Construction

Drake & Scull Intl’s previous management hid $857mn in losses, fact-finding committee finds

15 criminal complaints filed; DSI committed to completing probe on misconduct by previous management

Drake & Scull International (DSI) has announced that its new management is committed to completing the ongoing investigation on all actions taken by the company’s previous management and ensuring that shareholder rights are fully protected.

In a statement, DSI said that 15 criminal complaints have been filed against previous management, members of the previous board of directors and some of their family members. Sources aware of the matter added that a travel ban has been placed against a previous executive manager, who was also an executive board member, as well as one of his family members.

“It is our duty to protect the rights of our shareholders who trusted us and invested in this Company. We will pursue everyone who was involved and is proven guilty of jeopardising in any manner the best interests of our shareholders and undermining their trust in the Company,” said Shafiq Ahmed Saleh Abdelhamid, chairman of the Board of Directors of DSI.

“The investigation is still ongoing to uncover any other offences committed by the previous management. However, considering the confidentiality and privacy of investigations conducted by the relevant authorities, it is important to avoid making any statements that might impact the probe.

“We are all endeavouring to provide the evidence to the relevant authorities to ensure a verdict that fairly protects the rights of all Company shareholders, including governmental institutions such as the Social Security Fund, Dar Zayed for Family Care and the Social Care & Minor Affairs Foundation,” he added.

The statement added that authorities have also issued a directive to freeze the bank accounts of the previous executive manager – earlier mentioned – and his wife, as well as seizing properties registered under their names. While he is currently abroad with his family, he is still subject to ongoing investigations regarding the criminal complaints that were assembled by the experts and filed against him, it said.

DSI also clarified that press reports stating that the executive manager was absolved of his previous duties and liabilities by the Company stakeholders are incorrect and not based on facts.

According to the UAE laws, any such absolution can only be issued by the General Assembly Meeting (GAM) of a company. The 2018 GAM of DSI had issued a disclosure related to this subject, which was published on the Dubai Financial Market portal on April 23, 2018, clarifying that some members of the previous board of directors have not been absolved.

In fact, ongoing investigations have led to the filing of additional criminal complaints. Probes are also underway to uncover any other offences committed against the Company. Further, the court convicted one of the previous board members and he is currently serving time in a UAE jail.

The internal investigations that DSI conducted, through a fact-finding committee and a professional group of financial and legal experts who were appointed by the said committee, have established that during the previous management tenure between 2009-2017, the Company suffered a series of annual losses that were hidden from shareholders.

The losses increased from $255.6 million in 2015 to $380 million in 2017, reaching a total of $857.5 million by 2017 and representing approximately three times the Company’s total paid up capital. These hidden losses are the result of the previous executive management’s failure to comply with corporate governance and transparency rules, and lack of proper managerial and financial standards, the fact-finding committee observed.

With regards to the current financial state of the company, Shafiq Ahmed Saleh Abdelhamid reiterated that the new management of DSI is committed to accelerating the implementation of the company’s ongoing restructuring plan in collaboration with SHUAA Capital.

“We appointed SHUAA Capital to support our restructuring, to transform DSI and bring it back to profitability, and to contribute to the UAE’s growth as well as add value for our shareholders,” he said.

“We are awaiting the results of the ongoing investigations and a fair verdict that will protect the rights of our shareholders and help the Company to rebuild its reputation and reinforce its claims.”

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