What happens next?

Damas CEO Tawhid Abdullah admitted responsibility for $165m in unauthorised payments, but a senior board member says his only crime was ignorance. Will that be enough for the DIFC authorities? Those who question Dubai’s credentials as an international financial centre will be watching closely.

For a clear cut case, it got murky very fast.

On Monday evening last week, Tawhid Abdullah, CEO and founder of the Middle East’s largest — and listed — jewellery retailer Damas, officially put his hands up to $165m of non-specified unauthorised payments and resigned. Trading of Damas shares on DIFX was temporarily suspended.

On Tuesday morning, a senior Damas board member told Arabian Business the unauthorised payments were all down to a simple oversight, or a series of simple oversights, and that certainly nothing had occurred to trouble the police. Abdullah’s personal lawyer said: “He resigned because he takes responsibility for the unauthorised payments.”

By Tuesday afternoon, Abdullah was telling Reuters he hadn’t done it. “The news about me making unauthorised transactions is not true,” he said.

But when Arabian Business finally caught up with him later that afternoon, to ask “did you do it or didn’t you?”, he told us to contact his lawyer again and said he would agree with whatever he said.

The lawyer’s phone was switched off.

But let’s go back to the start. Here’s the original, official, mea culpa, issued by Damas on Monday evening:

“The company today announces that it has accepted Mr Tawhid Abdullah’s resignation as managing director and CEO due to his disclosure to the board of what is understood to be unauthorised 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 $165m.”

Certainly, such a statement implies a degree of certainty. It is fair to surmise that if you disclose to the board, and then to Nasdaq, that you have misappropriated $165m, that you did not do so lightly. Not lightly enough to change your story less than 24 hours later.

To put $165m dollars into context in terms of Damas, the company, which has stores in 18 countries, raised $270.6m when it listed in July last year, and net profits in the 15 months to March this year were some $61.9m. $165m is not, then, a relatively trifling sum for Damas.

The board member Arabian Business spoke to was quick to pour cold water on any notion that the money was lost. “It hasn’t gone missing,” he said, speaking on condition of anonymity. “It’s been used on different projects, without the prior approval of the Board, that’s the whole thing. So many projects, investments here and there.”

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READERS' COMMENTS

strange
Posted by rossi, italy on Thursday 22 October 2009 at 20:15 UAE time


Hey,what's going on?No more news?I can't wait to know where these "unauthorised payment" went and to whom.

Yoohooo

Ignorance?
Posted by Sami, Dubai, United Arab Emirates on Tuesday 20 October 2009 at 15:36 UAE time

It is fairly obvious that Tawhid Abdullah invested the money in the two Six Senses “Angsana” Hotel and Towers on SZR without Board approval.
These two towers have been resold at a discount of 45% of cost to a developer that intends to turn them into apartments.
Is fair to ask Damas CEO, how can he claim ignorance in such a case, when surely, his in house legal counsel and chief financial officer new about the transaction as it is impossible to execute without these two knowing about it
Now, why have these two senior officials not point out to Tawhid proper “Corporate Governance” and necessary approvals required.
I believe this is one big cock-up worthy of investigation by the highest level.

Damas Fraud
Posted by Mariam, Dubai, UAE on Tuesday 20 October 2009 at 00:50 UAE time

I know that Damas has the strictest Accounting / Auditing system and $165million if said is due to ignorance then i think people saying this are less educated. The UAE government has to closely investigate into this as such businessmen defame UAE on theinternational scene.

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