Saudi regulator refers suspects to authorities on Mobily scandal

Market watchdog also files lawsuit to Committee of the Resolution of Securities Disputes against suspects
Saudi regulator refers suspects to authorities on Mobily scandal
By Reuters
Thu 31 Dec 2015 06:00 PM

Saudi Arabia's market regulator has referred a number of suspects to the Bureau of Investigation and Public Prosecution over the restatement of accounts at telecoms group Mobily, the Capital Market Authority (CMA) said on Thursday.

The referrals come as a result of an investigation begun by the CMA after Mobily was forced to restate 27 months of earnings due to accounting errors related to the premature booking of revenue from wholesale broadband leases and mobile promotional campaigns.

The restatements cut 1.76 billion riyals ($469 million) off the profits made during that time by the company, part-owned by Abu Dhabi-based Etisalat and formally known as Etihad Etisalat.

Mobily, the second-largest telecommunications firm in the kingdom, did not immediately respond to a request for comment.

The CMA did not name the suspects but said the bureau had been asked to investigate and prosecute the suspects' actions.

It cited Article 49 of the kingdom's Capital Market Law for the move, which relates to creating a false or misleading impression around a company's value.

The regulator also filed a lawsuit against these suspects with the Committee of the Resolution of Securities Disputes (CRSD), citing Article 10 of the law, which refers to the functions of the board, as well as articles related to disclosure of financial information and duties of directors and senior executives.

In May, a local financial news website reported the CMA had recommended nine current or former officials at Mobily be prosecuted for violations that included insider trading, a week after the regulator confirmed more than one person was suspected of violating regulations on such conduct.

The regulator said the reasons for the CRSD lawsuit included "not ensuring the integrity of the financial and accounting systems including those related to preparing the financial reports of 2013 and 2014, not ensuring the implementation of appropriate control systems to manage risk, and not carrying out their duties in such a way as to serve the interest of the company".

For all the latest market news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.