|29 January, 2019

Ex-Drake & Scull vice-chairman Khaldoun Tabari launches $1mln claim against Tabarak Investment

Tabari alleges breach of an undertaking given at the time he sold his shares in Drake & Scull to Tabarak Investment

Image used for illustrative purpose. A beautiful view of Dubai skyline.

Image used for illustrative purpose. A beautiful view of Dubai skyline.

Getty Images/Umar Shariff Photography

The former vice-chairman and CEO of Dubai-based contractor Drake & Scull has submitted a $1 million legal claim in the DIFC Courts against the investment company which bought out his shares in the company in 2017.

The claim brought by Khaldoun Tabari and his daughter, Zeina, who was also a board director at Drake & Scull, states that Tabarak Investment breached an agreement undertaken in February 2017, at the time he agreed to sell his shares, to release them from any liabilities arising from their work at Drake & Scull.

It states that although Tabarak Investment initially agreed to release them from any liabilities, representatives later voted at Drake & Scull’s annual general meeting in April 2018 not to do so.

 Speaking to Zawya about the claim by telephone last week, Khaldoun Tabari said: "They gave us an undertaking when they bought my shares. They have not abided by it."

In a statement issued to the Dubai Financial Market in June last year, Drake & Scull said that a committee set up to investigate the actions of unnamed members of former management “has completed the investigation and has delivered all the Violations of the Previous Management to the designated authorities in the UAE to proceed with the legal proceedings.”

 This has led to an investigation being undertaken by the Public Prosecutor’s office in Abu Dhabi, which Tabari told Zawya he learned about when both his and his wife’s bank accounts were frozen in June last year, and he found that his visa was no longer valid.

 “I, at the time, was in the (United) States with my daughter," he said. "I have retired, I am staying between London and Jordan, so I just happened to be outside the country,” he said.

 However, he said that his legal representatives have subsequently met with the Public Prosecutor’s office to respond to allegations, although he said no charges have been brought against him, and no other member of his family is subject to the investigation.

Tabari also strongly denied reports published in July last year stating that he owed Drake & Scull $272 million.

“I don't owe anybody,” Tabari said. On the contrary, he said that he is pursuing two other claims through the Dubai Courts for money which he claims that Drake & Scull owes to him. In a subsequent email, he said the value of these claims were worth almost 23.9 million dirhams ($6.5 million). Drake & Scull did not respond to several requests by telephone and email to comment.

 Losses mount

Drake & Scull has endured a torrid few years both prior to Tabari stepping down as CEO in October 2016 and since Tabarak Investment became the company's biggest single shareholder in June 2017.

Prior to its investment, Drake & Scull had embarked on a recapitalisation which saw the firm cancel three quarters of its share capital to extinguish over 1.7 billion dirhams  worth of historic losses. Tabarak Investment then injected 500 million dirhams of capital into the company in October 2017, but losses have continued to mount. The company declared losses attributable to equity holders of 662.3 million dirhams for the first nine months of 2018, meaning that by the end of September 2018 accumulated losses were over 1.1 billion dirhams.

Tabari said that over the past few years, “the construction industry has not been good” in terms of general market conditions in the region.

 “And that's why you see many companies have lost money. But that doesn't mean it is because of the CEO. Everything was transparent, our losses were properly recorded and we had a proper auditor,” he argued.

In an emailed statement to Zawya on Monday, a spokesman for Tabarak Investment said: “We view this (the claim filed by Khaldoun Tabari) as a malicious claim, and we have provided DIFC courts with sufficient evidence to reject the claim.”

(Reporting by Michael Fahy; Editing by Anoop Menon and Yasmine Saleh)

(michael.fahy@refinitiv.com)

Our Standards: The Thomson Reuters Trust Principles

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

© ZAWYA 2019

More From Markets