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Abu Dhabi, UAEWednesday 26 September 2018

Dubai's Exential scam sheds light on risks for private investigators working in UAE

Strict privacy laws have restricted the work of court-appointed officials and fraud investigators, including those working on the Exential scam

Some of the investors and staff outside the closed office of Exential in Dubai Media City in 2016. Many investors have not received any cash back. Pawan Singh / The National
Some of the investors and staff outside the closed office of Exential in Dubai Media City in 2016. Many investors have not received any cash back. Pawan Singh / The National

Overseas private investigators have been warned they must have consent to conduct any surveillance operations in the UAE or face arrest and a possible jail term.

Specialists looking into financial scams that have duped UAE investors out of millions of dirhams in fake schemes have either been detained or threatened with arrest in recent months.

Fraud specialists at UK firm Carlton Huxley, one of the legal firms working on behalf of more than 60 clients of Exential, said they have been told their work is in breach of privacy laws.

Investigators are becoming more cautious about how they operate in the UAE after David Ingram, a partner at accountants Grant Thornton, was detained and had his passport confiscated.

Mr Ingram is an appointed receiver by courts in the UK, an insolvency specialist and expert in proceeds of crime, fraud and asset recovery, according to his company profile.

Although not imprisoned, his travel has been restricted following a complaint related to UK court proceedings. Mr Ingram denies any wrongdoing.

Bill Ferguson, a lead investigator at Carlton Huxley, said he has been warned off returning to the UAE and threatened with arrest.

“We’ve been told that Carlton Huxley is subject to the same ban as Mr Ingram, if we decided to come back to the UAE to continue our work,” said Mr Ferguson, who is leading the investigation into Exential, the investment scam that conned hundreds of people out of their life savings. The investigation is centred on Dubai, India, Australia and the British Virgin Islands.

“We have been making huge progress in locating Exential assets to recover funds for our clients, in the UAE and elsewhere.”

Exential’s office was shut down by Dubai’s Department of Economic Development last year, prompting hundreds of investors to submit legal claims against the company.

A judgement ruled in favour of investors, ordering the company to repay Dh1 million to one investor, which many hoped would become a landmark ruling.

Since then, few payments have been returned to investors as fraud investigators and recovery agents continue to locate assets sequestered before Exential’s collapse.

“We are more than happy to open our books up to the UAE prosecutors but we can’t do that if we are being threatened with arrest if we come to Dubai,” Mr Ferguson said.“The case of David Ingram puts this into sharp perspective, particularly as he is a court-appointed official.”

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Read more:

British investigator told he is unable to leave Dubai after complaint against him by UK criminal suspect

Exential forex scam: the background

Investors of Dubai-based Exential trading scheme may be able to recover lost funds, lawyers say

UAE investors caught up in Bitcoin and Bar Works financial scams

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Mahmood Shakir Al Mashhadani, a senior legal consultant at Galadari Advocates and Legal Consultants, said all private investigation work completed without official government consent is liable to prosecution.

“There is a clear article in criminal law that states it is illegal for anyone to hire a private investigator for this kind of work as it is not licensed,” he said.

“A person cannot go out and gather information freely under this law, or to jeopardise the privacy of someone or their family.

“There is an article that says clearly only the judicial officer, police or other government official has the power to enquire about a suspected crime.”

Exential CEO Sydney Lemos remains the only person arrested in connection with Exential, the fake foreign exchange currency scheme that offered 110 per cent returns on a $20,000 (Dh73,475) deposit.

Victims of fraud who have hired private investigators to attempt to recover their investments could face prosecution under article 378 of criminal procedure law.

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