Damas International, the Dubai-based jeweller, is to engage what it calls a cash-recovery 'task force' in a bid to recoup its missing millions.
Damas hires task force to find missing millions
Damas International, the Dubai-based jeweller, is to engage what it calls a cash-recovery "task force" in a bid to recoup more than Dh337 million it is owed by creditors.
"Several agreements" have been signed to get back money owed to Damas, the company said in a statement yesterday. The money represented Damas’s share of proceeds from exiting foreign ventures, according to Sanjay Kalsi, the company’s chief financial officer.
“There are certain regions we’ve exited from and we’re recovering money there,” he said, declining to name which regions those were.
Damas, once a darling of investors, was forced to restructure its business after $165m of unauthorised transactions were unearthed in 2009 and its former chief executive resigned.
"We have created a taskforce to focus on financial recoveries for the company," said Anan Fakhreddin, the current Damas chief executive. "We have concluded several agreements to recover funds from different sources that were owed to us.
This is a positive step in our ongoing restructuring and we are ensuring that we allocate sufficient resources to recover outstanding dues owed to us."
Damas is one of the biggest and oldest jewellery retailers in the region, with hundreds of stores and a history dating to 1907.
After the company sold shares to the public in 2008 and listed on the Nasdaq Dubai, one of its majority owners and its chief exeuctive - Tawhid Abdullah - continued to treat the company as a private business, siphoning off funds for personal investments and other purposes.
When the unauthorised transactions were discovered in October of 2008, the Mr Abdullah and his two brothers, Tawfiq and Tamjid, quickly produced a list of assets they planned to sell and agreed to repay the $165m in 18 months.
The Dubai Financial Services Authority (DFSA), which regulates companies listed on the Nasdaq Dubai, commenced an investigation. An accounting firm was hired to look at the company's books. In March of last year, the DFSA fined Damas Dh13.5m over the transactions and dismissed its board of directors.
The regulator also banned the Abdullah brothers from serving as directors in Dubai's financial centre for 10 years, ordered them to pay back Dh365m in cash and return 1.94m grams of gold taken from the company for personal use.
The investigation also revealed that Damas loaned $80m to a unit of Dubai Holding to buy stock in its initial public offering, a deal that was instrumental in raising interest in the listing. The latest round of attempts to recover money for Damas comes as it continues to try to turn its business around and put the $165m scandal behind it.
The unauthorised transactions forced the company to restructure its debts last year, when Mr Fakhreddin was appointed to help turn things around.
After numerous delays, Damas reached a deal early this year to restructure more than $800m in loans, but was still trying to recover funds from the Abdullah brothers, who were taken on last year as senior advisers despite being fined and dismissed from the board.
In April, Damas extended the deadline for the Abduallah brothers to repay what they owed. It was also revealed that month that they owed an additional Dh1.2bn to banks, bringing their total dues to both banks and Damas to Dh1.8bn.
In May, Damas gave the brothers more time to repay about Dh600m worth of cash and gold. The company last month reported profits of Dh53.3m for the year to the end of March, reversing a Dh2bn loss in its previous financial year. As of last month, the Abdullah brothers still owed money to the company.