x Abu Dhabi, UAEFriday 28 July 2017

BinHendi owner settles in Dh28m fraud case

He and an employee had been accused of stealing funds meant to be sent to clients' home countries.

DUBAI // Embezzlement charges against the owner of one of the Gulf’s largest luxury goods retailers, BinHendi Enterprises, have been dropped after a settlement was reached with the plaintiffs, according to court documents released yesterday.

M?B, a 61-year-old Emirati, and his manager, M?Z, a 33-year-old Algerian, were charged last year with breach of trust after prosecutors said they embezzled almost Dh28 million in deposits from clients using BinHendi’s Federal Exchange money transfer company.

According to court records, 76 clients lost money they intended to send to their home countries – the funds never arrived at their destinations.

The court dismissed the case on Monday, after receiving final confirmation of a settlement.

Public prosecutors said M?B and M?Z, the general manager of Federal Exchange, stole more than Dh47m from Federal Exchange remittance clients and used it to trade on the Forex currency exchange, court documents showed.

Yesterday, M?B blamed  MZ and other Federal Exchange employees in the organisation for “pilfering” funds.

He had repaid clients’ money because it was the “honourable” thing to do, he told The National.

“The people working there mismanaged the funds,” M?B said. “As an honourable businessman, we have to not penalise our clients.

“The clients have no reason to be penalised. If there were any transfers that were misplaced by the management, these are just innocent people that need to be paid.”

Dr Ali al Jarman, a managing partner at Prestige Advocates and Legal Consultants, one of the firms representing the plaintiffs in the case, yesterday said a settlement of Dh5.3m was reached with his clients on July 14 last year.

“We presented to court the documents validating the repayment and have dropped our civil claim against the suspects,” he said.
However, a separate civil claim filed by one Ethiopian and six Algerian plaintiffs was ordered to be reviewed by the Dubai Civil Court, documents showed yesterday. No date was set for the review.

BinHendi Enterprises has the franchises for retail brands including Hugo Boss, its own food franchise, Cafe Japengo, and owns the television station City 7.

M?B and M?Z were accused of “the misdemeanour of breach of trust”, a charge that carries a maximum sentence of three years.

During the investigation, M?Z told prosecutors that M?B had ordered him to trade with the clients’ funds and told him  it was a normal procedure for a money exchange firm.

M?B said yesterday that he was not directly involved with Federal Exchange’s day-to-day operations, and spoke with M?Z for the first time only after the complaints began to surface.

“I never made this company to eat poor people’s money, and I wouldn’t do that,” M?B said. “It is religiously and fundamentally wrong to do that.”

The 76 plaintiffs of various nationalities filed the complaint on February 26, 2009 at the Naif police station. They said overseas remittances through the company had not reached their beneficiaries.

Court documents show 41 of the 76 plaintiffs were repaid a total of Dh11.2m and dropped their charges before the case reached court. Another Dh3.2m was later paid to another six plaintiffs. Dr al Jarman’s clients receieved Dh5.3m.

However, the plaintiffs received no reimbursements for the remainder, Dh27.6m.

Court records show the money went missing in a number of ways. An investigation conducted by the Dubai Government’s financial audit department showed that Dh22.3m was transferred from Federal Exchange’s accounts to BinHendi Properties for purchasing real estate; Dh10m was returned days later.

M?B, however, said these transactions between BinHendi group companies were routine transactions within the organisation. Funds transferred from Federal Exchange accounts were returned, he added.

Records also showed the exchange company has operated in Forex trading since 2006, and its account ledgers registered profits of Dh3.8m in 2006, and Dh10.8m in 2007. Details of losses or profits in 2008 and 2009 were not found, records show.