Dubai Islamic Bank fraud repayment ordered back to appeals court

Cassation Court upholds 10-year sentence for six defendants, plus Dh1.8bn fine.

DUBAI // Dubai's highest court has rejected half of the US$1 billion (Dh3.67bn) payment six businessmen convicted of defrauding Dubai Islamic Bank have been ordered to make.

The 10-year prison sentences for all the men were upheld by the Court of Cassation, however, and they still must pay a Dh1.8bn fine. The court ordered the Court of Appeal to reconsider the second half of the payment.

That means the repayment of the funds to the Dubai Government will be the subject of a new trial.

The men, Briton CM, 48; RL, 50, who is also British; RU, 50, of Pakistan, a former DIB executive; OM, 39, also of Pakistan; Turkish businessman EN, 36; and American ZU, were all convicted of embezzling Dh1.8 billion from Dubai Islamic Bank in the case, which dates to 2008. A seventh businessman was acquitted.

RU, OM, and ZU were also ordered to pay a combined fine of US$2m and to return a further $2m to DIB.

All, including two of the bank's executives, denied committing fraud, embezzlement, bribery and forgery when they first appeared before the court.

The men were assisting in major bogus deals and embezzling public funds, Abdullah Al Hamili, the bank's chief executive, has told the court. He said they were deliberately helping others embezzle public funds, inflicting intentional loss on the Government and its interests, and participating in illegal profiteering and forgery.

Court records show that a Dubai Government Financial Audit Department investigation concluded that $501m had been given to the Turkish firm CCH, the firm for which RL, CM and EN worked, in the form of credit allowances.

The investigating officer, Mohammed Mustafa Hussein, told prosecutors that CCH, which was run by EN and represented by CM and RL, illegally acquired the funds from the bank with the help of the remaining defendants.

Witnesses also told prosecutors that after the investigation was launched, it was discovered that CCH owed $100m to two other banks.

In 2004, DIB agreed with CCH to invest the money in a project in which equipment related to oil work would be bought from Canada and used in Pakistan.

RU and OM were the executives in charge of overseeing the credit allowances for CCH. The two former DIB executives received $950,000 and $750,000 respectively as bribes from CCH to establish more credit for the company.

After RU and OM gave CCH excellent recommendations, the company was granted a $500m credit ceiling with the bank.

EN and CM collaborated with RL, who established a number of companies and submitted bogus documents to DIB to finance projects.

These three businessmen also forged documents that they submitted to DIB. OM and RU were charged with abusing their duties at the bank and accepting more than Dh5m in bribes.

ZU defrauded DIB of Dh7.34m through fake documents that made it appear to the bank's business partner that real deals were taking place.

In August 2010, the court ordered the case to be sent back to prosecutors for reinvestigation. Defence lawyers had asked the court to dismiss the case on the grounds of flawed investigations, and also asked the court to add four DIB board members to the list of defendants.

However, during the new trial, which began in January, the court refused to include the board members.