Property salesmen caught in sting



DUBAI // Two former property salesmen were sentenced to three years in prison and fined Dh3.8 million (US$1m) yesterday for pocketing Dh3.08m in illegal commissions. KM, 28, an Egyptian former sales executive, and WJ, 32, an Emirati former sales manager, both worked for the developer Nakheel, where they sold land on the Palm Jebel Ali. They were found guilty at the Dubai Criminal Court of First Instance of charging an extra two per cent - Dh5.13m - on a land deal worth Dh265m.

The judge, Fahmi Mounir, pronounced the sentence in the absence of the two defendants, who had not been brought from jail. The pair were caught after the main witness, AD, an American sales consultant at Nakheel, arranged with AA, the head of the audit department at Dubai World, to trap them in an internal sting. AD told prosecutors he pretended to go along with KM's plans, who asked him to find a buyer for a seaward-facing plot of land on the Palm Jebel Ali which had been reserved for a five-star hotel. KM told AD the buyer had to be willing to pay an extra two per cent commission in cash over the regular fee.

The witness, in co-ordination with AA, found a middleman, NJ, who had a company willing to pay two per cent extra for the land. After NJ's customer paid the 10 per cent down payment to Nakheel for the land, AD told prosecutors KM told him not to hand NJ a receipt unless he got the extra cash. AD arranged to meet NJ at the Radisson SAS Hotel at Dubai Media City. AD said he went with KM to the hotel but that KM waited in the car while he went to meet NJ who handed him a black sports bag stuffed with Dh5,134,260 in cash.

AD said they drove to KM's residence at Discovery Gardens to divide the money: "(KM) gave me 40 per cent of the cash, Dh2,050,000, and said he would split the rest of the money with (WJ)." AD said that after KM called him later that day to tell him WJ got his share, he went straight to AA at Dubai World and handed over the Dh2.05m K M had given him.
hmbathish@thenational.ae

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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