Ex-Drake & Scull chief fires back at new criminal charges
Says construction company’s losses have to do with industry and economy, not fund misuse
Dubai: Khaldoun Tabari, founder of Drake & Scull International, in its time one of the region’s leading contracting firms, has refuted the new set of criminal charges filed against him in Abu Dhabi. These charges, filed by the current DSI management, relate to incidents during Tabari’s tenure as CEO and vice-chairman.
“Even a cursory examination of the unfounded allegations made by DSI shows that they are unwarranted commercial claims and not criminal complaints,” said Tabari. “These claims have also been accompanied by a smear campaign that is feeding misinformation to the media, further underscoring the questionable tactics employed by DSI’s new management throughout this process.”
This is Tabari’s first formal statement since DSI announced last week in a statement - on DFM and to the media - that fresh criminal complaints have been filed. It is the office of Abu Dhabi Public Funds Prosecutor that is investigating the charges, which state that Tabari misused/mismanaged company funds during his tenure. That not just he, but his family members too benefited from this.
It was in summer last year that DSI revealed it had racked up accumulated losses in the billions of dirhams, and that it had started internal investigations into the former management and some of its dealings. In particular, DSI wanted to examine how some of the company’s overseas subsidiaries were set up and the deals that they oversaw. DSI also said that some of the annual losses were never reported at the time, which explains the size of the accumulated losses.
No hand in the decline
In the statement released early on Wednesday (February 5), Tabari said: “As CEO and Vice-Chairman of Drake & Scull, I had successfully worked with the Board of Directors to take the company to the highest success. “My tenure saw the company grow. More importantly, all activities undertaken at the time — from the company’s acquisitions and geographical expansion to its initial public offering — were strictly implemented within the confines of Emirati laws and regulations and international best practices.”
Tabari, a Jordanian national, was detained recently at the country’s international airport and the passport confiscated. This followed an alert sounded by Abu Dhabi authorities against him, pending an investigation into the criminal charges. Sources have said efforts are on to get an extradition from Jordan.
Counter claims
The statement also has Tabari reiterating that the current DSI management “owes him several million US dollars — a claim confirmed by a recent Dubai Court judgment”.
Tabari added that Drake & Scull’s IPO was overseen by a committee composed of “reputable international businesses and consultants”, which included HSBC, Earnest & Young and Deloitte.
“DSI’s financial statements were subject to internal and external audits by various world-class firms, meaning that questioning the validity of these statements — which have also been approved by the Emirates Securities & Commodities Authority (ESCA) — essentially constitutes an affront on the reputations and integrities of countless firms and individuals around the globe,” the statement adds.
At the time, its then board of directors and General Assembly decided to reduce the company’s capital by 75 per cent and "extinguish its accumulated losses, which amounted to Dh1.7 billion.
"It was at that point — on February 17, 2017 — that the UAE-based private equity firm, Tabarak Investment, made an official offer to the Board of DSI to become a strategic shareholder and invest Dh500 million in the company upon approval by ESCA and other regulatory bodies," said Khaldoun Tabari, ex-CEO and founder.
"The offer came with the strategic partner appointing two seats on the Board to be followed by the appointment of the CFO. These appointments were made nearly eight months prior to any funds being injected into the company and gave Tabarak effective control of the company from outset."
* In May 2017, Tabarak approached Khaldoun Tabari and requested to "buy his shares at below market price", Wednesday's statement from Tabari said. "This was conditional upon Tabari and his daughter resigning from the Board and voting in favor of the capital increase.
"The agreement was accepted and the terms were met. Tabari also received an indemnity and release from Tabarak for both himself and his daughter."
Tabari in his counter says: "Is it even remotely feasible for such a major investment company to enter a strategic partnership in a company without undertaking the necessary financial due diligence and feasibility assessments?"
Tabark’s entry was based on their own board of directors’ belief in the financial soundness of such an investment, he added.
According to him, Tabarak had worked with Drake and Scull executives, PricewaterhouseCoopers (PwC) and Clifford Chance to conduct a comprehensive audit of all financial statements upon the receipt and approval of Tabark’s offer in February 2017. The company’s restructuring efforts commenced during the same month and the measures to raise the company’s capital by Dh500 million were completed in October 2017.
“The losses suffered by the company were due to the gradual decline in the regional real estate business and construction sector, a direct result of a three-year drop in oil prices beginning in 2014, compounded by geopolitical instabilities in several countries in which DSI operated, such as Syria and Libya,” the statement issued early on Wednesday states.