Failed gifts company boss tells of threats, flees Dubai

Posted by: JP Sunday, 28 June 2009 12:38 PM[UAE]

I am in no way justifying what Simon did, but trying to understand why he did it. If you happen to land in the court for a bounced cheque case, you will face only one question: Is this your signature? Most certainly the answer is Yes and immediately you are in for 6 months, 1 year or whatever. No questions asked why you had to bounce the cheque or who owe you money etc. What do you do? Unless you go through the experience yourself, you will keep blaming Simon.

Posted by: John Smith Thursday, 25 June 2009 7:54 PM[UAE]

The Post Dated Cheque Laws are in the UAE are antiquated, and each passing day that these laws are not addressed, means the cancer keeps spreading through the system. A Twilight Zone episode comes to mind. Here's my experience: 1) Once you issue a Post Dated cheque - bear in mind that there is no system for the issuer of the cheque to put a stop on the cheque. Closing the account is illegal, even while you are being defrauded. Draining the funds out of the accounts, to let the cheque bounce is illegal. The only way to get the bank to put a stop is to get a court/police order. That court case can cost Tens of Thousands of Dirhams. The bank permits cheque stops on - get this - cheques that have not been issued. ie... if one has lost their cheque book. Big deal. 2) Very common practise for developers to advertise projects with payments seemingly linked to construction milestones which should occur by certain dates. The Developer then pushes people to write post dated cheques, which they cash with regularity while construction does not start or is on terminal hold. In this scenario, there is no truth in advertising laws, so the developer hasn't violated anything. If you let the cheques bounce, you are guilty. 3) Developers who have abandoned projects, or are near certain to abscond - are cashing cheques. Even in this scenario, it is the developer that has the upper hand. If the buyer lets the cheque bounce, he commits the first illegality. 4) Developers present cheques to non-escrow accounts. While that is illegal - if you let the cheque bounce, the developer - by walking into the local police station - can get you put on an immigration watch list. You think the police, who detain you at the airport, understand anything about escrow accounts...? ... fortunately, they're now swamped by the sheer volumes. A few things that can be done - just as an observer 5) Bouncing a cheque is a criminal act in the UAE. The law should be changed to make it a civil / commercial act, or at least introduce a threshold or cutoff amount. Or even start by segregating between business & personal accounts. 6) Since the laws don't get published openly, people keep writing cheques not knowing the consequences or limitations. Banks should give every cheque book owner a one pager on the consequences of cheque bounces in the UAE. Lots of people from the West automatically think that a cheque can be stopped, like in their home countries. Welcome any banker or lawyer to correct my understanding... or even present the alternate side - the positives of the current system. I can't think of anyone but a small minority that benefits from the status quo. I am stuck with a developer there - who advertised 50% payment until completion, 25% on handover, and 25% in installments after handover. Construction start was delayed for 12+ months, while, the developer helped himself to 40%, in some cases 60% of total payments by mid 2009. Having approached a law firm for help, their advise was to give us a lecture on the PDC system in the UAE, and the dire consequences of letting the cheques bounce. Add insult to injury - the developer's name turns up on a convicted fraud list from another country. The developer has no doubt found a perfect operating environment - one that incubates their practices. The latest twist. Buyers thought the new escrow laws would be of benefit.... since the developer would have to return the old cheques, and get them re-issued to the new escrow account. Instead, the Developer has somehow managed to work with the banks to allow the cheques to be endorsed into an account, other than the named party. What Mr. Ford did may make people sit up and take notice.... and expect more to come.

Posted by: Joe Thursday, 25 June 2009 7:29 PM[UAE]

Chahita you have clearly never been a business owner and you have probably never had any management responsibilities. It must be nice preaching from your cubicle....

Posted by: nasir Thursday, 25 June 2009 6:06 PM[UAE]

When someone starts a business he or she takes certain risks and expects some profits and possible losses. Similarly when a bank lends to a business its takes some risks based on the earning potential of the business and charges interest to cover that risk and puts liens on business assets. Risk and reward(profit or loss) is a basic principal both for the bank and a businessman but in Dubai it seems like all risks lie with the investor / business man and bank has to recover all its money plus interest without any risk all the time bankruptcy laws are better even in the sub continent, e.g. if u dont pay a house loan there u get notices, there a court case and finally if proven that u cant pay, the bank auctions ur property and u r free. Similarly if ur business cant pay back the bank, out of court settlements are done like just pay the principal or bank just sells whatever assets it has a right to . its not like you have given ur life to the bank against a loan. Plus a company is a legal entity around the world which takes the loan its not the individual. All cases and actions are taken against the company not the individual. Unless there is some misconduct. but here i don?t know of anything even close. Dubai badly need foreclosure/ bankruptcy laws. banks need to realize that they have taken a risk by lending and they cant always get back all their money. debt restructuring is a business transaction and not a criminal activity. in Dubai if i try to pay a mortgage ealry even than i m penalized. Wat a system!!

Posted by: Gilbert Thursday, 25 June 2009 5:09 PM[UAE] - United Arab Emirates

I feel for Simon. As a small business owner, I was his neighbor (quite literally) in Media City and watched his meteoric rise. At the same time my business grew yet the difference is I knew when to stop, swallow my pride, regroup my company and just plainly get into survival mode to ride out the economic catastrophe that hit Dubai. While I feel for him, he quite frankly didn't know how to manage his business. It is easy to make money when times are good. Your true business acumen is shown when business is slow and conditions are difficult. He overextended himself and now all the stakeholders are suffering. What he did is exceptionally dishonorable. Everything he wrote about is spin. This has nothing to do with the 'rules' of Dubai. We opened businesses here knowing what these rules are. We borrowed money knowing what these rules are. We hired knowing what these rules are. Mismanagement has nothing to do with rules. And that is where the spin comes in. He is not a hero. He just makes it more difficult for the rest of us small business owners at Media City (and elsewhere) to get the funding that we need to survive. Shame.