The Ras al Khaimah Government has taken legal action against the developer Khoie Properties, which was behind a Dh2 billion (US$545 million) project on RAK's man-made island of Al Marjan. Khoie Properties said in a statement on its website confirming the legal action that it was was unable to meet its commitments to the RAK Investment Authority (RAKIA). It told of its pending legal case after a report by The National last week quoted the chief financial officer of Khoie Properties, Ahmed al Jazayeri, as saying the company was insolvent.
The National also quoted RAK officials as saying a senior member of the Khoie Properties board was in jail after his arrest for failing to honour a Dh57m cheque to RAKIA to pay for the land on Al Marjan, a reclaimed island in the shape of a coral atoll. The latest company statement made no reference to the detention. "Following last year's credit crunch and its impact on UAE's real estate market, we were unable to meet our Dec 1 2008 land payment of $15m to RAKIA," the company said in a statement signed by its chief executive, Frank Khoie.
"Sadly, RAKIA's officials have not been able to accept our deferred payment proposals and have taken legal action, and placed our company and project in a dangerous position." The company said it was in talks with RAKIA for a possible handover of the project, which RAKIA had resisted so far. A company spokesman said Mr Khoie was not available to comment further. The project was sold to about 800 investors, half of them from Britain, in 2007.
The investors had become anxious about it since little progress had been recorded at the site. They have called for the Government to intervene. Dr Khater Massaad, the chief executive of RAKIA, has said he was reluctant to take over the project because it required heavy investment. Dr Massaad said last week Khoie Properties had collected Dh280m in payments by investors, but had spent just Dh50m on the project.
Although reluctant to take on another company's liabilities, he has previously said he wanted to protect investors in the emirate. * additional reporting by Sarmad Khan firstname.lastname@example.org