Damas moves to limit fallout

Dubai: Damas, the Nasdaq Dubai-listed jewellery group which announced the resignation of its managing director Tawhid Abdullah after admitting unauthorised transactions worth $165 million (Dh606 million), on Tuesday took a few quick steps to limit the fallout.

The Abdullah brothers, owners of more than 50 per cent of the shares of the company, reiterated their commitment to repay in full any losses arising from unauthorised transactions.

Ethics

"Adhering strictly to business ethics and upholding our commitment to corporate social responsibility, Damas will return money to all its stakeholders during a certain frame of time. The Abdullah family stands united to find direct solution of this issue and this always has been our commitment," a Damas board member told Gulf News on Tuesday.

The company said that a special committee of the board is appointing an independent global audit firm to conduct a review and an international law firm to assist in analysis of the transactions.

Damas also announced on Tuesday its decision to wind up its loss-making Italian subsidiary Ms/ DIT Group SpA, (formerly Stefan Hafner SpA - Italy). The company also resumed trading on Nasdaq Dubai. The share lost the most in four months, dropping 13.51 per cent to 32 cents.

Dubai Financial Services Authority (DFSA), the market regulator of Nasdaq Dubai, said it is closely following the developments. "The DFSA has been closely monitoring the situation and trading in the market. It has been proactive in ensuring that it discharges its role to maintain the integrity of the market," the regulator said in a statement posted on its website.

A Damas official said on Tuesday that the company did not have any bad intention and the money was not taken for the personal use of the Abdullah family. It was borrowed as there was a serious cash flow problem.

He further explained: "Mr Tawhid did not resign under any pressure as many today may think. The self-disclosure was an initiative taken by Damas and so all the preventive measures are being taken to tackle the issue."

Ignorance

However, unauthorised payments were the result of ignorance of the code of conduct with which CEOs of listed companies must comply rather than criminal intent.

According to a statement from Damas posted on Nasdaq Dubai's website, the decision to wind up the Italian subsidiary was taken by the shareholders of the subsidiary at its extraordinary meeting held on September 28 in Milan.

While the company has already appointed Maurizio Prada as the liquidator, it is expected to file a winding up petition in the near future.

The subsidiary's current year loss is 4.18 million euros (Dh22.7 million) .

Damas has listed its shares on Nasdaq Dubai since July 8, 2008. The company operates some 450 jewellery stores, mostly in the Middle East.