Former Nakheel chief back in spotlight
Nakheel lawyers grilled the developer's former Dh400,000-a-month chief executive at the Dubai World Tribunal yesterday ahead of a trial that will decide if he is entitled to receive as much as US$3.7 million in pay and benefits.
Chris O'Donnell found himself back in the spotlight for the first time since he left Nakheel in June.
Nakheel, where Mr O'Donnell served as the chief executive for five years, lost Dh76.6 billion ($20.85bn) during 2009 as Dubai's once-vigorous property market crumbled.
"In 2008, we were aware of the international environment, and we were adjusting our business plans accordingly," Mr O'Donnell told the tribunal, a special court set up to hear claims against the government-owned group Dubai World and its subsidiaries. Nakheel was formerly among these.
The company was "focusing on trying to build revenue-producing assets", he said, and even as late as October 2008 was booking strong revenue from its projects, which run the gamut from master-planned villa communities on Dubai's south-western fringe to the Palm islands and The World, an archipelago of artificial islands off the emirate's coast.
The expectation back then was that Nakheel's revenue and about Dh8bn of loans it made to Dubai World could be called on to help it meet financial obligations, including a $4.1bn Islamic bond due in 2009, Mr O'Donnell said.
The bond was eventually paid off with assistance from the Dubai Financial Support Fund as Dubai World embarked on a $24.9bn debt restructuring.
Dubai World completed that restructuring this year. As part of its reorganisation, Nakheel was formally separated from the conglomerate in August. It is now owned directly by the Dubai Government.
Central to Mr O'Donnell's breach-of-contract case against Nakheel is the claim he is owed two instalments of $1.5m as part of a "long-term incentive" plan outlined in his contract. According to his original complaint, the first instalment was due in June last year - his fourth year of service - and the second was due at the end of his five-year contract this June.
The additional money he is claiming comes in the form of interest, benefits he claims Nakheel owes him and changes in the exchange rate between the dirham and the Australian dollar. Mr O'Donnell is from Sydney.
Nakheel has countered that the tribunal does not have jurisdiction to hear the case, and that the complaint should instead be brought before the Ministry of Labour. The company argued in tribunal documents that Mr O'Donnell left before his five-year contract expired, and that he breached his duties to the company.
In addition, changes Mr O'Donnell made to company policies on severance pay and his decision to give dismissed employees refunds on residential properties they had contracted to buy from Nakheel also "ignored the correct procedure", Nakheel's lawyers argued.
Under cross-examination from Nakheel lawyers, Mr O'Donnell described the changes in company policy on refunds to dismissed employees as "incredibly appropriate", given the circumstances at the time.
In his testimony, Mr O'Donnell also explained in full detail the circumstances of his departure from Nakheel, which was reported on June 9 - about a week before his contract was to expire.
He had a meeting with Ali Lootah, the chairman of Nakheel, the day before in which he was informed the company's board of directors had decided not to renew his contract.
Mr O'Donnell had submitted a proposal for a new contract at a "substantially reduced salary".
A full trial in the O'Donnell case is expected to begin today.
Updated: December 20, 2011 04:00 AM