Business | Banking

The cost of bounced cheques

The law remains clear: a cheque that bounces for the lack of sufficient funds can land the issuer in jail.

  • By Mick O'Reilly, Deputy Managing Editor
  • Published: 23:02 July 12, 2009
  • Gulf News

  • Image Credit: Supplied
  • According to official statistics issued in May, 544,196 bad cheques were written in the first four months of the year across the UAE.

Dubai: The dream of making it rich in the UAE has turned into a nightmare of jail and police for hundreds of expats, locked up for bouncing cheques as booming businesses went bust.

For one Briton, the nightmare of prison and a lengthy jail sentence is looming large, all for a series of bounced cheques issued when his construction sub-contracting business went belly up.

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"If I knew then what I know now, I would never have come to Dubai in the first place," explains Mark, his thick bricklaying-hardened hands coupling a coffee. "And I certainly would have conducted my business better, not been as lax with the guys who I was dealing with."

For most of the past two months, Mark was in Bur Dubai jail, awaiting bail for bouncing a cheque worth Dh180,000. He was bailed recently , but his British passport has been detained. For the foreseeable future, he's stuck in Dubai, unable to leave, and is facing a lengthy prison term.

"I have no way of paying the money back," he says. "I'm out [of jail] for the moment, but I can't get any access to funds. I have nothing, I'm living with friends and I'm going to go back in unless I pay it off - which I can't do."

Mark is not alone.

According to official statistics issued in May, 544,196 bad cheques were written in the first four months of the year across the UAE. On average, one of every 20 cheques written during that period was sent back by a bank marked "Refer to Drawer" or "Insufficient Funds".

For three years, things were good for Mark. He'd come at the height of the building boom, knew a few buddies from the construction trade back in Birmingham who had come out before him, getting jobs as project managers and superintendents with multi-national corporations, laying the foundations for Dubai's prosperity.

"I had a few contacts when I got off the plane," he recalls, back in the heady days of early 2006. "Within a couple of weeks I was flying, doing bits of finishing work in some workers' accommodations and finishing off a couple of villas in Mirdif," he says. "There was no shortage of work. I brought a couple of other guys out and we had a couple of crews working for us in no time. It wasn't big stuff, but there was lots of work."

And because there was no difficulty in picking up more work to keep his guys working, there also seemed to be money coming in to pay the overheads and wages.

"There wasn't really any issue of not getting paid," he recalls. "A lot of it was personal contacts and you always got the money eventually, even if it was in dribs and drabs or a few weeks late. But there was enough work to keep us going and the bank had no problem offering financing, so I always kept it going."

Like many expats from Western countries, Mark fell into the trap of living the lifestyle he'd dreamed off growing up rough and tumble in the Midlands - the 4X4, the Marina view and the flash clothes, even the trophy girlfriend. All are now gone, her back to the Ukraine.

"I'm driving a beaten up Sunny now and I'm lucky if I can borrow Dh20 to pet petrol in it," he says. Instead of a two-bedroom 1,800-foot place with Marina and partial sea view, it's a bedroll in a maid's room in Al Ghusais. Up the week before, it was a corner of the outside courtyard in the sand in Bur Dubai jail.

"There was about 20 of us Brits in there, and most were either in for financial crimes, or for being drunk," he said. "It was pretty crowded in there. The food was all right, but you had to queue for a couple of hours to use the two phones in there, and then you only got three minutes."

By last October, the bloom had gone from the rose. For Mark, business became a bed of thorns.

"Mates who I had been doing business with suddenly weren't around," he recalls. "Their phones were turned off. They weren't hanging out in the usual watering holes. Whenever you met them, they'd run when they'd see you. The cheque would always be coming next week or tomorrow, or the bank is waiting to issue new cheques. There was always some excuse for not getting paid. The next thing I knew was that they had skipped the country."

Then things got suddenly worse.

"My bank wasn't lending anymore. They said I was a bad risk, that I needed to lower my debt ratio," he scoffs. "How could I lower my debt when I was not getting paid and the work was starting to dry up?"

He remembers well the sinking feeling in his stomach that his bubble had burst.

"I had a couple of cheques out, one for Dh125,000 for work I needed done on a villa, and the other was for Dh180,000 for block work in a workers' accommodation in Jebel Ali. I figured I was okay because I was owed around Dh270,000 and a couple of other little jobs as well."

Like a gambler who always reckons the next horse will win, Mark firmly believes he could have gotten through it all if the bank had just covered him off for a bit more.

It didn't.

"The last few months have been sheer hell," he says. "I've an ulcer, no passport, a police record and nothing else. She's gone back to Kiev because the gravy train came to an end, I'm stuck here paying the price for the credit crunch."

He points to his face. "See this?" he says. "This is the face of the credit crunch. Ugly, isn't it?"

What do you think should be the punishment for a bounced cheque? Do you think it should be treated as a criminal offence, or should there be alternatives?



Your comments


I think that laws regarding bounced cheques and financial services in general should be reviewed. There are other effective ways to punish fraudsters while still giving a chance to those who had bad luck to make things better. At the end of the day, any one of us could be put in a situation were a cheque bounces out of our will.
Momo
Dubai,UAE
Posted: July 13, 2009, 14:41

I do have the same position like Mark. I was having my own business and due to uncollectible funds I have cheques that bounce as well. I am a mother, raising 2 children alone. What I am trying to say is people have to investigate first why a person cannot be able to pay his debts not jump to a conclusion. I may say that authorities especially the bank should agree in one thing not just immediately imposing imprisonment. Nobody wants to be in a position of having this kind of burden as Mark does or any other businessman in that recourse. I hope there should be an alternative.
A Reader
Dubai,UAE
Posted: July 13, 2009, 14:20

No sane person would sign a piece of paper knowing that it would ultimately land him in prison. Most of the cheques are written in good faith. The thing that should be understood is that destiny is not in our hands .The future is uncertain. The judge should take all these things into consideration before handing any judgment. Sending genuine people behind bars for bounced cheques is like playing with the destiny of their near and dear ones, destroy their business and multiply their woes rather than giving them a helping hand.
Mohammad Asif
Dubai,UAE
Posted: July 13, 2009, 14:09

People doesn?t want to have bad record especially if you are doing business. Bank took the risk of lend and consideration should be given to people like Mark. We all know our obligation of paying back and sending them to jail will not help them pay back the bank. Losing their jobs will only make their financial problem worst plus even harassing them will make things terrible. A travel ban is a secure way that they do not leave the country. These are people who are suffering and should not be punished like that just because banks are desperate for their money.....so are people like Mark, desperate to get his money to pay the banks.
Normita
Dubai,UAE
Posted: July 13, 2009, 13:59

There should be alternatives for bounced cheques. Putting someone in jail and having a police record is not justified.
A Reader
Dubai,UAE
Posted: July 13, 2009, 12:28

I think being in jail for a financial "crime" is too harsh. Because people don?t want to be in debt anyways. So why not just confiscate the passport and the guy could not leave the country until he has paid.
Rehtur
Dubai,UAE
Posted: July 13, 2009, 12:28

I think there should not be any punishment, sometimes man makes a mistakes.
Manas Shrestha
Dahran,Kingdom of Saudi Arabia
Posted: July 13, 2009, 12:11

The treatment for a bounced cheque is so serious. It should not be considered as a big criminal offence and the authorities should sort other ways to find the issue and settle the matter. And they must inquire why the cheque was returned. And if possible grant him some time to clear the issue.
Abheesh
Dubai,UAE
Posted: July 13, 2009, 12:07

Putting people in jail wont solve the problem nor cutting their life line...in this case, the system should assist people in getting their due as well...
Manoj
Dubai,UAE
Posted: July 13, 2009, 11:58

It's sad to hear his fate, I am sorry friend I have no clue of telling you how to repay your loan.
Ajay
Dubai,UAE
Posted: July 13, 2009, 11:04

A cheque is a way of transaction of money by which bank gives particular amount to the customer on behalf of his client. When some body issues the cheque it means that he is giving the indemnity of payment. in any case when cheque is dishonored or bounced back so it means that this person has defraud with others and defrauding is a criminal offence and such persons has to face the penalty. but there are certain circumstances by which we have to know the situation that why the cheque is bounced? either this person intentionally issued fakes cheque or it is bounced through some financial problems. after perusing the situation one could be treated in the way of ADR (alternate dispute resolution) so that by mutual decision, one can solve the problem. whole world is facing financial crises and no body can say that who would be victimised next by such crises. therefore we should know the actual situation and then take the action in such a way that both the parties could be satisfied.
Shahzad Shaikh
Dubai,UAE
Posted: July 13, 2009, 10:57

Something needs to be done to improve the situation. Whatever happened, happened. But its time all these entrepreneurs are given a second chance to pay their debts. If the situation gets worse, there will be no one investing anymore. It?s a scary period for all businesses around the world.
Sheraz Ahmad
Dubai,UAE
Posted: July 13, 2009, 10:44

From Law point of view it needs to be judged properly between miscalculations and cheating. A post dated check should only be written if a sure shot fund is going to be there in the account by that date. I am not sure if we can ask for a stop payment incase if enough of fund is not going to be there before the cheque date. If we are honest and careful enough then cheque should not bounce.
Ashim
Abudhabi,UAE
Posted: July 13, 2009, 10:36

Should not treat like this, should give more time to arrange the fund as per the requirement. The authorities to be make arrangement for convenient method of handing bouncing cheque.
Faisal
Dubai,UAE
Posted: July 13, 2009, 10:33

in case of genuine situation 50% should be handed immediately. balance 50% in 2 equal installments in two months time
Vishal
Sharjah,UAE
Posted: July 13, 2009, 10:26

I think there should be some other options, the authorities should help these people. if it is small amounts then it should be written it off. for big amounts these people should be give some time to clear and also approval to change jobs
Mohammad Shafeeq
ras al khaimah,uae
Posted: July 13, 2009, 10:10

Who ever want to start business in any country they should know the laws of the country and respect the laws. Cheque bouncing is a criminal act from the day one and this has been repeated in the news paper every now and then so that people will be aware of the law. Authorities are doing their best for the benefit of both the parties. Hence, the law and order is required to any country to run it smoothly.
Richard Pinto
Dubai,UAE
Posted: July 13, 2009, 10:07

I am in favor of this law, however there has to be proper awareness, which should educate the business owners of such laws. When business is good nobody plans ahead and when such problem faced they start to criticize the laws. Laws are always there but they are unseen. All business owners should learn the lesson.
Adnan Ansari
Dubai,UAE
Posted: July 13, 2009, 10:04

this is one hole which needs to be filled, customer have no insurance in terms of banking, when you apply for loan they charge you for "insurance" but what insurance? I have no clue. I think we should have some sort of insurance
Bilal
Dubai,UAE
Posted: July 13, 2009, 09:59

Obviously, there should be issuer's compulsion in making cheque bounced. In business one bounced cheque not only affect the receiver but also affect its all related business organisation i.e. suppliers and consumers
WAGLE C.K.
Sharjah,UAE
Posted: July 13, 2009, 09:40

should keep passport in custody not to let the person out of country with out paying. but jailing and treating like criminal is not good. should leave the person out, then only he can solve the problems.
Vijaya Kumar
Dubai,UAE
Posted: July 13, 2009, 09:37

Well, the payee should be given an alternative to pay back in monthly installments which is possible for him as it is global recession period and most of the people around the world are empty handed. So, it must be considered that it's better to get something rather than nothing. Locking up anybody in prison won't get anyone any money neither would it help.
Asna
Sharjah,UAE
Posted: July 13, 2009, 09:26

Bounced check is a criminal act. Although most of the owners of these checks are innocent, there should be an alternative to assist them consolidate their debts and/or be granted a Flexible Installment Plan. Jail is not the solution as this lead to major depression to each and everyone's life.
Reyhell
Dubai,UAE
Posted: July 13, 2009, 09:25

Bounced cheque should not be treated a criminal offense and should be settled out of court, if a person with bounced cheque was jailed, how can he repay the amount of the cheque? and it depends on the situation, they should consider that at least and not automatically send them in jail.
Tonya
Abu Dhabi,UAE
Posted: July 13, 2009, 09:20

I strongly believe in the current situation, the bank, police or any other concerned authorities of bounced cheques must thoroughly study each case by case. I have had my cheques bounced back, not because I intended to cheat somebody but because I was promised to get paid at certain time. With no criminal intention you become a criminal. An alternative is to give respect for the reasons of the problem and treat the person not as a criminal but a victim.
Shavkat
Dubai,UAE
Posted: July 13, 2009, 09:10

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