Government ponders bad-cheque syndrome

DUBAI // The Government is trying to come to grips with the problems that arise from bounced cheques. A committee set up to tackle the issue has put forth some recommendations, according to the Minister of Justice, Dr Hadef al Daheri. "The federal Government will review the recommendations and will be the final decision-makers on what changes will be applied," he said. The UAE still considers cheque bouncing to be a criminal offence punishable by prison terms. The minister did not say specifically whether the committee would consider the feasibility of turning these cases over to civil courts instead. But he declared: "The committee has a free rein to study the issue from all possible angles and pass recommendations whether it concerns legislative amendments or procedural factors."

While developed countries usually consider deliberate cheque fraud as a criminal offence, the mere bouncing of a small cheque for insufficient funds is often settled out of court, or in a civil proceeding. The Justice Ministry has reported that between January and May 544,196 cheques bounced because of insufficient funds - about one in 18 of the 9.75 million cheques issued. In Dubai, the country's commercial hub, almost 11,000 monetary crimes were recorded last year compared with 8,081 in 2007 and 7,550 in 2006, according to court records.

The new committee, of which Dr al Daheri himself is a member, includes representatives from the Ministry of Justice, federal Police, Central Bank, Ministry of Economy, Ministry of Finance and property-regulating authorities. Lt Gen Dahi Khalfan Tamim, head of Dubai Police, is among the proponents of decriminalising cheque bouncing and defaulting on debts. "Sadly, now, as a police force, we have been involved in a matter that shouldn't have been under our mandate," he said in March, "and we are concerned more than we should, because this could escalate."

On the other side is a senior prosecutor, requesting anonymity, who argues that criminal penalties act as a deterrent. "Decriminalisation of cheque cases would result in a higher number of complaints and cases," he said, noting that 14,000 bad-cheque files were waiting to be reviewed at one Dubai police station alone. Eissa Bin Haide, a Dubai lawyer, also favours keeping criminal penalties. "Cheques are considered a monetary form of payment equivalent to cash in UAE law," he said. "Therefore, if a cheque is dishonoured a criminal complaint should be registered."

Capt Peter Krygger, a UAE-based pilot, is one of 42 investors who have filed bounced-cheque claims against a property developer in Dubai. "The criminalisation of bounced-cheque cases is the only thing that protected us from being swindled," he said. "The only power we have to retain our money is to keep the defaulter in jail until he pays back the amounts owed." [e-mail]