UAE opens investigation into local property developer over alleged financial violations

The federal investigation was launched following a complaint by the stock market regulator

  
Dubai Skyline. Image used for illustrative purpose.

Dubai Skyline. Image used for illustrative purpose.

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DUBAI: The United Arab Emirates attorney general has announced an investigation into allegations of financial violations by the chairman and other officials of Dubai-based developer Union Properties, state news agency WAM reported on Sunday.

The federal investigation was launched following a complaint by the stock market regulator, WAM quoted Attorney General Hamad Saif Al Shamsi as saying in a statement. The WAM report was also posted on the Public Prosecution's Twitter account.

WAM said the complaint outlined alledged violations by Union Properties Chairman Khalifa Hassan Al Hammadi "along with some of its officials", including selling a real estate asset below its real value and hiding the name of the beneficiary, as well as "forging documents and other violations that caused harm to the company and its stockholders".

Hammadi could not immediately be reached for comment. Representatives for Union Properties and for the stockmarket regulator, the Securities and Commodities Authority, did not immediately respond to Reuters' requests for comment.

The attorney general ordered the seizure of the property of some of those being investigated and they are barred from leaving the country, WAM said, without identifying the individuals.

The Dubai bourse suspended trading on Sunday in Union Properties shares after they had plunged 9% to 0.25 dirhams ($0.07). The bourse said this was because of an incoming disclosure from the company.

Union Properties' disclosure, which did not mention a federal investigation, said the disclosure was filed in response to what it described as news being circulated on social media.

It said that asset sales are carried out based on a methodology approved by the board and executive management "through following strict procedures in terms of the fair evaluation of its assets".

It said that in March 2020 the company sold a residential building to Amna Al Hammadi for 30 million dirhams ($8.2 million), adding she is not considered a "related party".

The building was sold after studying offers and in light of commitments to pay down company debt, it said.

The building was bought for 36 million dirhams in 1997 and registered in the firm's books for 49.5 million dirhams in 2019, according to the disclosure.

In a separate statement earlier on Sunday, Union Properties said that a subsidiary was seeking 3.5 billion dirhams ($953 million) in arbitration claims without identifying the subsidiary, who the claims were against or why. 

Union Properties, which started operating in 1987, has a market cap of just over 1 billion dirhams, according to a Reuters calculation.

($1 = 3.6728 UAE dirham)

(Reporting by Maher Chmaytelli and Alexander Cornwell Editing by Nadine Awadalla, Ghaida Ghantous and Frances Kerry) ((maher.chmaytelli@thomsonreuters.com;))


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