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Thu 4 Mar 2010 04:44 PM

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Jailed La Hoya Bay CEO offers refunds to angry investors

EXCLUSIVE: Developer has pledged to restart construction work on the site within 90 days.

Jailed La Hoya Bay CEO offers refunds to angry investors
CONCERNS: The $800m La Hoya Bay project has faced a series of delays, to the dismay of investors.

Frank Khoie, the jailed developer behind the stalled $800m La Hoya Bay real estate project in Ras Al Khaimah, has said he will refund any investor that wishes to reclaim their deposit and has pledged to restart construction work on the site within 90 days.

In a statement, Khoie said the firm would issue refunds to property buyers within three months.

“Should any of our investors desire to have a refund of their deposit they would be able to sign the proper forms and receive a refund within the said 90 days,” he said.

The firm has also appointed a panel to raise financing and renew construction on the site within three months, the statement said, without elaborating on the source of the funds.

Set on Al Marjan Island, the La Hoya Bay project was suspended following Khoie’s arrest in January last year.

The CEO, who had bought six plots of land worth AED302m ($82.2m) from Ras Al Khaimah Investment Authority (Rakia), is currently serving a three-year jail term for bouncing an AED57.5m ($15.6m) cheque written to the state-backed agency.

In October last year a court appointed Rakeen, the development arm of Rakia, as judicial custodian of the project in a bid to allow work to continue.

The court needed Khoie’s permission to transfer guardianship, but he later withdrew his consent, effectively suspending the development.

Khoie Properties has already received some AED300m ($81.6m) in downpayments from its 800 investors, half of whom are based in the UK. Around AED72m ($19.6m) has been paid to Rakia in land fees.

Neil Pattison, spokesman for a UK-based investor group, said he would urge buyers to seize the offer of a refund.

“The Investor Group must recommend to its members that they take cash refunds, an option we had previously discounted as not being possible,” he said.

Ashley Merry, a British investor in La Hoya Bay, questioned how Khoie Properties could afford to finance the refunds.

“The majority of the investors are not speculators; we are normal working people who simply cannot afford to lose our money in this way and are desperately trying to find a way to recover it,” she said.

Khoie’s statement comes as Rakia prepares to return to court in the latest round of legal wrangling between the emirate’s government and Khoie Properties.

Dr Khater Massaad, CEO of the agency, said it would press the court to fast-track the transfer of La Hoya Bay’s guardianship to Rakia, so construction can resume.

“We’ve asked the court to expedite [the guardianship]. We can’t continue waiting like this. If we do, the investors will sue,” he said. “We would be willing to continue building the project if [investors] would begin paying the remaining 70 percent on a monthly basis. And that would go into an escrow account.

“For the money already paid [by investors], we would probably take the loss of the land, or part of the loss of the land.”

Arabian Business digital magazine: read the latest edition online

OK YA HENRY 10 years ago

UAE must have the most and the best educated prison inmates found anywhere in the world if all these news reports about company CEO's being locked up is true :) An Interesting claim to fame

AJ 10 years ago

Truly enjoyed your comment.

DXBHeadhunter 10 years ago

How about OSN producing the gameshow "Im a CEO, get me out of here..."?!

Chiamanhing 10 years ago

In all fairness if La Hoya Nay CEO wants to continue with his business, he should also provide a bond say 10% value to his investors.