British real estate developer Safi Qurashi has called for a shift away from using post-dated cheques as security payments in the UAE.
Qurashi, who famously paid US$60m for Great Britain island on Nakheel’s The World artificial islands development, was earlier in the year released on bail after spending two-and-a-half years in jail after multi-million dirham cheques signed by him bounced.
Speaking at the Arabian Business Forum, he praised the release of more than 290 Emiratis debtors from prison and the expansion of the jurisdiction at DIFC Courts, but said more needs to be done to bring the UAE in line with payment methods in international markets.
“There needs to be a shift to moving away from the use of security cheques, which are commonly used in Dubai to secure business transactions. We need to establish better and more up-to-date practices that are in line with international business standards,” he said.
The global economic downturn exposed the UAE’s borrowing excesses, which were fuelled by easy credit during the country’s five-year real estate boom. When Dubai’s property bubble burst, thousands of expats fled the emirate leaving unpaid credit cards, mortgages and personal loans outstanding.
Qurashi was cleared of two counts of cheque fraud after the courts heard that he had written them as security and that they should have been returned to him rather than cashed.
The UAE has introduced several measures aimed at reducing the Gulf state’s reliance on post-dated cheques. The central bank last year rolled out a set of rules aimed at limiting loans to individuals and capping banking fees in the country.
Authorities in the Gulf state last week freed around 290 UAE nationals who were jailed for bouncing cheques.
In addition to the steps already taken, more needs to be done to differentiate between those that find themselves in debt and those that commit cheque fraud, said Qurashi. “There are many indicators of a roadmap for this already being set out by the authorities… There are many examples of good initiatives.
“Whilst these are very positive steps this is only an interim measure and there really needs to be a systematic solution that covers all debtors and the risk to the business community and society at large,” he said.
“There needs to be an applied understanding that there is a significant difference between a debtor who is themselves someone who is a victim and committing cheque fraud,” he added.