Dubai Police ‘unhappy’ over bounced cheque rule

The head of Dubai Police has said that his agency’s role in enforcing debt legislation is “not the proper way of doing things”, but that bouncing cheques nevertheless remains a criminal offence.

“We are not happy and we certainly do not think that is the proper way of doing things, but these are issues of individuals’ rights,” Lieutenant General Dahi Khalfan Tamim told Arabian Business. “It is important to note that the mere act of writing a cheque without the availability of cash to support it is a criminal offence that is punishable by the law.

By 2008, before the financial crisis hit the region, Gulf residents had spent $151bn in consumer credit by 2008 – a 460 percent increase since 2002.

However, most of these consumer liabilities were conditional on the provision of a cheque to the lender. Under local legislation, bounced cheques are a criminal offence, not a civil matter, as in many other jurisdictions.

When questioned as to how many businessmen were currently in Dubai prisons due to debt problems, Lt Gen Tamim replied: “None; however there are several cases being settled in the courts.

“Many newcomers or maverick investors became millionaires overnight and they jumped into the wave of excesses in investments without proper plans or informed decisions; they had no track record in sound investments and they thought it was easy money.”

Lt Gen Tamim also said that easy access to credit during the Dubai boom was not the cause for spiraling levels of personal debt that left many UAE residents fearful over their high liabilities.

“I think the problem was not about the ease of lending here; banks could offer financing without getting exposed.

“The problem was not about car, real-estate or personal loans here. It might have been so somewhere else, but the main problematic issue here was using the loans for unwise investments in the stock market and in speculation in overseas markets without the proper oversight or informed investment decisions.”