developer says $42 million was ’embezzled’ | Manufacturing enterprise technology
A Union Properties project in Dubai Motor City on October 24, 2021.
AP Photo/Jon Gambrell, File
DUBAI, United Arab Emirates (AP) — A struggling real estate developer in Dubai said on Monday he suspected $42 million had been “embezzled” by former company officials while claiming he had massively overvalued his assets, declaring nearly $800 million in cumulative losses in recent years. .
Union Properties’ announcement comes as Emirati prosecutors announced in October that they were investigating the company. Already, the company’s board has seen its chairmen and other officials fired amid the investigation.
Union Properties, known for building Dubai Motor City, had tried to turn the situation around in recent years. But the announcement and filings on the Dubai Financial Market stock exchange show that the company had even more serious problems than initially imagined.
Last year “was a difficult year for Union Properties, as we uncovered widespread fraud and misconduct by the company’s former management, involving forgery, embezzlement and various other financial violations, which have had a negative impact on the financial health of the company and have constituted a serious blow to the confidence of shareholders,” Chief Executive Amer Khansaheb said in a statement.
The losses represent nearly 70% of the company’s capital, the firm said in a file. It awarded $565 million in impairments in 2017, and more than $300 million more in 2021.
The company said it planned to “recover the misappropriated funds through legal proceedings” and restructure its debt.
Union Properties, like other businesses, struggled to emerge from the shadow of Dubai’s financial crisis in 2009, when its property market crashed. The city eventually received a $20 billion bailout from Abu Dhabi, the oil-rich capital of the Emirates.
Union Properties scrapped construction of a $460million Formula 1 theme park in Motor City during the crisis after its then-CEO said banks were no longer willing to lend money. Creditors, including state-linked bank Emirates NBD, sued the company for $2 billion in loans. Also today, Emirates NBD announces that the dusty buildings of Motor City are available for sale or rental.
However, Dubai still faces looming debt payments stemming from its 2009 financial crisis. Dubai and its government-linked businesses face a massive $30.6 billion bill by 2023, according to Capital Economics, based in London. Dubai itself insists it is able to cover its debts and that state-linked businesses should be seen as separate from the sheikh’s business.