'Execs caused Dh142m loss to Waterfront'
Three former executives of Dubai Waterfront and an investor allegedly caused a loss of Dh142 million to the company by selling a plot for a depreciated price and accepting only 5 per cent deposit as down payment in 2007, the Dubai Criminal Court heard.
The prosecution accused MJJ, 43, former CEO, AJ, 44, former director of legal affairs (fugitive), MRL, former commercial manager, and AR, fugitive, (all Australians) of harming their employer and causing loss of more than Dh142 million by falsely claiming that D17, a plot in the Waterfront project was booked by an investment company of the accused AR. They made the buyer pay Dh44 million as commission which they divided among themselves.
The three executives agreed with the fugitive owner of the investment company to make a profit of Dh44,105,780 for themselves in commission. To further attract the buyer, they depreciated the square metre price from Dh180 to Dh120 and accepted only a 5 per cent down payment whereas it should have been 15 percent of total rental value of Dh192 million.
MRL, commercial manager, prepared the documents necessary for the deal despite of his knowledge that the amount was paid in commission by the client SL (a company).
Similarly AJ, legal affairs director, prepared the contract before getting the approval of the management for the deal and with knowledge that the amount was paid in commission.
The CEO got Dh22.1 million from the deal and the company lost Dh142,153,760, being the difference between the actual value and the depreciated selling price.
The role of the fugitive accused AR was that of mediator between the buying and the selling companies.
He told the manager of the buying company DB that the plot D17 is not available for direct sale from Nakheel and that a selling process can only be through his investment company which he claimed had booked it with the seller. So he obtained more than Dh44 million in commission.
Waterfront executives confirmed his claim and told the buyer that the plot had been booked by AR’s company and that he needs to obtain a waiver from that company.
They supported their claim before DB, the buyer, by electronic mail and correspondence. They also tempted the buyer by offering him extra facilities should he obtain a waiver from AR. They deceived DB and made him pay the Dh44 million to AR.
DB, 45, architect, Australian, represented the buyer company ‘SL’ against the three Waterfront executives.
DB testified that he came to Dubai in 2006 and joined the company ‘SL’ as operations manager. While he was purchasing plot D5B of the project and finalising the deal with the owner, a third company, he met the CEO of Waterfront.
“I expressed interest in buying other adjacent plots provided they would be fronting the sea. He told me that there isn’t any that fronts the sea and that was in January 2007. In August, I received a call from the CEO of Waterfront MR, and told me that there is an Australian called AR who had connections with an American company and that he will discuss with me regarding a plot that fronts the sea.
“A few days later, he called me from Australia and told me about plot D17 his company owns in the project. Later AR came to Dubai and proposed buying and developing the plot jointly. However, he said that the plot is not exactly fronting the sea, he also proposed other plots and asked if we can obtain an amended plan of it and the surrounding plots. The amendments were carried by Waterfront from a number of proposals I made them.
“We did not proceed with the joint venture deal as AR asked for unjustified Dh65 million as administrative costs. AR asked for Dh44 million to give our company a waiver and through his relation with Waterfront he would reduce the price of the square feet to Dh120.
Waterfront executives offered 200,000 per square feet for free provided that our company finished construction of the whole plot in five years and made a penalty of paying the value of the free area if we did not build them,” he testified.
SL signed the two agreements, one for the waiver against which they paid Dh44 million and another for the purchase of the plot and started developing the two plots before being summoned by the Dubai Financial Control Department in December 2008.
The Financial Control Department when checking on the project suspected the deal as the price per square metre was lesser than other plots. Investigations were launched and lead to discovering the malpractice and so was reported to the police, testified Lieutenant Hamad Hassan.
The court will reconvene on October 18.