Abu Dhabi: A federal committee to combat commercial fraud would be set up, members of the Federal National Council (FNC) said on Sunday. The committee will have sweeping powers to close down offending businesses, be they inland or in free zones, and bring to task officials of these firms, once the existing draft bill turns into a law, according to FNC.

“The law would cover fraud in goods, contractual jobs and services offered by businesses across the UAE including free zone companies,” Ali Eisa Al Nuaimi, a member of the Federal National Council, told Gulf News on Sunday.

The committee, which will report to the Ministry of Economy, will work out anti-fraud strategies and policies, study reports of fraud submitted by competent authorities and take decisions on it. Subcommittees with powers to close down offending businesses for up to two weeks; order confiscating of goods and reach settlement with businesses involved or refer cases to the court, will also be created in each emirate.

Subcommittees will follow up destruction, recycling or returning of confiscated goods to exporters. Substandard goods may be seized for a month by these committees and a decision to get these goods released is taken by the court after a settlement is reached over how goods may be disposed off and fine paid.

Fraudsters would face up to two years in jail or be fined between Dh250,000 and Dh1 million or both, according to the new bill.

“Anyone who deceives or attempts to deceive another party by means of fraud in human food, animal feed, medicines, crops or natural products may be punished. Anyone promoting by any media means or possessing fraudulent and/or deceitful products may also be punishable under this law,” states the draft law.

According to Al Nuaimi, the same penalty would be imposed on offenders who fail to obey decisions by subcommittees regarding human food, animal feed, medicines, crops or natural products. He said a jail term of up to six months and a fine amounting to two times the price of the goods involved would be imposed in case of other fraudulent goods.

Al Nuaimi, also rapporteur of the FNC Financial Committee, which introduced changes into the draft law, stressed the legislation was meant to step up efforts to fight fraud and trade in fake goods, with unscrupulous inland and free zone traders facing up to two years in jail, a Dh1 million fine and being named and shamed at their cost.

Traders in counterfeit goods will be penalised even if buyers knew about these goods ahead of the transaction, stated the draft law passed by the Cabinet in early January.

Al Nuaimi said the new legislation would be reviewed by the House on February 18 and once passed it needs to be signed into a law by the UAE President His Highness Shaikh Khalifa Bin Zayed Al Nahyan.

The law would be published in the official gazette and take effect on the following day. These committees would be set up in three months after the law is enforced.

The law, he said, would empower the court to order confiscation or destruction of food, medical drugs, crops and tools. Under the law, the court may also order publishing the convictions in two local Arabic and English dailies with the convicts bearing the cost.

The only law on commercial fraud in practice in the country was drafted in 1979. It calls for a maximum jail term of two years and maximum fine of Dh10,000 for cheating a customer by delivering goods that are different to what is ordered.

The court may also order the business of offenders to be closed down for up to six months. If a business is a department store, only the offending department will be shut down. Repeat offenders may face revoking of their trading licences and double penalties.

The bill includes several articles covering all types of commercial fraud, such as the sale, display or possession of counterfeit goods in addition to provisions related to the prohibition of misleading advertisements. The bill lays down a mechanism to deal with counterfeit or rotten goods. It orders importers to return these goods to their source of origin within a specified period, or to destroy or recycle them.

“In all cases, the importers will bear the costs for disposal of the goods,” as per the to the bill. It further states that the conditions for fraud and deceit include any variation in the commodity agreed upon. This could be a fictitious type of product, or discrepancies in the origin, source, pricing or quantity.

Fraud may also be applicable in cases where products have been adulterated or an attempt to adulterate products is detected.