Dubai’s Drake and Scull says previous management ‘hid losses’ from shareholders

Dubai contractor Drake and Scull International (DSI) has said its new management is “committed to completing the ongoing investigation” against its previous management.

DSI has filed 15 criminal complaints against the previous management and some of their family members, a statement said.

The complaints are still under investigation by the relevant authorities.

Sources aware of the matter also said that a travel ban has been placed against a previous executive manager as well as against one of his family members, the statement added.

While DSI did not reveal any names, the former CEO of DSI Khaldoun Tabari had said in September that the complaints were filed against him.

He dismissed the allegations, telling Bloomberg that he was being made the “scapegoat”.

“Somebody has to be thrown under the bus,” he said. “I am the scapegoat.”

Read: ‘I’m a scapegoat,’ says former CEO of Dubai contractor Drake and Scull

However, DSI said an internal investigation found that during the previous management tenure between 2009-2017, the company suffered a series of annual losses that were “hidden from shareholders”.

The losses increased from Dhs939m in 2015 to Dhs1.396bn in 2017, reaching a total of Dhs3.15bn by 2017 and representing approximately three times the company’s total paid up capital, the statement alleged.

“These hidden losses are the result of the previous executive management’s failure to comply with corporate governance and transparency rules, and lack of proper managerial and financial standards”, it said.

Authorities have also issued a directive to freeze the bank accounts of a former executive and his wife as well as to seize properties registered under their names, DSI alleged.

While he is currently abroad with his family, he is still subject to ongoing investigations regarding the criminal complaints.

The company also clarified that press reports that the executive manager was absolved of his previous duties and liabilities by the company shareholders are “incorrect and not based on facts”.

“According to the UAE laws, any such absolution can only be issued by the general assembly meeting (GAM) of a company. The 2018 GAM of DSI had issued a disclosure related to this subject, clarifying that some members of the previous board of directors have not been absolved,” the statement said.

Ongoing investigations have led to the filing of additional criminal complaints, it added.

The court also convicted one of the previous board members and he is currently serving time in a UAE jail.

Probes are also underway to uncover any other offences committed against the company.

Shafiq Ahmed Saleh Abdelhamid, chairman of DSI, said: “We will pursue everyone who was involved and is proven guilty of jeopardising in any manner the best interests of our shareholders and undermining their trust in the company.

“The investigation is still ongoing to uncover any other offences committed by the previous management. However, considering the confidentiality and privacy of investigations conducted by the relevant authorities, it is important to avoid making any statements that might impact the probe.

“We are all endeavoring to provide the evidence to the relevant authorities to ensure a verdict that fairly protects the rights of all company shareholders.”

Abdelhamid also said the new management is “accelerating” the implementation of its ongoing restructuring plan in collaboration with Shuaa Capital to “bring it back to profitability”.

“We are awaiting the results of the ongoing investigations and a fair verdict that will protect the rights of our shareholders and help the company to rebuild its reputation and reinforce its claims,” he added.