DFM Slump
There have been some intense campaigns mounted against locally listed firms, with the express intent of damaging shareholder trust and eroding the company's performance. Image Credit: Gulf News Archive

Dubai: UAE companies, publicly listed and private, are combating a spike in malicious campaigns being unleashed on social media, which in some cases have hurt shareholder confidence or directly hurt performance.

Also recording a sharp increase have been targeted cyberattacks on some leading privately owned businesses, including two developers. (No official confirmation has been provided at this time.)

But other entities have not remained quiet. Emirates REIT, the real estate investment fund, this week issued a strongly worded note to shareholders and other interested parties. The company did not mince any words in describing what it was confronted with.

“Emirates REIT is aware that there are several parties engaging in an aggressive campaign of negative stories and false rumours, both online and offline,” said Sylvain Vieujot, CEO of Equitativa, which operates the Emirates REIT. “We believe this campaign is seeking to undermine investor confidence in the fund manager and negatively influence the REIT share value.

“Our investigations have found evidence of irregular trading activity by certain market participants. In light of these potentially abusive market practices, we have reported those activities to the relevant regulatory authorities.”

A clear case of malintent

Social media campaigns behind false identities has always been something local companies have had to deal with in recent years. These would often be about shareholders – who wished to remain unknown - giving vent to their frustrations about the company or stock’s performance. Other campaigns were launched with the aim to hurt.

But recent ones targeting specific companies are seeing much more sophistication in the nature of attack.

The theme of the campaign against Emirates REIT has been about the high management fees the fund has in place, and contrasting that with the returns offered to investors.

But Vieujot dismisses this outright – “Emirates REIT is not just a buy-and-sell property fund. It is a multi-faceted REIT that buys prime properties with the purpose of repositioning them, develops new office and retail concepts as well as new build to suit properties, like some of its education assets.

“This all requires a higher level of administration, resource and investment activity than passively managed funds, which are more commonplace in the region. Any suggestion that the Fund is overcharging on management fees is entirely unfounded and, moreover, ignores the simple fact that the fee reflects the REIT’s active management.

“Despite the difficult market conditions, we have been increasingly concerned that our share price is trading at unusually low levels compared with the rest of the REIT market. And that it has experienced unusual price movements.

“The fund manager is confident that despite the unpredictability 2020 has brought about so far, key opportunities will present themselves in the coming months."

The CEO, however, did not confirm whether Emirates REIT would try and take legal action against any perpetrator.

Sylvain Vieujot, CEO of Equitativa
Sylvain Vieujot, CEO of Equitativa Image Credit: Gulf News Archive

Suspect timing

Amanat, the asset management company with a focus on healthcare, issued a statement on DFM this week that a Twitter post issued by a “third-party” was “false”.

It was “posted following Amanat’s disclosure of the agenda item added three days prior to the General Assembly Meeting on 28 April for shareholders to vote on the resolution.

“Amanat confirms that there are no details to be disclosed or that may affect the Company’s share price and is committed to all disclosure and transparency rules.”

There had been a burst of chatter about Amanat selling a stake to a strategic investor in Abu Dhabi. The stock had been a solid performer in recent weeks even as other stocks on DFM and ADX got caught up by investor concerns over the economy and corporate performances in a COVID-19 infected landscape.

Social media feeds and online chat rooms have always been platforms of all sorts of campaigns unleashed against businesses. And these days, there’s no escaping that, and such attacks would only get virulent when companies struggle in a difficult operating environment and not able to match shareholder returns of the past.

Most listed companies have already scrapped plans for dividends, and even if they are fully justified, there will always be some who think differently.

This could explain the reasons behind the latest round of online campaigns. But when these campaigns turn malicious and done with the purpose to inflict harm on the companies, then lines need to be drawn.

Direct attack

And then there is the constant threat of cyberattacks. Gulf Islamic Investments, the asset management company, found that it was being systematically targeted on a “number of social networks” through a “phishing or phishing activity against its official website and on Twitter”.

“Gulf Islamic Investments has also been fraudulently promoted by several social media figures on Instagram and Snapchat,” the company said in an official statement.

A spokesperson later told ‘Gulf News’, “We had an incident which was more of an online-fraud/identity-theft, where somebody created a website for a fake company using contents from websites of multiples companies in the financial services sector, including linking to some pages of GII websites.

“This happened sometime in April. Additionally, we witnessed through social media platforms during the last few weeks some miscreants spreading false, fraudulent and malicious statements against GII in a manner to harm the company’s reputation. We have also seen couple of incidents of unauthorized promotion of our Company in social media involving some influencers.”

On whether the company’s performance was compromised in any way, the spokesperson said: “The short answer is ‘No”, as we all know that fraudsters try to exploit the brand of reputed firms as it easy to mislead/brainwash innocent people with established names.

“We are assessing ways to increase awareness about such incidents so that people don’t fall for it. We have submitted a criminal complaint through the E-Crime Department of Dubai Police, and are in contact with the social media platforms to register abuse and take necessary action against such fraudsters.”

GII project in London
A rendering of a Gulf Islamic Investments' project in London. Image Credit: Gulf News Archive

What legal recourse is there?

The laws of the land are quite clear on the legal options victims of such attacks can purse. A criminal action for defamation can be filed under the UAE Penal Code and “potentially also taking action under the UAE’s Federal Law on cyber-crimes, given the use of social media,” said Seema Bono, Senior Dispute Resolution Lawyer at Pinsent Masons.

“There is also the option of advancing civil claims to seek damages for the harm done. Ultimately, a company will need to determine its strategy at the outset and consider how aggressive an approach it wants to take.

“Commencing legal proceedings might also result in a compromise or settlement being achieved, whereby a substantial settlement sum is paid, together with a public apology from the perpetrator which should restore investor confidence and improve public perception.”

What of the chances of success?

As is the case with any other charge, outcomes from a legal action will depend on specific facts and circumstances.

“The company will have to prove its case through legal submissions demonstrating that a false statement was made through social media and that this resulted in clear and demonstrable harm. In short, there are legal avenues available and legal action in this regard should assist in deterring such conduct in the future.”

Companies can hope that those behind the cyber campaigns will eventually lose interest or make a move on other potential victims. But it’s always best in these difficult times for companies to keep all options open. The nature of cyberattacks is they tend to ebb and flow… but never go away forever.

The company will have to prove its case through legal submissions demonstrating that a false statement was made through social media

- Seema Bono of Pinsent Masons