x Abu Dhabi, UAEMonday 24 July 2017

Bank investment chief testifies in fraud trial

The chief executive officer of investment banking at Dubai Islamic Bank told a court yesterday that two defendants in a US$501 million (Dh1.8 billion) fraud trial were the bank executives responsible for facilitating credit allowances.

DUBAI // The chief executive officer of investment banking at Dubai Islamic Bank told a court yesterday that two defendants in a US$501 million (Dh1.8 billion) fraud trial were the bank executives responsible for facilitating credit allowances for a company that defaulted on its loans. Saad Zaman, 42, told the Dubai Criminal Court of First Instance that in 2007 he was informed that CCH, a Turkish company, had defaulted on its loan instalments. He told the court the bank was owed $170m by the company. "We found out that CCH had not used the funds provided according to the investment agreements set between us," he said. In 2004, the witness said, the bank had agreed with the company to invest in a project to buy oiling equipment in Canada to be used in Pakistan. The money was distributed through CCH to four other companies, he said. The defendants include two former executives at Dubai Islamic Bank - R U, a 50-year-old Pakistani, and O M, aged 39. Mr Zaman said that R U and O M were in charge of facilitating the credit allowances for CCH. The charge sheet states that the former DIB executives received $950,000 and $750,000 respectively from CCH to facilitate more credit for the company. CCH had a $500m credit ceiling with the bank after R U and O M had allegedly given them excellent recommendations. When asked if R U and O M exploited their positions at the bank, the CEO said they were operating within their domains. "I do not know if they exploited their positions," he said. Other defendants in the case include C M, a 48-year-old Briton, R L, a 54-year-old Briton, and A F, 58. Two defendants are at large: E N, a 36-year-old Turkish businessman, and Z U, a Pakistani-born American citizen. "C M was our main contact at CCH," Mr Zaman said. "In one of our meetings he told me that CCH has distributed the money into four other companies." He testified that an agreement had been reached between the bank and CCH for the repayment of the amounts, but only between $60m and $70m were received. After an investigation started by officer Mohammed Mustafa of the Dubai Financial Departments, the witness said, it was discovered that CCH owed $100m to two other banks. Sameera Gargash, who is representing one of the defendants, asked the witness whether the dealings with CCH had been in line with the bank's policy. The witness confirmed that they were. When questioned about the involvement of R U and O M and their alleged receipt of bribes, the witness told the court his knowledge was based on information provided by the investigative committee of the Financial Department. The defence lawyers requested the court to present in the next hearing Mr Mustafa, the Dubai Financial Department investigator. The presiding Judge Hamad Abdul Latif requested the prosecutors' office to subpoena the witness and adjourned the hearing to September 28. amustafa@thenational.ae