UAE prosecutor probes Union Properties executives over financial irregularities

Market regulator filed complaint against the developer's board chairman and other executives

A residential project by Union Properties in Motor City, Dubai. Pawan Singh / The National

A UAE prosecutor is investigating claims of financial irregularities by executives at Dubai-based developer Union Properties, according to state-run news agency Wam.

The Securities and Commodities Authority, the country's markets regulator, filed a complaint against the developer's chairman Khalifa Al Hammadi and some of the company's executives, Wam reported on Sunday.

The developer's shares dropped 9.67 per cent to 24 fils on the Dubai Financial Market at 1.15pm Dubai time.

The executives are accused of selling one of the company's property assets at a price below its real value and attempting to conceal the name of the beneficiary through the use of forged documents.

Other allegations include abuse of authority, fraud and damage to the interests of the company and its shareholders as a result of investments entered into outside and inside the UAE without proper studies being done, leading to financial losses for the company, Wam said.

The company's executives have also been accused of breaching accounting standards systems to hide the loss incurred by the company through the change in the classification of its investments, it said.

UAE Attorney General Hamad Al Shamsi said prosecutors had begun to carry out investigations under his direct supervision. He ordered the seizure of the property of some of the accused and barred them from leaving the country, Wam reported.

The legal status of the contracts, deals, and procedures initiated by the accused is being investigated and subjected to a technical examination by specialists, with the participation of the SCA and law enforcement authorities, he said.

Executives whose responsibility has been proven will be summoned, Wam reported.

Mr Al Shamsi issued directives "to deal firmly with anyone whoever attempts to defraud or tamper with the national economy", Wam said.

"The Public Prosecution will continue to inform the public in accordance with the course of the investigation and the interest of the investigation process," he said.

Under instructions from the SCA, Union Properties will add a motion to dismiss seven board members to the agenda of its General Assembly Meeting scheduled for October 26.

The members who would be dismissed are Mr Al Hammadi, Darwish Al Ketbi, Mohamad Al Fardan, Abdul Al Halabi, Fathi bin Grira, Dahi Al Mansouri and Klar Jorg, it said in a bourse filing on Sunday.

Shareholders will vote on this during the meeting, Union Properties said.

The DFM briefly suspended trading in Union Properties shares on Sunday due to an incoming disclosure from the company.

In its disclosure to the bourse, Union Properties did not refer to the federal investigation but said it was responding to news being circulated on social media platforms regarding the sale of an asset in 2020.

Asset sales are carried out in accordance with a methodology approved by the board of directors and its executive management by following "strict procedures in terms of the fair evaluation of its assets by reputable real estate valuers", it said.

Union Properties said that in March 2020 it sold a residential property to Amna Al Hammadi for Dh30 million and that she is not considered a "related party" based on company governance regulations issued by the SCA.

The building was sold "in light of the company's commitment to settle its debt towards its lenders and after studying the offers received by the company", Union Properties said.

The residential building was bought in 1997 for an amount of Dh36m, and was mortgaged to one of the company’s and one of its subsidiaries’ lenders since 2009, and registered in the books of the company for Dh49.5m, Union Properties said.

The SCA was not immediately available for comment when contacted on Sunday by The National.

In a separate bourse filing on Sunday, Union properties said that one of its subsidiaries filed arbitration claims seeking Dh3.5bn and the arbitral tribunal is expected to issue its decisions on a number of the claims in the second quarter of 2022. It did not identify the subsidiary or the reason for filing the claims.