Dubai: A Saudi businessman has fallen in a huge debt trap amounting to 26 million riyals following commercial dealings with an Arab expatriate man under commercial cover-up (tasattur), local media reported.
The businessman, who owns a trading company in Dammam, allowed the Arab man to engage in contracting activities under the name of his establishment, a mistake that costed him SR26 million.
He authorised the Arab man to manage and operate the establishment’s businesses in return for a monthly amount of 5,000 riyals. The power of attorney allowed the Arab man to carry out activities such as purchase of equipment, implementation of projects, signing of contracts and act as the business owner,
The expatriate started construction of a number of projects in the name of the Saudi man’s establishment. He defaulted on the payment after the purchase of equipment and doing construction work.
When the authorities summoned the Saudi owner following complaints of payment defaults, he was surprised by financial claims exceeding SR26 million against him.
The Ministry of Commerce intervened and summoned both, the Saudi businessman and the Arab expat to testify. They were then referred to the Public Prosecution and subsequently to the court to examine the case.
The ministry announced earlier this month that it will start applying deterrent penalties against violators of the new Anti-Commercial Cover-up Law effective from February 25, 2022.
The penalties for commercial coverup include imprisonment up to two years and a fine of up to 1 million riyals. Expatriates involved in such violations will be deported from the country after serving their sentences. People involved in tasattur will also be named and shamed in newspapers.
The business will be closed and liquidated while the owner will be banned from engaging in business activities in the future.