Dubai: Citibank is accused of self-dealing, defrauding investors, and attempting to initiate a global cover-up of investor losses. The bank was sued by investor Dr. Sami Abbas Hussein Ali before the Abu Dhabi Commercial Court of First Instance
According to the lawsuit (Lawsuit No. 2901/2014) filed on Sunday, Citibank International PLC, Citi Private Bank, and Citi Private Bank — Abu Dhabi hid losses from investors in the CReAM (Citi Real Estate Asset Management) Fund, some of whom unknowingly lost their entire investment, for more than three years before sending a one-page letter that stated that previous quarterly reports showing value in the investment had been inaccurate as a result of a “Citi Private Bank operational error.”
The suit accused Citi of purchasing two shopping centers in the United Kingdom at questionable values, one of which appears to have been owned by the CReAM Fund’s own manager, without disclosing the “insider” nature of the transaction to investors.
A Citibank spokesperson said, “At present Citi is not aware of the legal action referred to in the press release. Citi does not consider there is any merit in the allegations contained in the release and will vigorously defend any proceedings brought against it.”
The case states that the bank failed to obtain required approvals from the Central Bank of the United Arab Emirates to solicit investments from investors in that country. Under UAE law, investments marketed to investors in the country without the required approvals are null and void.
Citibank marketed the CReAM Fund to investors in the GCC countries of the Middle East in 2004 as a medium-risk investment projected to yield annual revenues at a rate of 4 per cent. From 2004 to 2006, the CReAM Fund, which was managed by David Lockhart of the Halladale Group Plc, invested in 12 shopping centres in the United Kingdom.
However, unknown to investors, Lockhart’s employer, Halladale, appears to have owned one of the shopping centers, which was sold to the CReAM Fund at questionable values. All of the shopping centers eventually liquidated, costing investors millions of dollars.
Lockhart, through a new entity known as New River, in 2008 purchased the assets of CReAM Fund at distressed prices. Again, none of the proceeds went to the original investors.
“Citibank, Halladale Company and Mr. Lockhart achieved huge profits … at the time the Plaintiff lost all the invested money,” according to the lawsuit.
Dr. Sami Abbas Hussain Ali is seeking among other reliefs the return of his entire investment, plus appropriate compensation for the losses suffered by him on account of the wrongful acts of Citibank.
