x Abu Dhabi, UAESunday 23 July 2017

Damas to appoint auditor to investigate $165m transactions

Ex-chief executive Tawhid Abdullah denies making any unauthorised transactions, following the disclosure that $165m was misspent.

Worker fitting stones on different jewelry item in the mass production area of Damas factory in Dubai Multi Commodities Center.
Worker fitting stones on different jewelry item in the mass production area of Damas factory in Dubai Multi Commodities Center.

Damas shares fell 13.5 per cent yesterday as the region's biggest jeweller called in auditors and a legal firm to investigate allegations of US$165 million (Dh606m) worth of unauthorised transactions. Tawhid Abdullah, the company's chief executive, resigned on Monday after disclosing the irregularities to the board of directors. Mr Abdullah declined to comment when contacted by The National yesterday but was earlier quoted as denying any wrongdoing. "The news about me making unauthorised transactions is not true," he told Reuters. Mr Abdullah has been replaced by Hisham Ashour, who recently joined the company as its deputy chief executive. The auditors could include PricewaterhouseCoopers or KPMG, two of the world's largest auditing firms, according to a source close to the company. The source added that Mr Abdullah's departure related to an alleged failure to follow procedures in gaining shareholder approval for the transactions in question, which have not been disclosed by the company. In July last year Damas sold shares to the public in an initial public offering in which about 29 per cent of the company was sold to investors with the remainder being held by members of the Abdullah family, Al Fahim Group and the private-equity company Amwal Al Khaleej. The stock has declined about 43 per cent this year. The group's majority shareholders would "repay in full any unauthorised transactions", Damas said late on Monday in a disclosure to NASDAQ Dubai. "The Abdullah brothers, being founding members and current owners of more than 50 per cent of the shares of the company, fully stand behind the company and have agreed to commit the necessary assets to secure and repay in full any unauthorised transactions." The Dubai Financial Services Authority (DFSA), the regulator of the Dubai International Financial Centre, said it was in close contact with Damas and NASDAQ Dubai. "The DFSA has been closely monitoring the situation and trading in the market," it said on its website. "It has been proactive in ensuring that it discharges its role to maintain the integrity of the market." The situation arose because of the difficulties involved in moving from the status of a private family business to a publicly listed company, said a senior industry official who asked not to be named. "The requirements at a public company are totally different - this was a family business for over 100 years and it's hard to make that transition," the official said. bhope@thenational.ae