-- Posted Monday, 22 March 2010 | Digg This Article | | Source: GoldSeek.com

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.

-- Posted Monday, 22 March 2010 | Digg This Article

About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link

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