Santhosh J Karimattom, the chief executive and a major shareholder in the $4bn Dubai Pearl is facing criminal charges in Bangalore for bank fraud.
Dubai Pearl executive Indian case nears end
About a decade after his Indian garment business fell into trouble and became unable to pay its debts, Santhosh Joseph Karimattom is still trying to clear his name as a criminal case relating to the issue nears its end in the sclerotic Indian justice system.
Mr Karimattom, who also goes by Santhosh Joseph, is the chief executive and a shareholder of the US$3.8 billion (Dh13.95bn) Dubai Pearl project under construction at the entrance to the Palm Jumeirah. He has been in the post since 2007.
The project is one of the most prominent luxury developments on Dubai's waterfront. Its 1.85 million square metres of offices, homes and hotels are being completed in phases, with the first due at the end of 2013.
In the late 1990s and early 2000s, Mr Karimattom was the head of the menswear company Cityman Clothing, based in Bangalore. A combination of family illnesses and unrest at his factories led him to fall behind on production and increase debts to $15 million, he said.
Cityman collapsed and Mr Karimattom left for Dubai in a bid to make a new fortune to pay off the debts. He had done so by 2005 through consulting, property investments and developing call centres in Dubai, Doha and New Delhi.
But on a trip back to Bangalore later that year, he was detained by the authorities after his name appeared on an Interpol alert.
Although Mr Karimattom's debts were settled, he said last week, one of his lenders, the Corporation Bank in India, had filed a criminal complaint that became a fully fledged investigation by the Indian authorities.
He claimed he was detained while on his way back to appear in court after learning about the criminal case for the first time, but the authorities said he was listed as "absconding" for three years after the charges were filed in 2002.
Court documents show Mr Karimattom is a defendant in a criminal case filed by the Central Bureau of Investigation in India.
He is accused of "cheating" the Corporation Bank of India "to the tune of Rs 1 crore and odd", documents show. A crore is the equivalent of 10 million rupees (Dh816,300). Mr Karimattom claims he owed $150,000 to the Corporation Bank, and investigators had clubbed his case together with several others to surpass the minimum amount needed for them to investigate alleged corruption.
After Mr Karimattom was detained in 2005, Judge Mohan Shantanagoudar cited the Interpol alert as a reason for denying his petition to be allowed to leave the country. "His presence [for the case] was secured by [the Central Bureau of Investigation] only after alerting Interpol," the judge said.
Mr Karimattom said the case arose from a practice called "discounting", whereby a bank would cash a cheque given to his company before the date on the cheque.
However, he claims, in his case about 15 cheques were cashed by the bank in 2000. But the cheques were later withdrawn by his customers after he failed to deliver products. The bank then filed a civil case and a criminal complaint to recover the funds."It was a difficult period," he said. "Being young, sometimes I became confident that I knew everything. I couldn't pay what was due."
The company had been almost inactive for nine months after he suffered a stroke and his brother died suddenly, meaning it did not have the assets to pay off the debts as of 2001. So he travelled to Dubai and founded his own consultancy, One World .
"I started incubating small investments and doing small projects," Mr Karimattom said. "I was eating, breathing and sleeping the idea that I had to pay off all my liabilities."
He said after he had paid everything off, he did not expect to be detained by the police when he arrived in Bangalore.
"They presented me in the court, saying that I was not co-operating," he says. "All along, I had been in touch with the bank. They had withdrawn their case after I settled my debts."
The current case centres on an alleged "criminal conspiracy" involving Mr Karimattom and four others. The Central Bureau of Investigation alleges they presented cheques in 2000 to the bank "without there being sufficient balance in the accounts of the drawers". A bank manager credited the money to the accounts nonetheless, causing losses to the Corporation Bank amounting to 11,106,000 rupees, documents show.
In September 2005, the defendants repaid the entire amount due to the banks and a civil case lodged in the Debt Recovery Tribunal seeking the funds was withdrawn. Yet, in December that year, Judge Shantanagoudar ordered a criminal case remain open.
Mr Karimattom filed numerous petitions between 2005 and this year asking for the charges to be dismissed and for the court to allow him to travel freely. He was eventually allowed to travel back and forth to Dubai.
Mr Karimattom said he expected all criminal charges to be dismissed within months.
"These debts were just 1 per cent of my total liabilities, yet it is now causing me problems," he said. "I've never been hiding from the court. There is no way there is any corruption on my part and there is no proof of it."
However, he said he had benefited from the turmoil. "If I had not been through these tough, tough days when I was younger, then I would not be as strong as I am now," he said.
Dubai Pearl said in a statement that the Al Fahim Group - a shareholder in the project - supported Mr Karimattom fully. Abdul Majeed al Fahim, the chairman of Dubai Pearl, said Mr Karimattom had disclosed his legal history to both the company's board and the board of Al Fahim.
"Most successful entrepreneurs have had to face challenges at some point in their careers," he said. "Mr Joseph has the full confidence of the Al Fahim Group in his ongoing role as the CEO of Pearl Dubai."