Probe of Dubai’s Union Properties Sends Shares Tumbling

(Bloomberg) --

The attorney general of the United Arab Emirates is investigating alleged financial violations at Dubai-based Union Properties PJSC, sending shares of one of the country’s biggest developers into a tailspin. 

The “major” probe follows complaints by the market regulator, the Securities and Commodities Authority, alleging violations by board Chairman Khalifa Hassan Al Hammadi and other company officials, according to a statement carried Sunday by the state-run WAM news agency. Prosecutors ordered the seizure of property of some of the accused and barred them from leaving the country, WAM said.

“The allegations include the firm selling property at less than its real value and hiding the name of the beneficiary of the sale, as well as forging documents and other violations that caused harm to the company and its stockholders,” Attorney General Hamad Saif Al Shamsi was quoted as saying by WAM. 

It’s also suspected of violating “accounting standards systems to hide the loss incurred by the company by changing the classification of its investments,” according to WAM. 

Shareholders in Union Properties are now set to discuss whether to dismiss the chairman and six other board members at a meeting as early as Tuesday, according to a company filing with the Dubai Financial Market. 

Shares of the troubled developer fell as much as 9.7% before closing down 4.8% on Sunday. The stock is down 8.6% so far this year, giving it a market value of almost $300 million. 

A spokesman for Union Properties said the allegations are still being investigated and no charges have been filed. If the case is brought to court, the company will defend itself, the spokesman said. Union Properties maintains that the buyer of the property in question isn’t a “related party” as defined by law. 

Rare Case

In a statement to Dubai’s bourse, Union Properties said a property that was sold for 30 million dirhams ($8.2 million) in March 2020 had previously been valued at 49.5 million dirhams “before the spread of the Covid-19 pandemic and its accompanying negative effects.” 

It was bought by a woman who shares the chairman’s last name, according to the statement. It wasn’t clear if there was a relation between the two. 

Once among the main developers that shaped Dubai, Union Properties struggled to repay its debts in the aftermath of the emirate’s crisis in 2009 and has never fully recovered.  

While many Dubai builders and developers have been beset by accusations of wrongdoing, probes of listed companies are rarely disclosed by local prosecutors. 

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