Drake & Scull International, the Dubai contractor undergoing a restructure to narrow years of losses, made new appointments to replace its chairman and board member who resigned this week. The company also handed over a string of files as part of an investigation by the UAE markets regulator.
A total of 15 legal complaints were lodged against DSI's former management for alleged offenses during their tenure between 2009 and 2017, which are under review by the public prosecutor, DSI added in a filing on Thursday to the Dubai Financial Market, where its shares were traded.
DSI said it appointed Fahem Alshehhi and Salem Alshamsi as new board members, after chairman Obaid bin Touq and board member Khamid Buamim resigned from the company earlier this week. There is no suggestion that the legal complaints relate to them, and Mr bin Touq was only appointed to the post in December 2018.
The filing said the company “has handed over some files related to questionable projects for the period 2009-2016, and they are currently under review”. DSI made the latest disclosure following requests from shareholders for clarity over the legal proceedings the contractor is embroiled in, it said.
In July 2018, an internal investigation by the company into alleged misconduct by previous management found that former DSI chief executive Khaldoun Al Tabari and his daughter, Zeina Tabari, owe the company as much as $272.3 million (Dh1 billion), exceeding the market capitalisation of the company.
Shares fell as much as 70 per cent before trading was suspended last November.
This week, DSI confirmed it was under investigation by the Emirates Securities & Commodities Authority, which has set up an audit committee to examine DSI’s financial statements.
The contractor has fallen on hard times amid a softer property and construction sector in its core UAE market because of a three-year oil price slump that began in 2014. Since then, its losses have widened and the company has come under the spotlight.
DSI posted a net loss of Dh4.5bn for 2018, widening from Dh1.18bn in 2017, and has seen a string of senior management exits over the past year. The latest was that of its chief executive Tawfiq Abu Soud, who was appointed to the post in January but was fired in April, along with chief financial officer Khaled Jarrar and chief legal officer Mohamed Ghanem.
The bourse statement on Thursday added that DSI will “continue to provide additional documents and files related to the business as per [the ESCA’s] requirements.
DSI continues with a restructure it began this year, after appointing financial and legal advisors last November. The turnaround plan under consideration could include closure of some of the company’s branches and subsidiaries, negotiating with banks and suppliers, and reducing debts, according to the filing.