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Property tribunal begins into multimillion-dirham Dubai rental scam

Haitham Al Kouatly, the Saudi owner of Shamyana Entertainment Services, fled the country in August with a year's rent on at least 350 apartments in Dubai. He is now wanted by Interpol.

DUBAI // A property tribunal has begun examining evidence in the multimillion-dirham Shamyana subletting scam.

Dubai Municipality’s Rent Committee is effectively the emirate’s property “court”, and its rulings on disputes between landlords and tenants are considered binding.

Haitham Al Kouatly, the Saudi owner of Shamyana Entertainment Services, fled the country in August with a year’s rent for at least 130 apartments in Dubai and quarterly payments for about 350.

On Sunday, the first day of the Rent Committee hearings, officials checked petitions submitted in Arabic and English and evidence documents including contracts and rent receipts.

“The hearing was in Arabic and I have been given an October date for my next hearing,” said Alex, a tenant who paid 12 months’ rent in August for an apartment in The Greens, which the real landlord never received.

“I want an end to this uncertainty so, either way, I know whether I should cry and cut my losses or whether I have the right to stay because I paid in good faith,” Alex said.

Interpol has issued a Red Notice against Al Kouatly, better known by the nickname Sam, who duped about 200 property owners when he rented their apartments for his non-existent employees.

He then posed as landlord and illegally sublet the homes in The Greens, Jumeirah Beach Residence and Burj Downtown for between Dh60,000 and Dh115,000. Police believe he absconded with the rent money on August 30.

Dates for the hearings before the Rent Committee are listed until mid-October. Many victims are trying to renegotiate their lease contracts outside the court, and avoid paying the 3.5 per cent of their total lease value required to register a case.

Tenants can approach the committee directly, but owners are expected to first lodge a complaint with the Dubai Court over bounced cheques and illegal subleasing. After a court notice is granted to the tenant, the case comes before the Rent Committee.

Among cases being heard are several that have been filed against both Al Kouatly and property companies accused of knowingly acting as a go-between for him.

Michael is one of more than a dozen tenants who paid a commission to Noor Al Fajr, a property company registered with the Real Estate Regulatory Agency (Rera). He has filed cases against both Shamyana and Noor.

“I asked and was shown their Rera registration and so I trusted them, since in my four years in Dubai I always used a broker,” said Michael, who paid Dh70,000 for an apartment he cannot enter because the real owner has changed card access and cut off utility services.

“It has been very difficult. Since we went through a broker, we’re hoping they should be held accountable. It was so wrong on their part. Now I want to move on. So I have asked the Rent Committee to cancel the contract and asked for compensation for our losses.”

A spokesman for Noor Al Fajr said they put tenants in touch with Shamyana directly. “How should we be fault at all when one of the parties run away?” he said.

“We checked their trade licence, if they were registered with the Department of Economic Development. We don’t have any sort of involvement in this.”

Property companies with subletting activities are required to post a Dh5 million security bond with Rera, and the agency has said it will liquidate the bonds of any agency found culpable.

Rera is also investigating cases, along with Dubai Economic Department.

The agency has said brokers found to have broken the law may be blacklisted and barred from operating. It is also considering plans to raise the required security deposit for agencies and introduce a black-point system.

“It is the duty of the broker to be diligent, to research, to understand the legal documentation needed for a transaction,” said Shahram Safai, a partner at Afridi & Angell legal consultants.

“That is what they are trained for and taught in brokers’ certification courses. Anyone who did not take the precautions and did not correctly inform the customers can certainly be found to be negligent and liable in a court of law.”



* Additional reporting by Preeti Kannan

- This story was updated on 25/09/12 to correct the number of rent payments Mr Al Khouatly is accused of fleeing with. It is believed he took at least 130 annual cheques, not 350.

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