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Damas founders fined $4 million for ‘unauthorized transactions’
Dubai Financial Services Authority takes action on Abdullah brothers for their 'failure to exercise appropriate corporate governance'.
March 21, 2010 1:30 by Ben Flanagan
The founders of the luxury jewelry retailer Damas International have been fined a total of almost $4 million after Dubai’s Financial Services Authority (DFSA) found that they had failed to “exercise appropriate corporate governance”.
Brothers Tawhid, Tawfiq and Tamjid Abdullah were found to have for violated DFSA laws by withdrawing “funds for their own personal use without disclosing it to the board.”
The amount owed by the Abdullah brothers to Damas “comprised of approximately AED365 million ($99.4 million) plus the value of approximately 1,940,250 grams of gold, the price of which is to be fixed on a date agreed by Damas and the Abdullah Brothers,” the DFSA said in an emailed statement, according to Zawya Dow Jones.
Under the DFSA’s ruling, the brothers will be suspended from directorships with any company registered in the Dubai International Financial Centre, of which the DFSA is the independent regulator.
The “voluntary bans” apply for “periods up to 10 years”, according to the DFSA.
“The remedial action includes the resignation of the Damas Board, the appointment of a new Board to govern Damas, and measures to enhance the governance, systems and controls of Damas so as to protect the company, its assets and shareholders’ interests,” said a statement issued by the DFSA.
Trading in Damas shares on the Nasdaq Dubai was suspended Sunday morning.
The DFSA first announced the investigation into Damas on 15 October 2009. The regulator’s move is “its most aggressive action since it was founded”, according to The National newspaper.