Dubai gold retailer speaks out over fraud investigation

Dubai AE seeks to offer explanation to investors as it files legal case against former management
Gold bars
By Sarah Townsend
Thu 24 Dec 2015 12:58 PM

A Dubai-based gold company has issued a statement to investors attempting to offer clarity over an alleged fraud thought to involve up to $30 million.

Gold AE, which enables the online trading of gold and silver, had its licence terminated last month by the Dubai Multi Commodities Centre (DMCC) free zone with which the company is registered.

Frustrated clients of Gold AE say they have been unable to access their accounts since, as the company is unable to trade.

They also claim they have not been told what has been happening with the company, or when their money will be returned.

One source claimed that just 60 of Gold AE’s estimated 2,000 clients have a total of $60 million invested in the company, and the total amount of missing funds is thought to reach $25-30 million.

Amidst the confusion, Arabian Business reported on Wednesday that Gold AE’s parent company – the Dubai International Financial Centre (DIFC)-registered Gold Holding – has filed a criminal case with Dubai Courts and Bur Dubai Police Station against the previous management of the company, alleging fraud and mismanagement of funds.

An email sent to customers on December 16 and seen by Arabian Business states that, during an internal investigation, Gold AE’s acting management found members of the previous management team “had used significant amounts of client and shareholders’ money and transferred [it] to multiple locations, including Switzerland, Jordan, Turkey and Saudi Arabia.”

Following publication of the story on December 23, Gold AE’s acting management sent an email to clients attempting to explain the situation. 

The email below, which was copied to Arabian Business, stated:

“Dear Client,

“A group of minority shareholders of GOLD HOLDING suspected that there were questionable financial transactions being undertaken in Gold AE DMCC ("the Company"). Acting on these suspicions they initiated internal investigations.

“During the course of the investigations the entire then management team abruptly resigned with no notice. Since the majority shareholders also seemed to be unavailable, the minority shareholders did not accept this resignation.

“However, these persons went to DMCC, submitted their resignations and managed to get their visas cancelled.

Following this, in August 2015, Mr Andre Gauthier [was] appointed as the manager of the Company so that investigations continued and, once completed, necessary action [could] be taken to secure the interests of the clients and shareholders of the company.

“His appointment took effect from August 9 2015. When he took over, new management realised that he now had access to more information concerning the activities of the previous management and realised that there had been substantial withdrawals from the company’s account to the personal accounts of some of the management and majority shareholders.

“Management has also uncovered information with respect to the existence of a bank account with Arab Bank (Switzerland) Ltd in Switzerland in the name of the Company.

“An attempt has been made to approach this bank but, since none of the current management or minority shareholders are signatories to the account and, due to the stringent Swiss banking laws and regulations regarding confidentiality, no additional information or access has been provided by the bank.

“In order to try and secure/recover monies that had been taken out of the accounts of the company, Mr. Gauthier in his capacity as manager has filed various cases as against the recipients of the funds from the Company (Dubai Police ( Bur Dubai Police Station), Case No: 24378).

“The minority shareholders are doing everything within their powers to support him in his efforts to recover these monies that were withdrawn from Gold AE in questionable circumstances.

“DMCC has alleged that some of these activities undertaken by the previous management are in breach of DMCC’s rules and as such they have taken the decision to terminate the license of the Company. We are working closely with DMCC to find a solution and in the meanwhile, we request that you bear with us.

“In the meanwhile, as a statutory consequence of the license being terminated, the trading platform of the Company has to shut down as of the date of termination of the license which is 24th November 2015.

“We trust the forgoing is of assistance. Sincerely.”

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