A United Arab Emirates prosecutor has ordered the detention of the chairman of Dubai-based Union Properties PJSC pending an investigation into alleged financial violations at one of the country’s biggest developers.
Khalifa Al Hammadi’s detention was requested by the Federal Public Funds Prosecution and “the case is still under investigation,” the company said in a stock market disclosure, citing a letter from the authorities. A spokesman for Union Properties declined to comment when contacted by Bloomberg on Tuesday.
Keep readinglist of 4 items
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 bourse’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, sending its shares into a tailspin. The probe followed complaints by the market regulator, the Securities and Commodities Authority, alleging violations by the company’s board chairman and other officials.
The allegations include the firm selling property at less than its real value and suspected violations of accounting standards systems to hide losses.
While many Dubai builders and developers have been beset by accusations of wrongdoing, probes of listed companies are rarely disclosed by local prosecutors.
In a statement to Dubai’s bourse last month, Union Properties said a property that was 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 its accompanying negative effects.” It was bought by a woman who shares the chairman’s last name, according to the statement. It wasn’t clear if there was a relation between the two.
Once among the main developers that shaped Dubai, Union Properties struggled to repay its debts in the aftermath of the emirate’s crisis in 2009 and has never fully recovered.
Its shares are up 16% so far this year after rebounding from October’s collapse, giving the company a market value of $380 million. The stock has been suspended from trading.
“The share price increase can only be explained by the competition between the two camps on the board as they tried to increase their share amid a board struggle,” said Mohammed Ali Yasin, chief strategy officer at Al Dhabi Capital Ltd. “For a struggling real estate company to reverse losses after the announcement of a probe is highly unusual.”