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The Death of Development, Part I
Dubai master-developer Nakheel, which aimed for the stars with iconic projects, prepares for a dramatic restructuring, reports Trends. Part I.
January 11, 2010 1:08 by Edmund Sheen
On the rocks
A string of lay-offs followed high-profile investigations into financial misappropriations and the resignations of prominent company executives. The exit of Nakheel’s chief financial officer, Kar Tung Quek, didn’t fall into either of these categories. There was no official word on whether he was asked to leave or simply went of his own accord.
Insiders say he was a casualty of the “blame game” culture that had crept into the organization, which kept someone when the company was doing well and sacked them when things hit the rocks. In the words of one former employee, the culture was thus: “If I can’t blame anybody else, let me blame you.”
Some say Nakheel came up with an innovative plan to wriggle out of the crisis by offering payment of 65 cents to the dollar. “They negotiated a 35 percent decrease of their unpaid invoices, starting with some of the suppliers to that party [on The Palm] and general contractors that were not paid over six months,” says someone familiar with procedures inside Nakheel.
Several sources TRENDS spoke to (not surprisingly, on the condition of anonymity) saw no light at the end of the tunnel, at least for the moment.
One former employee confirmed three parallel audits at the company – one from Dubai World, one from an independent auditing firm, and a third government audit probing allegations of financial misappropriation.
The beginning of 2008 proved to be the turning point for Nakheel. “That was when it began to lose focus and went on a spending spree. It also became overly public relations driven,” says one former executive, choosing to emphasize the cash splash that was happening during his stint there.