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29 March 2024

Owing millions in credit, owners of four UAE trading firms allegedly absconding

Published
By VM Sathish

Four trading and distribution companies in the UAE have allegedly closed down after taking construction materials and other related goods on short-term credit giving postdated cheques.

The affected traders told Emirates24|7 that they have suffered losses in millions of dirhams and that they cannot contact the company officials as their mobile phones and land phones are switched off. They have filed police complaints in the respective police stations, they added.

Two companies, based in Dubai, have left at least 50 suppliers of construction materials and other goods with dud cheques, reportedly worth more than Dh60 million.

The owners have absconded, allege victims.

The companies had offices and two warehouses in Dubai, which remain closed now, frequented only by traders. They dealt with cement, steel, plastics, diesel, cables, and other commodities.

Similarly, a firm in Abu Dhabi is reportedly closed since December 16, 2013 leaving more than hundred creditors and suppliers in the lurch. The mobile phones of the company’s marketing manager, purchase manager and procurement manager are switched off from December 17, while the landline is not functional, claim the victims.

The manager of an electric goods supplier that has offices in Dubai and Abu Dhabi, said: “We had orders worth Dh500,000 for supplying electrical and wiring items, but we have stopped supplying the material after a cheque for Dh200,000 issued for the first delivery bounced. We were dealing with the construction wing of the company.

The company’s offices are closed and the bank issued a cheque bouncing statement due to insufficient funds. We will take legal proceedings to claim Dh200,000 that we have lost in the deal.”

Meanwhile, general manager of a furniture company in Ajman, said one of the closed companies "placed an order for supplying bedroom furniture, dining sets and sofa sets worth Dh450,000. The company issued a cheque which bounced within four days of delivery. When we checked the bank account, it was revealed that the company’s balance sheet was strong for the first year, due to regular deposits and withdrawals of cash.” He is also taking legal action against the company, and warned other traders to be cautious.

“They used to give ten per cent advance payment before taking the products and promised to make the full payment within 45 days. Many traders are victims in this fraud,” said Khassim, one of the affected traders, who did not wish to name his company.

A representative of another electrical trading company said, "We supplied special cables worth Dh100,000 to the firm in Abu Dhabi. They paid ten per cent cash for the initial transactions. Later they increased the volume of orders and on the last contract we delivered electrical armed cables worth Dh100,000. Last week, we were supposed to deliver another consignment of cables worth Dh250,000, that's when we learnt of the fraud."

Traders fear that a gang is behind such cases. More cheques are due in the last week of December and January.

One of victims said that all four firms - two in Dubai and 2 in Abu Dhabi - that have closed down perhaps were managed by the same group, given their modus operandi.

Their allegedly renewed old trading licences and operated the same with a few employees. They bought fast-moving goods, especially construction-related electrical and electronic goods, and furniture, computer, heavy equipment, mobile phones, food items like rice and textiles. After buying huge quantities of these goods on credit, they used to sell the same at steep discounts or transfer the material to their other warehouses in the UAE and Oman.

An Indian trader reportedly sold rice worth Dh400,000. There are other traders who have lost between half a million dirhams to Dh2 million.

The bank account of the closed companies show a balance of just Dh 649, according to one of the victims - an Asian trader. About 200 traders could be affected.

[Image via Shutterstock]