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An independent team investigating alleged corruption in Dubai companies began laying out its findings in court yesterday, having been given unprecedented powers of scrutiny.

The team, led by Mohammed Mustafa Hussain, was appointed by Sheikh Mohammed bin Rashid, the Ruler of Dubai and Vice President of the UAE, to investigate dealings at the developer Deyaar.

Mr Hussain told the Dubai Court of First Instance that an intricate web of land deals and transactions had created a massive fraud. He was giving evidence in the case of SA and IJ, two former Deyaar employees who stand accused of bribery involving the sale of land.

kabulvarkenBoth men have been on bail but only SA, an Emirati and former member of the Deyaar board, was present at the hearing, where he was represented by three lawyers.

In one case, the pair allegedly bought a piece of land and engineered its sale to Deyaar days later for almost twice what they paid.

SA, who was also an executive of Dubai Islamic Bank, had bought the land in Dubai Marina for Dh415.8 million (US$113.28m) on September 23, 2007.

Two days later it was sold to Deyaar for Dh800 million. In addition, Mr Hussain alleged, SA made a personal commission of Dh11.5 million.

As Dubai Islamic Bank and its subsidiary Deyaar are both government-owned entities, their employees are prohibited from accepting commissions.

The land deal had been struck between SA and IJ, who “initially claimed they did not know each other”.

However, Mr Hussain said his team had unearthed evidence that the two had been business partners before.

“When confronted about their history, IJ claimed that he was simply acting as the middleman for Deyaar,” said Mr Hussain. IJ had persuaded Deyaar executives that the Dh800 million price represented “an opportunity”.

During his investigation, Mr Hussain could find no one in Deyaar who could account for the doubling in the price of the land.

“The people we interviewed could not even give a single reason for the price increase,” he told the court.

He also provided evidence of a farm and another parcel of land that were sold in Al Ain, allegedly earning another defendant, AA, also a Deyaar employee, Dh73,647 in kickbacks.

Dubai’s public prosecution has charged 10 former Deyaar employees with a range of offences including bribery, forgery and breach of trust, swindling and supplying company secrets to competitors.

Speaking outside court, one of the public prosecutors said that Sheikh Mohammed had given the investigative team carte blanche to look into the Deyaar allegations.

By law, they were allowed to question anyone, and to demand any documents or files. The team reported directly to Sheikh Mohammed.

Sheikh Mohammed publicly stated his firm support for the investigations during an internet question-and-answer session in April.

“These cases are a sign of the Government’s clear interest in improving management of firms and its commitment to principles of proper accountability,” he said. “No one in the Emirates is above the law and accountability.”

There was, he said, “no room for corruption and the corrupt”, adding: “In all corruption cases, people are not only prosecuted and punished, administrative and legal holes that they exploited to commit their crimes are plugged.”

A major real estate scandal is unfolding in Dubai as 500 angry unit buyers and investors in the $630 million Ebony Ivory Towers project demand a full government investigation of developer Al Fajer Properties and its agent Dynasty Zarooni Inc., according to Ebony Ivory Investors Group.”

Misleading advertisements and press releases, overselling of non existing space and the missing down payments are among the buyers’ documented complaints, according to Moses Oye, a British investor and spokesperson for the Al Fajer Properties Investors Group having investors from US, UK, Russia, Iran, India, Canada & Pakistan.
“We are calling on Dubai’s Real Estate Regulatory Authority (RERA) and the Dubai Ruler’s Court to investigate the developer, cancel the Ebony Ivory project and compel a refund of our $140 million in down payments,” said Oye.

Oye cited a series of fake construction photographs that ran in a local newspaper in July 2008 with Al Fajer Properties logo. The photos showed a structure rising six floors above ground with the following caption: “Shot on location on 10th June 2008, Ebony Ivory, Jumeirah Lakes Towers.”

In reality, the photos were taken at another Al Fajer site and currently there is only a hole in the ground at the Ebony Ivory project, according to Oye.

“Had we known that Al Fajer Properties was presenting false and misleading photographs, we would never have invested in the development,” he said.
“In fact, some investors have already filed criminal cases for misrepresentation with the Dubai Public Prosecutor.”

In the past year, there has been virtually no construction on the site, said Oye. In addition, investors have learned that the developer sold approximately 250,000 square feet more space than the maximum built-up area allowed by government permit – another indicator of potential fraud selling air.

Most importantly, Al Fajer Properties paid Dynasty Zarooni Inc approximately $55 million of the $140 million collected in down payments that should have been deposited in an escrow account, Oye said. “We demand our money back and want to know why Al Fajer gave those funds to Dynasty Zarooni rather than use them for construction,” continued Oye.

“The law sets a punishment of imprisonment and fines for any person who embezzles payments made for the purpose of construction of real estate project.”

To date, RERA has ignored the investors’ demands of a transparent investigation and the evident violations of RERA regulations and UAE criminal laws in order to serve the interests of Sheikh Maktoum Bin Hasher Al Maktoum and Al Fajer Properties, said Oye.

“What do you do when the independent government agency trusted by the Ruler of Dubai to regulate and monitor the real estate developer’s performance actually participates in a cover-up operation that deprives investors of their rights?

What does that say to the world about the security of real estate investments in Dubai?

Where is the transparency and accountability Dubai Ruler ordered?

Are the laws not applicable when it comes to Sheikh Maktoum Bin Hasher Al Maktoum?” Stated Oye

“Al Fajer Properties, which is controlled by a powerful sheikh from a ruling
family using the government agency platform, continues to mislead the
public about their non-existing construction with false reports as evident in their recent press release claiming 15% construction where in reality it is a deserted site with no construction at all.”

Summing up the case, Oye raised grave concerns about the recent threats some of the investors have received and quoted attorney Salim Al Shaali who represents plaintiffs in a criminal case against the Ebony Ivory sales agency for misrepresentation.

In a recent interview, Al Shaali said,

“We have full trust in Dubai justice system. I personally guarantee all investors that Dubai government will never allow a few individuals to abuse their social or official positions for illicit profits and damage the reputation of the brand Dubai as a safe and most secure investment hub in the region.

We are waiting for a reply from the prosecution’s office”

Driven by good faith in the name ACI and its German CEO, I have entrusted ACI AED 750,000.00 with the INTENT to purchase an apartment/unit in ACI’s Project PALAZZO ARABIA Al-Furjan.

I have not signed any reservation contract/agreement, much less the Purchase/Sales Contract, since I did not consent to the conditions. Since the project entertains an escrow account with NBAD, I trusted that my funds will be sitting in that account.

In order to have access to information about that, I would have to register the Unit, which I “intended” to purchase with RERA. This would cost another up 3 percent of the offered sales price of some AED 2.6 million.

As per legal advise, I decided not to do that and instead file a very clear-cut criminal complaint based on allegations of potential embezzlement of funds and unjustified enrichment, after the legal department of ACI responded negative to the request of my attorney to refund my AED 750,000.00.

Question: would anyone, who read this comment, know of other formerly interested parties of the PALAZZA ARABIA project of ACI?

May 25, 2009 at 12:29 am

In reference to the ongoing dispute, and personal meeting on the 12th of May 2009, in Omniyat Properties’ head office in Burjuman Business Tower, in attendance of the investors in Binary project:
Ms. Judit Kovacs, Dr. Szuliman Musztafa, Ms. Zita Teimel (on behalf of Mr. Ferenc Gal)
and appointed managers by Omniyat properties:
Cornelia Montgomery – Customer Relations Director; Mark Phoenix – Development manager;Henrietta Odozi – Legal Department

Brief case summary
The owners would like to highlight the fact that the construction has been started in 2006 and the original completion date as per the Sale and Purchase Agreement supposed to be at end of 2008.The owners have fulfilled their contractual obligations and paid 75% of the total price by 1st April 2008. By going for a site visit in May 2009 and taking photographs, it has been witnessed that the construction progress in reality is at the ground level, which means that the development in point of fact is at 15-20%.

A verbal estimation has been requested at the site from the subcontractors about the considerate completion date, which was 2011.

Investors request on meeting
In respect of the above terms the owners would like to kindly request to readjust their payment schedule and refund partially the paid money, proportionate and fairly to the progress of work. E.g.: The construction is currently at 15-20%, the collected amount should not exceed more than 40%.As the progress goes, the owners offered to continue to pay punctually in accordance to the construction progress.

The investors expected to receive a rental fee by the year of 2009. These terms are highly affecting their profitability and cash flow in business till 2011.

Omniyat Properties’ respond and status:
Omniyat Properties have been stated that they are:
-Not taking the responsibility for the progress of construction as this term belongs under the point of contract “Force Major” whereby if the subcontractor has been chosen is not delivering is beyond their control.

-Not willing to refund any money of owners, they are willing to keep 75% without any interest rate or progress of work
-Not willing to compensate their investors in any other non financial format
-Luck of Escrow account for Binary project
-Luck of subcontractor at moment and construction has been stopped
-Not willing to give any guarantee of a definite completion date and in case of breach of contract.
-Not willing to provide Arabic copy of the Sales and Purchase agreement for their investors.
Please help if you are an Omniyat expert!!! Judit Kovacs

– – – – – –
April 10, 2009 at 1:29 pm

Omniyat is a one of the largest swindler and thief in Dubai. What is inside story of Omniyat, time will tell, so please be careful in your dealings with this developer
Any body who has purchased any property from omniyat, please contact.


To 7Stars from Court Expert May 26. 2009

1. Under UAE Law, Article 69, the presiding Judge MUST appoint an expert/auditor to look into the historical records of the company from the first day of establishment. The expert will rely on evidence and facts only. It is a very simple task. Any party who is afraid of the truth will try to block the court from appointing an expert auditor to examine the company account.

2. In this case, where the Iranianian Plaintiff had been detained illegaly for a period of 60 days without any charges, and in violations of a series of UAE Laws his rights have been deprived by the authorities, which indicate the facilitating the take over of the company by the sheikhs raises serious questions about the involvement of the various authorities as potential partners in crime.

3. The current false claims filed by the sheikhs in police are a tactic used to mislead the public/ court and to try to pressure the judge to close the lawsuit against the sheikhs. Although sometimes these tactics work, but normally it can backfire especialy if the other party can provide evidence that it is a false case. Which will result in a criminal prosecution of the sheikhs for creating false cases.

4. In my 25 years experience of complaex financial cases where I have been appointed as an expert , I can give my personal view that if FOR ANY REASON the judge does not appoint an auditor expert with a crystal clear mandate to look into the company records and determine who has invested capital in the company and what is the contribution (IF ANY) of the sheikhs, and hence determine who is the true owner of the company. Then I can conclude that the sheikhs have used their influence to close the case.


Deutsche ACI vertreibt Fonds seit 2008 auch in Österreich

Vier Dubai-Fonds der deutschen Fondsgesellschaft Alternative Capital Invest (ACI) sind möglicherweise in Schieflage geraten. ACI vertreibt seit 2008 die Dubai-Fonds auch in Österreich. Der Dubai Fonds VI, der mit Niki Lauda am Prospekt warb (siehe unten, weil der Fonds in die Niki-Lauda Twin Towers in Dubai investiert), war der erste Fonds, für den auch ein Prospekt in Österreich hinterlegt wurde. Aktuell geht es um die Vorgängerfonds II bis V. Diese können vorerst keine Ausschüttungen leisten, berichtet unter Bezugnahme auf ein Schreiben der ACI an ihre Anleger. Ein Verkauf der Fondsimmobilien sei zwar vertraglich vereinbart, jedoch habe der Erwerber entgegen einer früheren Zusage seiner Bank keine Kredite erhalten, so die “Welt”. “Einer Auflösung der Fonds II bis V zum 31. Dezember 2008 steht derzeit nichts im Wege”, verkündete ACI noch am 9. Dezember 2008 in einer Aussendung. Der Börse Express ging dem nach: Am Firmensitz in Gütersloh hiess es, der zuständige Fondsmanager sei derzeit nicht zu erreichen, sonst könne leider niemand Auskunft geben. Bei der Österreich-Koordinatorin, Ok-System Invest GmbH, ging am Mittwoch erst beim dritten Versuch jemand ans Telefon. Ok-System verwies allerdings wieder nach Gütersloh, man sei dafür nicht zuständig. Mit einer Investitionssumme von 474,5 Mio. Euro ist ACI nach einer Marktstudie der Beteiligungsmodelle von Feri EuroRating der grösste Anbieter von Dubai-Fonds in Deutschland.
Traumrenditen versprochen
Die Auszahlungen an die 6000 Anleger aus Deutschland, Österreich und der Schweiz seien bislang “wie prospektiert” getätigt worden, steht auf der Homepage. Seit 2008 wurden Dubai-Fonds von ACI auch in Österreich über Finanzdienstleister angeboten. Eine Beteiligung war ab 10.000 Euro zuzüglich 5% Agio möglich. Den Anlegern wurden Renditen von 12% p.a. und mehr in Aussicht gestellt. Investoren haben in den vergangenen Jahren für Milliardenbeträge Bürotürme und Hotels in Dubai errichtet und damit eine gewaltige Spekulationsblase geschaffen, die mit dem Beginn der Subprime-Krise platzte. Verbraucherschützer warnten schon 2005 vor Engagements im Immobilienmarkt des Öl-Emirats am Persischen Golf gewarnt.

Well Malika, as I told you before….the (and your) end is near !!!

Malika 3 in 1Dubai – Vier Dubai-Fonds des Gütersloher Initiators Alternative Capital Invest (ACI) sind offenbar in Schieflage geraten. Die Fonds II bis V könnten vorerst keine Ausschüttungen leisten, berichtet der Branchendienst unter Bezugnahme auf ein Schreiben der ACI an ihre Anleger. Zwar sei ein Verkauf der Fondsimmobilien vertraglich vereinbart. Jedoch habe der Erwerber entgegen einer früheren Zusage seiner Bank keine Kredite erhalten. Aus unternehmensnahen Kreisen wurden die Informationen der WELT gegenüber bestätigt. ACI-Geschäftsführer Uwe Lohmann war bis Redaktionsschluss nicht für eine Stellungnahme zu erreichen.
Mit einer Investitionssumme von insgesamt 474,5 Mio. Euro ist ACI nach der Marktstudie der Beteiligungsmodelle von Feri EuroRating der größte Anbieter von Dubai-Fonds in Deutschland. Auf ihrer Internetseite beziffert die Gesellschaft ihr Gesamtinvestitionsvolumen im Wüstenstaat sogar mit “über 550 Mio. Euro”.Investoren hatten in den vergangenen Jahren für Milliardenbeträge Bürotürme und Hotels in Dubai errichtet und damit eine gewaltige Spekulationsblase geschaffen, die mit der Finanzkrise platzte. Verbraucherschützer hatten schon im Jahr 2005 vor Engagements im Immobilienmarkt des Öl-Emirats am Persischen Golf gewarnt. rhai

With thanks to

You are not alone there. Probably there are thousands of investors in this moment who invest in off plan property and now balancing on the edge of precipice.

What is very sad that authority doesn’t do their job. They have established RERA and Laws around but RERA does not act in accordance with responsibility that they have. By their passiveness they actually support developers to make with investors what every developer would like. But this is like huge boomerang that will devastatingly hit entire Dubai project.

I am simply stunned how authority is looking peacefully while full crowded ship sinking in front of their eyes.
By Law No 9 it is evident that RERA would like to help developer rather than helping investors. Where will be our investment place after Law No.9 just God knows.

What will be rules and conditions to cancel project will probably depends on color of skin, distance from Sheikhs, residency, are the owner of Developer domestic or stranger etc.

And do you think that investors are asked to participate in panel? Or when composing rules for categorize project to what “Sliding Scale” to place it?

I think that without pressing from outside they will still think that they can do whatever they would like and manipulate with foolish investors as much as they want.

UAE is not alone in the Earth. Their life depends on world community. Without respect to all of us who wanted to participate in Dubai story they do not have future.

One lesson was recently reached UAE by freezing permission for using nuclear power for civil purposes caused by incident from royal family.

I think that there has to be more lessons if outside investors are going to lose their invested money. We have to ask our government to protect our interest in Dubai.

Anita Henry, a British teacher who has invested in a one-bedroom apartment at Dubai Lagoons, now faces a double whammy. So does Purvi Beri, an Indian advertising executive, and many other investors.

The units they bought are delayed for two years and the developer, Schon Properties, is “stonewalling” them.

“It now costs me Dh8,000 per month to rent, as they have delayed this build,” said Henry. “Now, they have advised me of a December 2010 completion – how disgusting is that?”

She said her one-bedroom unit at Dubai Lagoons – a 52-building project at the Dubai Investments Park (DIP) – was scheduled for a June 2008 handover.

“They have no intention of compensating anyone. I had planned my kids’ schooling around this,” she said.

Major payment

“In 2007, I sold my house in the UK and invested that money in a one-bedroom unit at Dubai Lagoons for Dh480,000,” said Henry, who has paid more than 63 per cent of the property price.

Purvi Beri is in the same bind due to the delay. “I am stuck. I took out a bank loan for Dh250,000 to be able to buy this unit. I sold property in India to survive and take care of my son’s fees. Since my property has not been handed over as promised, I was forced to move to my sister’s place. Now, the developers are asking me to pay more, but I’m not going to because the construction hasn’t even happened.”

Asher Schon, Vice-President of Schon Properties, said, “The project has been set back a little, due to numerous reasons,” he said.

“Firstly, the expansion of the two-lane road into a six-lane highway took out about 40 metres off our plot. Secondly, there was an internal feud between partners of our first contractor so we replaced them. We negotiated with the Roads and Transport Authority (RTA), who were cooperative. We are also working with investors to move them into zones that will be completed earlier,” said Schon.

He added that none of their projects have been put on hold.