Former CEO of Drake & Scull ordered by Dubai court to pay back company

Dubai: In what is a landmark judgement in UAE corporate history, the Dubai Court of Appeal has rules that Drake and Scull’s former CEO and another official are liable to pay Dh151.97 million back to the company.

Thus, Khaldoun Rashid Tabari, the former CEO, along with Saleh Muradwejj, a former executive director at DSI Construction, have to pay the amount in full. This will be as compensation and ‘moral damages’ suffered by the Dubai headquartered construction firm.

The Dh151.97 million also includes legal interest at 5 per cent from the date the ‘judgment becomes final until full payment is made’.

Assets ‘attached’

The judgement can be appealed, and Drake & Scull has ‘already initiated enforcement procedures and previously secured attachments on assets belonging to the defendants’.

Additionally, the Public Funds Prosecution in Abu Dhabi has imposed attachments on funds and assets belonging to Khaldoun Rashid Tabari.

For the current management, the verdict delivered by the Dubai Court will come as vindication for the hard yards put in over the last 5 years, when it was found that the previous management mis-reported billions of dirhams in losses.

As recently as late last year, Drake & Scull was on the verge of liquidation. A court order at the time stopped all such proceedings, and since then the turnaround steps have been taken in earnest.

And in May, the DSI stock returned to DFM after 5 years, where it is trading at Dh0.419, up by 0.48 per cent in morning trade.

“While it can be appealed, the Dh151 million verdict is a huge win for the company, especially as it stakes out a roadmap for new projects,” said an analyst. “It will instil confidence among its lenders and creditors, and will be particularly of note for the local construction sector.

“There are some major tenders up for grabs in the next few months, and a revitalised Drake & Scull will be looked at keenly once the project awards are decided.”

It was in 2018 that matters at Drake & Scull started to turn sour and then came into the public realm. It was later revealed that the revealed losses were only a fraction of what the company was suffering. What the company owed its lenders and others ran into the billions of dirhams.

All through these five years, the current management had steadfastly said that if given the right breaks, Drake & Scull can return to full operations. They had also actively pursued legal action against former officials, and the new ruling by the Dubai Court caps all of the effort they put into it.