him of betraying his trust and misappropriation of the company’s funds.

The defendant claimed that the accusations are false and auditors were not professional. The specialised body then decided to refer the lawsuit to the Disputes Settlement Department, which succeeded in proving that the stolen funds exceeded Dh23 million.

Al Qiwani pointed out the department reviewed the relationship between the business partners as per the contract signed between them. The department faced many issues, the most significant being insufficient documents presented by the claimant.

The company also did not retain any regular accounting records. Al Qiwani added there was no trace of company’s accounting system, because the defendant sold the company’s assets and PCs.

The defendant also impeded the investigation by not supplying the papers requested by the experts, and providing false and conflicting documents.

A careful analysis of financial statements and indexes showed that the numbers did not match, particularly those concerning revenues and expenses of projects implemented by the company. The experts also looked into the company’s bank accounts, which revealed the presence of many accounts used for making payments to a large number of suppliers and creditors. The defendant was asked to present a list of suppliers and creditors, and he presented one that had several pieces of information missing.

The list was looked into and compared with the bank statements, which revealed that some amounts were transferred from one of the company’s accounts into another account not included in the list of suppliers. Upon contacting the bank, it was confirmed that the account to which the amounts were transferred was registered under the name of the defendant and his wife, and statements of the account showed a balance of Dh10 million. The defendant did not provide a valid explanation for transferring the said funds into his personal account, in addition to the fact that some of the money transferred and withdrawn from this account was not used for operations concerning the company.

The defendant also transferred large sums of money to relatives and friends.

There were also a number of projects that were completed by the company. The defendant disclosed the expenses accrued by the said projects, but kept the profits for himself, falsely claiming that said projects were not completed.