Former CFO of Equitativa and Emirates Reit fined $33,220 by DFSA

Remi Ishak was fined for knowingly making misleading statements and accounting breaches

The DIFC building in Dubai. The UAE has taken steps to ensure the implementation of a robust financial regulatory framework. Jeff Topping / The National
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The Dubai Financial Services Authority, the regulator of the Dubai International Financial Centre, has imposed a fine of $33,220 on the former chief financial officer of Equitativa and Emirates Reit for accounting breaches and making misleading statements.

In December 2021, the DFSA published its decision notice penalising Equitativa for making misleading statements in relation to Emirates Reit, not preparing financial statements in accordance with international financial reporting standards, and failing to take reasonable steps to ensure that relevant information was reported to its auditors, the regulator said in a statement on Thursday.

The DFSA found that Remi Ishak was "knowingly concerned in those breaches".

Equitativa manages Emirates Reits, a sharia-compliant real estate investment trust.

“CFOs [chief financial officers] of public funds and listed funds play a critical role in ensuring that financial statements and any associated public announcements are fair and accurate,” Ian Johnston, chief executive of the DFSA, said.

“CFOs need to ensure that all the facts relevant to the preparation of financial statement are provided to external auditors in a full and transparent manner.”

The UAE has taken several steps to ensure the implementation of a robust financial regulatory framework.

In August, the country announced plans to establish federal prosecution offices dedicated to money laundering and other economic crimes, including corporate crimes, bankruptcy, regulation of competition, financial markets, intellectual property and trademarks and customs evasion offences.

In 2018, Mr Ishak, in his capacity as chief financial officer, made "public statements in relation to a school that had been vacated by the previous tenant with unpaid rent of more than Dh9 million ($2.45 million), to the effect that a new tenant had been secured to start in the following academic year in September 2019," the DFSA said.

"Those public statements implied that the asset’s revenue and valuation would be unaffected and therefore were misleading since there was no binding offer or agreement in place at the time," it added.

Mr Ishak also signed off on Emirates Reit's 2018 half-year financial statements without including a provision for the unpaid rent or any impairment of the asset value for the school as required under IFRS.

Instead, the asset was reported as 100 per cent occupied on the assumption that there was a long-term tenant in place, it said.

"As CFO, Mr Ishak was responsible for overseeing the management and coordination of all financial reporting [including the maintenance of internal controls at Equitativa that ensured all relevant information was conveyed to the auditors of Emirates Reit] and ensuring that Equitativa fulfilled its regulatory duties," the DFSA said.

"In this regard. Mr Ishak failed to take reasonable steps to ensure that Equitativa or its employees reported certain information, relevant to the recoverability of the asset, to Emirates Reit's external auditors for their review of the 2018 half-year financial statements."

The DFSA also found that Mr Ishak breached its principles by failing to act with "due skill, care and diligence" in his role at Equitativa in relation to the matters as set out in the decision notice, it said.

Updated: October 12, 2023, 1:33 PM