Khalifa Al Hammadi is being held pending an investigation into alleged financial violations by one of the United Arab Emirates’ biggest developers.
A United Arab Emirates prosecutor has ordered the arrest of the chairman of the Dubai-based Union Properties PJSC pending an investigation into alleged financial breaches at one of the country’s biggest developers.
Khalifa Al Hammadi’s arrest has been requested by the Federal Public Funds Prosecution and “the matter is still under investigation,” the company said in a stock market disclosure, citing a letter from authorities. A Union Properties spokesman declined to comment when contacted by Bloomberg on Tuesday.
Hours later, Union Properties said shareholders approved Al Hammadi’s dismissal along with three others from the company’s seven-member board, according to a separate statement posted on the exchange’s website. They also rejected a proposal to ratify the auditors’ report as well as the company’s balance sheet and profit and loss accounts for 2020.
Last month, the UAE Attorney General announced a “major” investigation into alleged financial violations at the company, which left its shares in a shaky state. The investigation followed complaints by the market regulator, the Securities and Commodities Authority, alleging that the company’s chairman of the board and other officials had violated.
The allegations include that the firm is selling property at less than its fair value and suspected breaches of standard accounting systems to hide losses.
While many Dubai builders and developers have been plagued by allegations of infringement, investigations of listed companies are rarely made public by local prosecutors.
Union Properties said in a statement to the Dubai Stock Exchange last month that a property sold for 30 million dirhams ($ 8.2 million) in March 2020 had previously been valued at 49.5 million dirhams “before the spread of the Covid-19 pandemic and the associated negative effects. “According to the statement, it was bought by a woman who shares the chairman’s surname. It was not clear if there was a connection between the two.
Once one of the major developers who formed Dubai, Union Properties struggled to repay its debt in the wake of the emirate’s crisis in 2009 and has never fully recovered.
Its shares have risen 16% so far this year after recovering from October’s crash, giving the company a market value of $ 380 million. The stock has been suspended from trading.
“The rise in the share price can only be explained by the competition between the two camps on the board, as they tried to increase their share in the midst of a board battle,” said Mohammed Ali Yasin, chief strategy officer at Al Dhabi Capital Ltd. “For a struggling real estate company to reverse losses after announcing an investigation is highly unusual.”