Emirati prosecutors said Sunday they launched a major investigation into Dubai-based real estate developer Union Properties, saying they would probe allegations the long-troubled firm committed fraud and other offenses while trying to claw its way out of debt.
Union Properties piled on some $2 billion of debt during the city-state's financial crisis over a decade ago. The company had nearly $500 million in debt at the end of last year, according to their financial filings.
A statement carried by the state-run WAM news agency said the investigation involved allegations of 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.
“The investigation involves complaints lodged by the Securities and Commodities Authority on allegations of financial violations committed by Khalifa Hassan al-Hammadi, chairman of the board of directors of Union Properties, along with some of its officials,” the WAM statement said.
A stock market filing by Union Properties identified a March 2020 transaction in which a purchased property for 30 million dirhams ($8.1 million) had been earlier valued at 49.5 million dirhams ($13.4 million).
Union Properties’ filing sought to explain the sale by noting it came amid “the spread of the COVID-19 pandemic and its accompanying negative effects — and in light of the company’s commitment to settle its debt towards its lenders.”
Other filings on Sunday to the Dubai Financial Market showed shareholders wanted a vote later this week to possibly remove its board of directors. Separately, the company said one of its subsidiaries was involved in a lawsuit seeking nearly $1 billion, without elaborating.
Shares in Union Properties fell as much as over 9% in trading Sunday on the Dubai Financial Market before closing down 4.83% to 26 fils a share, or 7 cents.
The firm’s current shareholder structure wasn’t immediately clear, though a profile from the data firm Refinitiv showed its major investor as the Bluestone Fund.
Union Properties abandoned the construction of a $460 million Formula One theme park in Motor City during the crisis, with its CEO at the time saying banks were no longer willing to lend money.
