Monday, Oct 12, 2009

(Adds further details.)

By Mirna Sleiman

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)--Dubai-based listed jewelry retailer Damas International Ltd. (DAMAS.DI) said Monday it accepted the resignation of Tawhid Mohammed Taher Abdulla as its chief executive after he disclosed alleged "unauthorized transactions".

Damas said in a statement that Abdulla had told the board about "what is understood to be unauthorized transactions conducted by him. The full extent of these transactions has not been ascertained at this time but the company's initial estimate is that these transactions could amount to approximately $165 million."

Tawhid Abdulla didn't answer calls to his mobile phone. A spokesman for Damas was unreachable. Zawya Dow Jones had earlier Monday exclusively reported his resignation, citing people familiar with the matter.

The company added that it has "adequate funds to meet its current financial obligations and is continuing to conduct business as usual."

The resignation is the latest corporate scandal to engulf Dubai after a series of damaging investigations that began 18 months ago led to the arrest of dozens of senior executives at some of the sheikdom's biggest companies.

"The Abdulla brothers, being founding members and current owners of more than 50% of the shares of the company, fully stand behind the company, and have agreed to commit the necessary assets to secure and repay in full any unauthorized transactions," the Damas statement Monday added.

SHARES SUSPENDED

Damas on Sunday requested that NASDAQ Dubai suspends trading in its shares.

"NASDAQ Dubai is in close contact with Damas following the company's decision to voluntarily suspend its shares," a statement from the bourse said late Monday following the Damas disclosure.

Damas, a family-controlled jewelry firm with origins back to 1907, raised $270 million in an initial public offering on the Dubai International Financial Exchange in July 2008. The exchange was the predecessor of NASDAQ Dubai.

In July the group said it will form a partnership with India's Gitanjali Gems Ltd (532715.BY) to tap demand in the world's largest gold market.

The company posted a net profit of U.A.E. dirhams 226.91 million ($62 million) for the 15-month-period ending March 31 and earnings per share of AED0.25. It changed its financial year end to March 31, from Dec. 31, due to market volatility.

Damas said in the statement that its board has appointed Hisham Ashour as chief executive of the company effective Oct. 11.

"A special committee of the board is appointing an independent global accountancy firm to conduct an independent review and an international law firm to assist in analysis of the transactions," Damas said it in its statement on the NASDAQ Dubai exchange.

-By Mirna Sleiman, Dow Jones Newswires, +9714 364-4966, mirna.sleiman@dowjones.com Copyright (c) 2009 Dow Jones & Co.

(END) Dow Jones Newswires

12-10-09 1625GMT