Probe 'could hit investor confidence in Tamweel'

Dubai: An investigation into alleged financial fraud in which housing finance firm Tamweel's two former executives have been questioned could bring trouble for the company similar to that which hit property developer Deyaar over a corruption probe, market analysts said.

Although Tamweel, the country's largest mortgage lender, has tried to reassure its shareholders and investors that the reports of the investigation "will have no impact on the future profitability and financial strength," the market would find little comfort in those words.

Fadi Al Kiswani, trading manager of Al Sharhan Stock Centre, told Gulf News several investors worried about the negative impact of the probe had sold Tamweel shares on Thursday when information about the police questioning of Adel Al Shirawi, the company's former chief executive, and Feras Kalthoum, former head of investment, got leaked.

Tamweel's shares closed 5.7 per cent lower at Dh6.11. The stock has dropped 26 per cent since rumours of an investigation into the company began last month.

In its second denial within weeks, the company told the Dubai Financial Market, where it is listed, that it "has received no formal notification of such an investigation from the relevant authorities."

Leaked information

"Some investors sold shares when they received leaked information about a police investigation before the market closed. I think the stock will drop further when the market opens," Al Kiswani said, adding that the new reports of investigation after Tamweel's fist denial have affected investor confidence.

"Deyaar is not doing well because of the ongoing investigation," he said.

P. Krishna Murthy, chief executive officer of Dubai International Securities, said investors will remain cautious about Tamweel until they get a clear picture about the probe.

"Investor will be cautious, at least in the short-term. If you do not have full information, then that requires caution," he said.

However, he does not attribute the fall in Tamweel shares entirely to the investigation rumours

Tamweel is the second high-profile Dubai-listed company to have faced unwelcome publicity in recently.

Zack Shahin, a former chief executive officer of Deyaar, a real estate company part of Dubai Islamic Bank, was held earlier this year over alleged embezzlement. Several other arrests followed and the investigation is continuing.

JPMorgan's senior country officer for UAE Omair Mooraj was detained by Dubai police in a bribery probe into Dubai Islamic Bank, according to reports in June, signaling the government's toughness on corporate crime.

Al Shirawi is currently vice-chairman of Istithmar World, a Dubai World company with billions of dollars in investments, but remains a member of Tamweel's board of directors. Kalthoum is Istithmar's chief financial officer.

Istithmar acknowledged the two have been questioned about "certain alleged charges related to their previous positions at another company," but Istithmar World is not under any investigation.