As the Government of Dubai continues to raise its international reputation as a modern, stable place in which to invest, there are a number of business stories that challenge this image-enhancing campaign.
These stories suggest that the power structure of Dubai’s past continues to cast a long shadow over the future to which the Government and its Ruler aspire. They also raise questions about the ability to overcome the traditional, entrenched power base and a business culture that is anything but aligned with modern legal or ethical standards of conduct – or enforcement.
One story in particular captures the tension between Dubai’s Old Guard and its modern aspirations: It is the story of entrepreneur Omar Ayesh and his broken partnership with members of the powerful Al Rajhi family.
THE CASE OF TAMEER HOLDINGS
In 2002, Mr. Ayesh started a real estate development company in Dubai – just as the property boom was getting started. Starting with a single plot of land in Sharjah, he re-deployed capital from other successful ventures in Dubai, Abu Dhabi, Ajman and Umm al Quwain.
The rapid growth and profitability of the company, Tameer, soon attracted the attention of members of the Al Rajhi family. Based in Saudi Arabia, they are well-known in the UAE for their ownership of the world’s largest Islamic bank – as well as their sprawling investments in a variety of business sectors in the GCC and around the world.
Mr. Ayesh and the Al Rajhis formed a partnership. The family acquired an initial 50 per cent stake in Tameer, pledging to leverage their financial and engineering expertise to mutual advantage.
After many achievements for Tameer – including Mr. Ayesh’s receipt of the HH Sheikh Mohammad bin Rashid al Maktoum Award of Excellence in Business - the partnership foundered: By then, the Al Rajhi’s had acquired 75 per cent of Tameer.
Mr. Ayesh left the company in 2008, after an evaluation of Tameer’s assets was conducted by Gulf International Bank (GIB). That assessment pegged the value of the property portfolio at US$5 billion dollar, but Mr. Ayesh never received full payment for his remaining 25 per cent – worth US$1.25 billion dollar at the time.
DOCUMENTED FRAUD
Internal documents obtained by the Foundation for Global Business Standards show that the Al Rajhis have subsequently orchestrated a systematic plan to defraud and discredit Mr. Ayesh. As part of that initiative, they have transferred significant real estate assets out of Tameer and into family-controlled shell companies. That has, to date, allowed them to avoid a financial settlement with their former partner.
In a 2012 arbitration judgment, Mr. Ayesh’s ownership claim was acknowledged by the Dubai International Arbitration Court (DIAC). In a ruling, DIAC noted that the value of the 25 per cent “was not yet crystallized.” That legal recognition of Mr. Ayesh’s ownership, however, confirmed his stake in Tameer and the implicit trust in which it is held by his former partners, pending resolution of the dispute.
Shortly after that DIAC judgement, however, Al Rajhi employees began moving Tameer assets into a number of newly-formed private companies owned by the family.
In an email on December 9, 2012, Tameer’s chief legal officer, Aasma Kahn informed company CEO, Frederico Tauber, that a broad power of attorney was being drafted because “we will be establishing new companies...we will need to open bank accounts, we may need to transfer the bank financing, we will need to do land transfer to the New Land Cos.”
“TAMEER IS INTENDED TO DIE”
A few months later, in April 2013, Ms. Kahn wrote to a colleague informing him of board approval a number of initiatives and that “Tameer is intended to die.”
By May 6, 2013, emails from Ms Kahn confirmed that a new company, Gemstone, had been created, along with two wholly-owned subsidiaries, Moonstone and Sandstone. “These are being used to house the land…” she wrote.
Mr. Tauber informed Ahmed Al Rajhi in subsequent correspondence that the new companies were to have a board and manager of their own “in case of legal dispute or intended claim against the company.” He also wrote that these companies “will be the buyers of the plots from Tameer.”
As the properties were “sold” to Gemstone and other Al Rajhi subsidiaries at prices far below market-valuations, Tameer executives scrambled to preserve some adherence to basic corporate governance requirements – albeit after the fact.
For example, documents show that a former Tameer director, Phillipe Akl, agreed in February 2014 to sign minutes and board resolutions from 2012 and 2013. In an email to Ahmed Al Rajhi dated February 2, 2014, Mr. Akl noted the papers he was asked to sign “include approvals on transactions in hundreds of millions of dirhams including bonuses, compensations, sales of assets and others.”
Then, clearly aware of the “the significance of the transactions and the implications at stake,” Mr Akl demanded Ahmed Al Rajhi sign a letter “holding me harmless from any implication that may arise from signing these documents.”
At the same time, a Tameer employee, Mona Agha, was promoted from the human resources department to executive status and put on the Tameer Holdings board. She asked for similar assurances from Mr. Tauber that she would not be responsible if things went wrong.
In an email on February 11, 2014, Ms. Agha conceded that “such major transactions made me uncomfortable.” Specifically, she cited the fact she had no financial, banking or real estate experience and “no way or mean to verify or review anything in the document…” She adds that “there is no approval from the shareholders on this transaction…”
Ms. Agha also wrote: “I read that Ahmed and Ibrahim Al Rajhi themselves have travel restrictions in UAE based on this case which is something I can’t afford at all based on my personal circumstances … I beyond trust our shareholders and trust that they will protect me and support me in this matter “.
She concludes: “I was assigned a board member and only knew that when I got the first resolution to sign; I was never talked to and don’t know what is expected of me. I don’t mind taking some risk but I need to know what the risks are and be prepared.”