Drake & Scull says ex-management hid losses worth $857.65m
15 criminal complaints filed against firm’s former management, previous board of directors members, and their family members
Dubai-listed contractor Drake & Scull International (DSI) announced that its new management has committed to completing the ongoing investigation on all actions taken by the company’s previous management, and stated that it will ensure that shareholders rights are fully protected.
According to a company statement, DSI has already filed 15 criminal complaints against the previous management, members of the previous board of directors, as well as some of their family members.
These complaints are still under investigation by relevant authorities.
The Company General Assembly Meeting of 2018 did not absolve some members of the previous board of directors, including a previous executive manager and one of his family members.
Sources aware of the matter said that a travel ban has been placed against a previous executive manager, who was also an executive board member, as well as against one of his family members.
Authorities have also issued a directive to freeze the bank accounts of a previous executive manager, and his wife, as well as to seize properties registered under their names. While he is currently abroad with his family, he is still subject to ongoing investigations regarding the criminal complaints that were filed against him.
DSI has also clarified that press reports about the executive manager being 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, which was published on the Dubai Financial Market portal on 23 April, 2018, clarifying that some members of the previous board of directors have not been absolved.
In fact, ongoing investigations have led to the filing of additional criminal complaints. Probes are also being conducted to uncover any other offences committed against the company. Furthermore, one of the previous board members has been convicted and is currently serving time in a UAE jail.
The internal investigations that DSI conducted, through a fact-finding committee and a professional group of financial and legal experts, who were appointed by the committee, have established that during the previous management’s tenure between 2009 and 2017, the company suffered a series of annual losses that were hidden from shareholders.
The losses increased from $255.66m (AED939m) in 2015 to $380m (AED1.396bn) in 2017, reaching a total of $857.65m (AED3.15bn) by 2017, and representing approximately three times the company’s total paid up capital.
According to the fact-finding committee, the 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.
Chairman of the board of directors of DSI, Shafiq Ahmed Saleh Abdelhamid, said: “It is our duty to protect the rights of our shareholders who trusted us and invested in this company. 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.”
Abdelhamid added: “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 endeavouring to provide the evidence to the relevant authorities to ensure a verdict that fairly protects the rights of all company shareholders, including governmental institutions such as the Social Security Fund, Dar Zayed for Family Care, and the Social Care & Minor Affairs Foundation.”
On the current financial status of the company, the chairman of the board of directors of DSI reiterated that the new management is committed to accelerating the implementation of the company’s ongoing restructuring plan in collaboration with SHUAA Capital.
Construction Week reported in April 2019 that the Dubai contractor fired its former chief executive officer, Tawfiq Abu Soud; chief financial officer, Khaled Jarrar; and chief legal officer, Mohamad Ghanem, following a board meeting on 24 April as the company's loss-making trend continued.