Union Properties: Selective Swift Justice?
Washington, D.C. – The United Arab Emirates has dealt with a slew of corruption cases in recent years, the latest when the Federal Public Funds Prosecution sought the detention of Khalifa Al Hammadi, Chairman of Dubai’s Union Properties (UP), on charges of financial misconduct. Executives soon voted on his dismissal with 3 other board members. The shakeup came amid conflicting reports about the developer’s standing. The public joint stock company had accumulated losses of 1.96 billion UAE dirhams ($534 million), constituting 46.7% of its capital, while dealing with multiple arbitration claims amounting to $952 million. After stating it had returned to profitability in early 2021 due to an “impressive turnaround,” UP then declared its profits dropped 100% several months later.
Al Hammadi was appointed Chairman in mid-2020, yet the same board expelled him just over a year later, and “rejected a proposal to ratify the auditors’ report as well as the company’s balance sheet and profit-and-loss accounts for 2020” following announcement of the attorney general’s investigation. The crimes allegedly committed include:
- Violating standards and concealment of losses by altering investment classifications
- Abuse of power, committing fraud, embezzlement, and harming company and shareholder interests
- Investing in foreign markets without requisite due diligence, resulting in significant financial losses
- Racketeering, concealing the names of beneficiaries purchasing properties with fraudulent documentation
- Selling company assets “at less than its real value.”
Up Leaks, a twitter account ostensibly created exclusively for disclosing details of the case, posted a series of tweets with links to incriminating documents in October 2021. The articles focused on Al Hammadi’s apparent self-enrichment, providing receipts, contracts and even an Excel sheet listing 182 properties sold to siblings through shell companies at a value of 277 million dirhams ($75.4 million). In one example, the blog indicates the Dubai Real Estate Regulatory Authority web site lists 73 properties sold in UP’s Oia Residence for a value of 136.9 million dirhams (dhs) while company accounts indicate the paid amount is 85 million dhs. The site shows Sales & Purchase Agreements (SPA), trade licenses, and internal company documents to support its claims of corruption.
Top tier regional and international media that covered the story include Reuters, Associated Press, US News & World Report, Bloomberg, CNN Arabic, CNBC Arabic, Russia Today Arabic, AlJazeera, Zawya, Arab News, AlArabiya, Asharq AlAwsat, Emirates News Agency, Gulf News, AlBayan, AlKhaleej, and Sharjah 24.
The timely arrest and dismissals reflect a general commitment to combatting corruption; however, they also raise questions as to the consistency of applying swift justice. The Union Properties case shows the authorities do investigate suspect illicit activity, and in this case apparently soon after enough evidence was gathered. Conversely, authorities have yet to investigate offenses exposed by the Global Justice Foundation’s 80-page legal analysis by white collar crimes attorney Bruce Casino Esq. which uncovered racketeering, embezzlement, and fraud involving the Saudi Minister of Human Resources and Social Development of Tameer, a company once valued at $5 billion dollars. Tameer’s majority shareholder, Ahmed AlRajhi, along with his siblings and executives have orchestrated what one National Review pundit called “the greatest real estate fraud in the history of the Middle East.” The plan was laid out in a presentation detailing an exit scheme to defraud individual buyers as well as Omar Ayesh, the company’s founder.
The AlRajhis set up a far more complex structure of multiple shell companies owned by the brothers and executed multiple fraudulent acts to facilitate a transfer of assets to those companies. In fact, over the years investigative efforts have revealed a strategy of delay tactics, abuse of power and outright theft unchecked by the authorities, including
- Fraudulent conveyance of assets to shell companies out of Tameer, leaving only debts on the company’s books
- Re-labeling AlRajhi’s investment capital as a loan in company ledgers to increase its liabilities
- Multiple manipulations of financial records in violation of International Financial Standards 10, 24, 32 and 37
- Issuing backdated Board resolutions signed by unauthorized AlRajhi employees such as human resources staff, expropriating assets from Tameer and enabling its devaluation
- Having an employee of an AlNahyan royal facilitate the forgery of Board resolutions
- Refusing court-appointed experts’ access to financial records, hard drives and email servers without fear of being held in contempt
- Rejecting fair purchase offers in favor of undervalued transactions
|Khalifa Al Hammadi||Ahmed AlRajhi|
|Known Shell/Paper Companies|
Island Falcon Investments, IFPM Real Estate, Island Falcon Property Management, Pure Diamond Investment
Gemstone Investment, Gemstone Real estate Development, Moonstone Investment, Sunstone Investment, Blue Onyx Commercial Investment, Onyx Stone Real Estate Investment, Lapis Lazuli Asset Management, Lazuli Asset Management, Mada
|Beneficiary Sibling(s)||Amna & Mohammad AlHammadi||Khalid & Faisal AlRajhi*|
|Value of Embezzled Assets/Funds|
114 million AED/$31 million
2.2 billion AED/$600 million**
**Calculation of the devaluation requires forensic investigation. This is the sum awarded by Dubai courts to Ayesh, including 1.6 billion AED plus damages.
The size and scale of the difference between the UP and Tameer cases of corruption is staggering, and yet the approach of authorities raises more questions than it answers. The Global Justice Foundation conducted interviews in the Ayesh case and discovered the legal team had presented whistleblower documents to Dubai’s public prosecutor through the police in 2015. However, rather than investigate, the public prosecutor refused to proceed with a criminal probe demanding the claimant be present for interrogation first. Yet while the UP case represents approximately 5% the value of the Tameer fraud, a probe was launched within months of the alleged crimes being committed whereas coverups of evidence in the Tameer case have been ongoing for over a decade.
The Global Justice Foundation applauds His Highness Sheikh Mohammed’s 8 principles that emphasize “justice delayed is justice denied.” However, the reality is that Dubai’s judicial process can appear to be selective in which corruption cases it pursues. There must be no quarter given to any perpetrators of financial crimes, and the declaration that no one is above the law must consistently be pursued to the fullest extent of the law.