x Abu Dhabi, UAETuesday 25 July 2017

Seven charged in bank fraud

Public prosecutors say seven people have been charged with defrauding the Dubai Islamic Bank of $501m.

The indictment said the defendants defrauded DIB by creating fake companies and getting the bank to lend money to projects.
The indictment said the defendants defrauded DIB by creating fake companies and getting the bank to lend money to projects.

DUBAI // Seven people have been charged with defrauding the Dubai Islamic Bank (DIB) of US$501 million (Dh1.84 billion), documents at the Public Prosecutors office say. The charges, involving the largest sum yet in the emirate's wide-reaching corruption investigations that began last spring, were laid on Thursday.

They follow similar charges for fraud allegedly committed on the property developers Sama Dubai and Mizin. Among those charged in the DIB case are a Turkish businessman identified as AN, 36, and Britons CR, 48, and RL, 54. Also charged are two of DIB's former senior executives, RU, 50, and OM, 39, both Pakistanis. A Pakistani businessman with US citizenship, identified as ZU, is being sought by the authorities. The British executive AF, 57, who was director of a luxury property development company in Dubai, was also charged with criminal complicity.

DIB said it had set aside provisions for a loss of Dh496m to cover its exposure to CCH International, a company allegedly connected to several of the defendants. "DIB believes that the current provisions, together with collaterals foreclosed and being pursued, are adequate to cover its exposure to CCH, even in the current economic downturn," the bank said. Last year, the bank foreclosed on The Plantation, a proposed $3.5bn equestrian development in Dubailand that received funds from CCH.

In September the bank seized land allocated to The Plantation in a move that was then contested by the developer. DIB said it was continuing to chase other assets related to the deal. Other executives arrested in the corruption investigations have had ties to the bank. The indictment said the defendants defrauded DIB by creating fake companies and getting the bank to lend money to projects. It said AN and CR, who worked for a company that acted as an agent for the bank, colluded with RL, who had set up several front companies to fabricate documents and make the fake projects seem legitimate.

RL presented the documents of the fake projects to DIB to obtain financing for them, the indictment said. It said RU and OM, who worked in the bank's project finance department, assisted in getting the loans from the bank in return for bribes. RU is charged with accepting bribes worth $950,000, and OM is charged with accepting bribes worth $750,000. ZU is charged with creating a fictitious company and presenting the bank with fake invoices for non-existent transactions to defraud the bank of $2m.