Dubai World files US lawsuit against fraudster Jaubert

source Arabian Business

Dubai World has filed a lawsuit against former employee Herve Jaubert in the United States federal court, the company said on Tuesday.

The company accuses him of fraud, theft and related charges linked to his time as CEO of Dubai World subsidiary Exomos, established in 2004 to design and manufacture submarines.

The lawsuit has been launched in Florida because Jaubert chose to flee there from the UAE instead of signing an agreement he had made with Dubai World to repay money he stole from the company, Dubai World added in a statement.


"Dubai World is fully confident that the US court will come to the same conclusion as a Dubai court did in April 2009: that Mr Jaubert misrepresented his ability to design and build submarines to obtain his position as CEO of Exomos, and then used that position to steal millions of dollars from Dubai World," the statement added.

Jaubert, a former French special agent was convicted in June in absence in a Dubai court of defrauding the company out of millions of dirhams – charges he denies.

Jaubert was sentenced to five years in jail and fined AED14m by Dubai Criminal Court at a hearing in June at which he was not present.

The court was told that Jaubert’s company, Seahorse Submarines, had bought equipment worth AED11.8m for Exomos, the submarine division of Dubai World, but that it did not all arrive.

Jaubert had a contract with Dubai World to build two submarines, but prosecutors told the court that when the vessels were delivered they were incomplete and faulty.

He wrote to Dubai World and agreed to settle the matter by paying an initial AED3m, but he fled the country before handing over any money, the court heard.

Last month, Jaubert told Arabian Business that he escaped from Dubai aboard a rubber dingy and dressed in a burqa to evade police using skills he developed as a spy.

The former French naval officer claimed then that he was not worried about being tracked down to face his five-year prison sentence because he could prove his innocence.

Jaubert said he decided to flee the country last year after his passport was confiscated by police and he was fired by Dubai World.

He said he left from a beach in Fujairah after sabotaging the only coast guard boat in the area to make sure no one could follow him.

Jaubert said he spent six hours aboard the rubber dingy before meeting his friend, who had sailed his boat into international waters, and the pair headed to India on a journey that took eight days.

Vancouver con man winds up in a Dubai prison

source Vancouver Sun

Martin Bender's crime mirrors the way he duped rich locals into handing over cash for discount luxury purchases

German-born confidence man Martin Bender, who used the lure of heavily discounted luxury cars to defraud prominent members of Vancouver society in 2002 and 2003, is now residing in a Dubai jail after stiffing citizens of that country.

The National newspaper in Dubai said Bender's company, V1 Advanced Composite Technologies -- which purportedly built yachts for wealthy clients -- provided a creditor with a cheque for the equivalent of $4.35 million US as security for a loan. However, when the creditor went to cash it, the cheque bounced.

"I thought it was a mistake," Bender told the newspaper during an interview from the Dubai Central Prison in Aweer, where he has been languishing for the past two years.

"I had no idea what was happening. The judge didn't care about the circumstances of the cheque. All he wanted to know was if I had signed the cheque. If so, I was guilty."

The newspaper said that, after Bender went to jail, he defaulted on other obligations: A bank loan that was used to pay for his $68,000 US wedding to an Indonesian woman, credit card debts, money owed to suppliers and employee salaries. As a result, he faces up to 16 more years in prison.

The article is actually quite sympathetic toward Bender. It portrays him as a victim of what amounts to a debtors' prison.

"His situation is one of hundreds of cases in which businessmen and individual borrowers face prison for bouncing cheques," the article stated.

"At the core of the issue is the widespread use of postdated cheques and the fact that United Arab Emirates law considers each bounced cheque or group of bounced cheques as a separate crime. Judges can choose to fine an offender or sentence him to prison for one month to three years for each case."

The newspaper said there has been mounting pressure to address these cases through a specialized civil court, rather than the criminal system.

Having borne witness to Bender's business methods, I'm not nearly as sympathetic.

A native of Hamburg, Bender came to Vancouver in 2001 and set up a jet charter business, Aerojet Air Services (BC) Ltd., at the south terminal of the Vancouver airport.

Several months later, he announced the company had taken delivery of its first Lear jet, a seven-passenger aircraft with a "high-end executive interior in grey leather" and a cruising speed of 520 miles per hour. It was purportedly available for business charter, medical evacuation or all-inclusive dream vacations.

As he was getting his charter business off the ground, Bender began positioning himself to meet and fraternize with Vancouver's most affluent citizens. He walked into Westerly Yacht Sales Inc. in Coal Harbor and introduced himself to the proprietor, Jean Paul Cardinal.

"He had everything down to a T," Cardinal recalled. "I introduced him to a sail manufacturer who specializes in high-end sails for racers, and they were talking the same language. When he talked about cars, they were only high-end cars."

Bender chartered a 47-foot cruising sailboat, worth about $350,000. Coincidentally and fortuitously, the Royal Vancouver Yacht Club was in the middle of a membership drive. He soon became a member.

Bender told his new-found friends and acquaintances that he had connections with luxury automobile distributors in the United States, including Mercedes-Benz and Porsche. He could buy expensive cars from dealerships that had gone into liquidation at heavy discounts, anywhere from one-third to one-half the normal retail price.

He told Cardinal he would get him a new 2002 Porsche Boxster, retail value $75,000, for only $43,000. Cardinal, who had no reason to suspect Bender's motives, provided the full amount up front. Delivery was scheduled for September.

But September came and went and nothing happened: "I was told there were some problems, that this was an American car and it had to be Canadianized. The dashboard had to be converted to kilometres and other minor alterations. It would take a few more weeks," Cardinal recalled.

Bender also befriended Gerry Hooper, owner of Promark Aviation Services Inc., located next door to Bender's charter business.

Hooper agreed to lend Bender $41,000 US to assist in the purchase of a Mercedes, two BMWs and three Audis, which had purportedly been pre-sold to the Vancouver law firm Clark Wilson. In return, Bender would repay him $67,305 US.

As security, Bender gave him a post-dated cheque for the full amount drawn on Canadian Western Bank in Vancouver. However, when Hooper tried to negotiate the cheque, it bounced.

Bender claimed there had been confusion over wiring funds from his bank in Switzerland. To assuage Hooper's concerns, Bender provided him with a copy of an e-mail from Jeff Smith, an employee at Canadian Western Bank, confirming the bank would issue a draft for the full amount to Hooper's company. According to a court affidavit, Hooper later learned that Jeff Smith "did not exist as an employee of the Canadian Western Bank."

It soon became apparent that Bender's charter aircraft business was also a mirage. Alan Sabey, a pilot Bender had hired to fly his jet, said Transport Canada refused to license Aerojet as a commercial carrier because Bender was not a Canadian citizen, so Aerojet sub-chartered the Lear jet through an unrelated licensed operator.

The jet was eventually taken back by the leasing company, and Sabey was left with unpaid wages.

By the spring of 2003, the pressure was mounting. Bender vacated his office and later sent Cardinal an e-mail saying he was in Southeast Asia, but would soon return to Vancouver.

I also received an e-mail from Bender. He was not happy with my story about his escapades: "My lawyers in London -- the largest law firm on the globe -- received instructions from my end on Saturday June 7, 2003 to file a lawsuit against Mr. David Baines ... demanding a compensation of $5 million," he wrote.

"In the meantime, I've also contacted several newspapers in Canada to assist me by publishing the truth about the issues released about me and highlight the methods of publishing from The Vancouver Sun. I've received a reply from one of the most reputable newspapers in Canada this morning and I will release all relevant information to them shortly."

He provided elaborate explanations as to why his air-charter business failed and why the car deals were never completed. He promised to repay everybody as soon as possible.

But Bender never did show up. Neither did the lawsuit, nor the redeeming newspaper stories, nor the thousands of dollars that he owed people.

Now he is pleading to Dubai authorities for a reprieve: "I've been able to generate a lot of money in my life," he told the National. "Give me the chance to pay it. Let me work."

Five face court in first corruption probe case

source Arabian Business

Five real estate executives are set to appear in court next month in the first case connected to the crackdown on alleged corruption in Dubai, it was revealed on Thursday.

Four former employees of real estate company Sama Dubai are to appear in the Dubai Criminal Court of First Instance with a fifth defendant from another company.

Among the defendants is the former chief executive of Sama Dubai’s project The Lagoons who is charged with asking for bribes in the form of properties and cash from clients, which led the company to incur a loss of $37.3m, according to prosecution officials quoted in UAE daily The National.
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Three sales executives at The Lagoons are also charged with taking bribes for property transactions while the fifth defendant, who worked for a local property developer, is charged with accepting a bribe, the paper reported.

The news follows on from an announcement this week by the Dubai attorney general, Issam al Humaidan, that a long running investigation into the dealings of the former chief executive of Deyaar, Zack Shahin, and three co-defendants was close to completion.

Crackdown

source Arabian Business

Dubai is turning the screw on white-collar crime, a string of dramatic arrests sending the message that bribery and corruption will not be tolerated in the emirate. Arabian Business details the four-year investigation that culminated in the scandal of the summer.

The call came without warning. "They didn't give me much notice - it was a case of ‘get there now'," the CEO of a major Dubai property firm tells Arabian Business.

And when the call comes direct from Dubai Police's Criminal Investigation Department (CID), neither he nor the dozen other business leaders summoned was about to decline the invitation.
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When each arrived at CID, each was grilled by officers about their finances - both company and personal. "We had to explain everything, every single thing," recalls the CEO, speaking on condition of anonymity.

There are strict directives to have zero-tolerance towards all aspects of corruption, bribing and taking advantage of official positions.

"But it was clear not everyone could - one guy was even asked how he could afford a private jet on his salary."

As is swiftly becoming apparent, those who found themselves unable to answer the questions to the satisfaction of CID, now have even more explaining to do. A wave of high-profile arrests, followed by the announcement of a crackdown on corruption, has put Dubai on red alert for white-collar crime.

"Dubai government follows a transparent and clear policy on such issues," warned the public prosecutor in a statement last week. "There are strict directives to have zero-tolerance towards all aspects of corruption, bribing and taking advantage of official positions."

In a statement emailed by the media office of HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, the public prosecutor added that the results of ongoing investigations into the accused employees would be announced once they are complete.

"The government will disclose the full extent of any wrongdoings that have been committed," says Parth Kikani, a senior analyst with Dubai-based investment company Al Mal Capital.

"This will send a clear signal that one should not indulge in this kind of activity, and ensure that going forward there are no such issues arising again."

The drama began last week when it was announced that the former CEO of mortgage giant Tamweel was under investigation for alleged financial wrongdoing.

Adel Al Shirawi, now vice chairman of state-owned Istithmar World PJSC, is being investigated for alleged embezzlement and mistrust while employed by the UAE's biggest mortgage provider.

The UAE national was arrested on August 5 and Dubai police have referred the case to the public prosecution office. Former head of investments at Tamweel and chief financial officer of Istithmar World, Feras Kalthoum, is also under investigation.

A day later, it was reported that a criminal case had been brought against a senior executive at government-owned developer Nakheel, this time for allegedly accepting bribes.

The executive was named in media reports as the company's general manager of sales, Walid Al Jaziri, while on August 19 it was revealed that former Nakheel executive Karim Masaad is also being held in Dubai.

Nakheel is the master developer behind the iconic man-made Palm and World islands, which have become synonymous with Dubai's coastline since they first began to take shape in the Arabian Gulf.
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While Nakheel is a private company, in the two trading days following the arrest of Al Shirawi, shares of Tamweel - in which Istithmar World has a 21.6 percent stake - dropped like a stone.

Shares trading at AED6.48 ($1.76) on August 13 were down to AED5.86 ($1.59) by close on August 17 - a drop of almost 10 percent. However, analysts suggest that although investor confidence may be shaken by the investigations in the short term, ultimately the markets will readjust.

"If companies are not listed then ultimately it's only their owners that will be at stake, but if they are public companies then it's the whole shareholder base that will be affected," says Kikani at Al Mal Capital.

For the short term there might be some pain, but for the long term I think this kind [of accountability] is always good, and ultimately even the market recognises that."

Indeed, Tamweel stock has since rebounded, closing at AED6.05 ($1.65) on August 19, just 7% down on its pre-announcement price.

"The announcement shows the government is paying a lot of attention to standards of corporate governance, which can only be positive for the markets in the long term," agrees Marios Maratheftis, regional head of research for the Middle East at Standard Chartered Bank in Dubai.

"It will provide investors with all the reassurance they need, and the track record of the authorities so far is a strong guarantee."

A series of high-profile police investigations are already underway over alleged financial irregularities by senior executives at Dubai Islamic Bank (DIB) - the UAE's biggest Islamic bank by market value - and its affiliate Deyaar, a development firm.

DIB's former vice president for finance structure, Rifaat Othmani, was arrested as part of a fraud investigation on June 5. He and several other former members of DIB staff are being investigated, according to the bank, while the probe also led to the arrest of JPMorgan Chase's senior country officer for the UAE, Omair Mooraj.

At Deyaar, meanwhile, four people have been arrested as part of a police investigation into alleged embezzlement. Those arrested include Deyaar's former CEO, Zack Shahin, who has since maintained his innocence.

And yet the scandal could just be beginning. Sources suggest that the CEOs of at least two other Dubai development majors - between them responsible for a completed project portfolio worth over $100bn - are currently the subject of CID probes.

"The probes include several real estate and financial companies, not just one company," Arabic daily Emarat Al Youm quoted another high-level source as saying last week.

The roots of this summer's crackdown can be traced all the way back to June 2004, and a very public scandal that engulfed the Dubai International Financial Centre.

Then, the two chief regulators at the Dubai Financial Services Authority (DFSA), Ian Hay Davison and Phillip Thorpe, were both fired after "questioning" several land contracts awarded by the authority.

Crackdown
by Anil Bhoyrul, Andrew White and Tom Arnold on Sunday, 24 August 2008
TRANSPARENCY: Ex-Tamweel CEO Adel Al Shirawi is under investigation for alleged financial wrongdoing.
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TRANSPARENCY: Ex-Tamweel CEO Adel Al Shirawi is under investigation for alleged financial wrongdoing.

Their suggestion was that some DFSA members were favouring their own companies when it came to awarding of land contracts.

Although this was never substantiated and the DFSA has since led a drive for greater transparency in the emirate, the scandal focused CID attention on the issue of corporate accountability - and creative accountancy.

"It set the ball rolling. People started asking questions about companies, and then the questions were about the people running those companies, and those in positions of power," says one senior figure who witnessed the initial investigations at close hand.
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Over the next two years, Dubai Police began looking closely at the financial affairs of its top officials. Nobody - not even those at the very top of the business community - was spared from the probe.

With the help of the financial audit office - which audits around 250 companies in Dubai each year, including firms in which the government owns 25 percent or more - CID and the public prosecutor's office had compiled detailed dossiers of unanswered questions by the time some business leaders were first called to account in early 2006.

"It was quite a heavy meeting, I would say quite aggressive," recalls a businessman who was present at the initial meetings. "The official leading the meeting said he was from Dubai CID, and it didn't seem to matter who you were, or how well known you were - you had to give answers."

In the two years since, CID has been probing in detail the personal affairs of Dubai's business leaders, studying their bank accounts, and even their spending habits - the size of home they live in, the model of car they drive and the type of holiday they go on.

The main question was a simple one: how could businessmen with salaries of AED100,000 ($27,247) to AED200,000 ($54,495) a month, afford the lifestyles they were leading?

Clearly, not all could - at least on their salaries alone. They now languish in police cells, while the net closes on those who have not yet been arrested, but who have serious questions to answer. And however many are finally called to account, the summer of 2008 could be remembered as a watershed moment for financial transparency in the emirate.

"The message is that there's a constant evolution of the economy here and things will continue to improve," says Maratheftis at Standard Chartered.

"Having a stronger regulatory environment will be very important, especially as the economy and markets become more complex, and the authorities are sending the message that they will do everything they can to improve things even further."