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Discuss this article (10 Comments)Damas CEO quits over $165m 'unauthorised payments'
by This email address is being protected from spam bots, you need Javascript enabled to view it on Monday, 12 October 2009
PAYMENTS PROBE: The MD and CEO of Damas International, Tawhid Abdulla, has resigned after admitting making unauthorised payments. (Getty Images)
The managing director and CEO of UAE jewellery retailer Damas International on Monday left the company after admitting to being responsible for unauthorised payments worth up to $165m, the company said in a statement.
Following Sunday’s voluntary suspension of trading by Damas on Nasdaq Dubai, the company announced that it has accepted Tawhid Abdulla’s resignation.
The luxury retailer said in a statement that he had stepped down "due to his disclosure to the Board of what is understood to be unauthorised transactions conducted by him".
The statement added that the full extent of the transactions had not yet been calculated but the company’s initial estimate was that they could amount to about $165m.
The Abdulla brothers, who are founding members and current owners of more than 50 percent of the company's shares, "fully stand behind the company", the statement said.
"They have agreed to commit the necessary assets to secure and repay in full any unauthorised transactions," the statement added.
A special committee of the Board is to appoint an independent global accountancy firm to conduct an independent review and an international law firm to assist in analysis of the transactions.
The Board has appointed Hisham Ashour as CEO of the company effective from Sunday. Tawfique Abdulla will continue to serve as chairman of the Board and has also assumed day-to-day responsibilities as managing director.
The company also said it had adequate funds to meet its current financial obligations and was continuing to conduct business as usual.
"The Board remains fully committed to the highest standards of corporate governance, and has implemented procedures to ensure that the repayment is conducted in an appropriate and timely manner and that all transactions are fully scrutinized in the future to prevent a recurrence," the statement added.
Damas, a family-owned jewellery group with origins going back to 1907, raised $270m in an initial public offering on the Dubai International Financial Exchange, NasdaqDubai’s predecessor, in July 2008, in one of the largest privatisations of a family-owned business in the Gulf.
One of Dubai’s best-known brand names and a leading member of the city’s jewellery and precious metals industry, Damas has more than 500 stores across the world.
READERS' COMMENTS
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Auditors' fault
Posted by kat on Wednesday 14 October 2009 at 14:01 UAE time
I agree with Varghese. The audit practice in Dubai is sadly a sorry state of affair. It is commercialized. And there are lots of exceptions and notes to financial statements enough not to warrant issuance of a standard audit report. There are no standardized industrial limits on materiality levels on exceptions. When the CFO can explain the hows and whys of an exception and the auditor can extract the matching excuse in IFRS, then voila, a so-called USD200M transaction becomes an ordinary one done in an ordinary course of business.
Calling all accounting professional bodies in Dubai - WAKE UP!!! Our reputation is fast going down the drain. Sadly.
Posted by kat on Wednesday 14 October 2009 at 14:01 UAE time
I agree with Varghese. The audit practice in Dubai is sadly a sorry state of affair. It is commercialized. And there are lots of exceptions and notes to financial statements enough not to warrant issuance of a standard audit report. There are no standardized industrial limits on materiality levels on exceptions. When the CFO can explain the hows and whys of an exception and the auditor can extract the matching excuse in IFRS, then voila, a so-called USD200M transaction becomes an ordinary one done in an ordinary course of business.
Calling all accounting professional bodies in Dubai - WAKE UP!!! Our reputation is fast going down the drain. Sadly.
Auditors
Posted by varghese, Dubai, UAE on Wednesday 14 October 2009 at 09:10 UAE time
Its a clear lapse from the auditors responsibility. I am not surprised with this happened to a family business which become public only one year ago. May be still the CEO acted as if its a family business.
Anyways, auditors always do close their eyes in the face of money or power. take the case of Indias once premier computer company, Satyam, audited by world famous auditing firm Pricewater Cooper with inflated accounts for years and bursted with investors money.
Hope that someday the truth will come out.
Posted by varghese, Dubai, UAE on Wednesday 14 October 2009 at 09:10 UAE time
Its a clear lapse from the auditors responsibility. I am not surprised with this happened to a family business which become public only one year ago. May be still the CEO acted as if its a family business.
Anyways, auditors always do close their eyes in the face of money or power. take the case of Indias once premier computer company, Satyam, audited by world famous auditing firm Pricewater Cooper with inflated accounts for years and bursted with investors money.
Hope that someday the truth will come out.
More info
Posted by Dod, Dubai on Tuesday 13 October 2009 at 13:45 UAE time
Nic, I imagine we will find out what is required under the stock exchange rules and no more. Hopefully it will be more than the current release which could cover everything from technicality (breaching authorisation limits for certain transactions etc), through to massive theft.
The integrity of the stock exchange and the enforcement of its rules (which I am not an expert in) are hugely important for future investment in the country
Posted by Dod, Dubai on Tuesday 13 October 2009 at 13:45 UAE time
Nic, I imagine we will find out what is required under the stock exchange rules and no more. Hopefully it will be more than the current release which could cover everything from technicality (breaching authorisation limits for certain transactions etc), through to massive theft.
The integrity of the stock exchange and the enforcement of its rules (which I am not an expert in) are hugely important for future investment in the country
Wrong message to all!
Posted by Nic, Dubai, United Arab Emirates on Tuesday 13 October 2009 at 11:41 UAE time
Hey Boby, like with all other "investigations" the verdict will never be known, nor will the clear outline of what happened. This company release is the furthest we the public will ever get to know, this isnt your average NY based firm with SEC compliance, etc.
Wonder what all the Damas staff feel when the head is responsible for such an act. How do you encourage your staff to be loyal, honest, etc, etc, etc - when you do not do as you expect of others??!
Posted by Nic, Dubai, United Arab Emirates on Tuesday 13 October 2009 at 11:41 UAE time
Hey Boby, like with all other "investigations" the verdict will never be known, nor will the clear outline of what happened. This company release is the furthest we the public will ever get to know, this isnt your average NY based firm with SEC compliance, etc.
Wonder what all the Damas staff feel when the head is responsible for such an act. How do you encourage your staff to be loyal, honest, etc, etc, etc - when you do not do as you expect of others??!
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