Look who's back

by Shane McGinley Sunday, 22 May 2011

When people are faced with tough times they have two options, says Kabir Mulchandani: Crumble at the first sight of pain and take the easy way out, or absorb the hardship and stand and fight. One thing is certain, if anyone knows how to stand up and fight, its Dubai-based Indian businessman Kabir Mulchandani. Arrested over two years ago and accused of real estate fraud of up to half a billion dirhams ($136.2m), Mulchandani spent 140 days in custody and was interrogated for up to eight hours a day for 40 days straight by prosecutors.

As his queue of accusers mounted and his bail spiralled to a reported AED33m ($8.9m), he says he was tempted to settle but instead decided he wanted to fight to clear his name.

“It is a tough spot to be in I’ll tell you… I can truthfully tell you there are moments when one fears the worst. However, my family always said, at the end of the day everything is so clear. No matter what happens, eventually the truth really does not need any defence.

“I would have never pleaded guilty. I am not guilty and never have been guilty. I wasn’t going to [settle] because I wasn’t wrong. If I had settled, innocent or guilty, I would have been perceived as guilty the rest of my life, no matter what I did, although I was tempted.

“I thought I will have to face pain [but] I thought I’ll deal with that now.”

Fast forward to 2010 and in December a third Dubai court ruled he was innocent of all the fraud charges against him as they were “baseless and without foundation and without evidence.” His lawyer, Dr Habib Al Mulla, once again delivered when called upon.

Faced with such an experience, most people would leave Dubai and start afresh with a clean sheet, but Mulchandani is not going anywhere. Just a few months since his final court hearing, he says he is staying in Dubai, staying in the real estate sector and has set up a new company which is aiming to close up to AED1bn worth of new deals by the end of the year.

“It is easy to see why somebody would say I’ve had enough of this and let’s look at something else or let’s look at somewhere else to be.

“I can’t get put off by a city or a market by 20 bad apples, that would be extremely immature. At the end of the day, I am a businessman. Why should I leave a city, my home, my son, my family… because of 20 people who lied?”

His new venture capital scheme is looking to invest in Dubai real estate projects which have run into funding issues and need an urgent cash injection in order to meet their completion dates. SKA1, which Mulchandani launched this year with his brother Siddharth, has already signed one new deal and has big plans for the future.

“We have signed one [deal] in the Marina for AED300m, which is underway. I can tell you this: we estimate the transactions we will conclude this year will exceed AED1bn.” For all intents and purposes, Kabir Mulchandani is firmly back at the heart of Dubai’s property business. Looking back over the last two years, he says the world back in 2009, when he got the call from Dubai Police, was a very different place.

“Lehman Brothers started it and it steamrolled on and fraud cases were unearthed globally. It’s not just here but you had issues of wrongdoing by developers, it was a global phenomenon. The tide went out and it was there to see what everybody really was.”

At the time, the Dubai property market was grinding to a halt, prices tumbled by nearly half in a matter of months, construction cranes gathered dust and HH Sheikh Mohammed Bin Rashid Al Maktoum, Dubai's ruler, said he would strive to root out the corruption which had infected the sector.

As a series of high-profile scandals broke, Dubai's public prosecutor vowed that “the government will continue to have a strict stance against all aspects of corruption and will take legal measures against violators.”

Mulchandani could never have imagined he would one day end up at the centre of a major corruption scandal himself. Having only arrived in Dubai in 2004 to seek out and buy a villa on the Palm Jumeirah, Mulchandani was captivated by the fast-paced real estate market. He moved to the UAE, bought a house in Emirates Hills and was completing his first AED30m ($8m) deal in Discovery Gardens within two months.

With the market in a spiral and speculators and property flipping in full swing, his company Dynasty Enterprises began to get involved in bigger and more elaborate deals and in 2007 went into partnership with local developer Hilal Al Zarooni and established Dynasty Zarooni. The new team acquired around 32 buildings, villas and projects in Dubai and Abu Dhabi worth a reported AED24bn ($6.5bn). With the market moving at high speed, Mulchandani devised a scheme whereby he would negotiate a bulk discount on buildings and his top-tier purchasers would be given preferential treatment on the resales. All for a non-refundable fee of AED300,000 ($81,681).

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