Dubai fines Lebanese banker for overstating client’s wealth

Dubai’s financial regulator has fined a private banker Dh27,525 for overstating the wealth of a client in 2009.

Tareck Fouad Farah, a Lebanese national, was chief executive of FFA private bank at the time and “issued a bank reference letter on behalf of a client containing false information that was addressed to another financial institution”, the Dubai Financial Services Authority (DFSA) said yesterday.

“The bank reference letter stated that the client held a portfolio of securities valued at approximately Dh18.3 million”, whereas the actual value was only Dh697,000. No person suffered a financial loss as a result of Mr Farah’s actions.

An investigation prompted last January revealed that Mr Farah at the time in question was not familiar with the FFA’s policies and procedures on reference letters.

He failed to review the client’s account before issuing the letter, allowed the document to be issued with inaccurate information, and did not register the letter on file. The main concern was that the letter could have been used to “extend credit or for some other purpose”, said Stephen Glynn,the head of enforcement at the DFSA..

Mr Farah acknowledged that his failure to check the client’s account was an oversight amid market volatility. His client held debt issued by Nakheel, the Dubai developer, which tumbled in value following the emirate’s 2009 property crisis.

“I thought the guy was a very wealthy client. His account surpassed Dh12m frequently, so I found it very normal to issue a letter that he asked me for,” Mr Farah said in a telephone interview from Beirut.

“I put the figure that he asked, which was my mistake. It was not intentional, as I should have checked his account and situation. He had lost his money on Nakheel bonds.”

The DFSA has accepted an enforcement undertaking after Mr Farah agreed to pay a penalty of Dh27,525 and cooperated fully with the investigation.

Mr Farah is now chairman of Mena Invest, based in Beirut.